It’s Not Automation, It’s the Trade Deficit

Matthew McMullan

Matthew McMullan Alliance for American Manufacturing

A common refrain in economic commentary on the nature of work, and the changes in manufacturing employment, is basically:

“Trade didn’t take those jobs. It was robots. The robots did it!”

Okay, maybe it’s not the terminators who are doing it. Rather, it’s industrial automation: We make more stuff with less people, because manufacturing is now performed by automated processes. This idea is breezily inserted into all kinds of articles, including ones with other interesting things to say. (And, in defense of those who spread this idea, there are studies that back this up.)

But this isn’t the entirety of thinking on the subject. David Autor – one of the academics behind the “China shock” hypothesis – has pumped the brakes on this idea. And others – from those at the Democratic-aligned Brookings Institute to President Trump’s hawkish chief of the National Trade Council, Peter Navarro – have pointed to the real-world example of Germany, which has put a lot of robots on the assembly line in recent years but hasn’t seen its substantial manufacturing workforce shrink.

So what gives? How does this refrain persist? Well, a new report by the Information Technology & Innovation Foundation (ITIF) takes a look at the “shaky foundations” it stands on:

First, while productivity growth in manufacturing compared to the rest of the economy was fairly consistent from 1990 to 2010 (25.8 percent in the 1990s, and 22.7 percent in the 2000s), job losses in the latter decade were 10 times greater than in the former.

That’s a very good point that has been made by others, albeit not pointed out enough. What else?

Second, government statistics significantly overstate manufacturing productivity growth. Government data shows an astonishing 179 percent increase in computer manufacturing output from 2000 to 2010. But companies actually produced fewer computers during this time, not more. The discrepancy is explained by the fact that the massive growth in productivity represents increasing computer processing speeds. The resulting mismeasurement of this subsector significantly skews manufacturing statistics overall. Indeed, after removing computer and electronic products, it turns out that real value added from U.S. manufacturing grew just 6.4 percent from 2000 to 2015, not the reported 19.3 percent.

The report’s author, Adams Nager, suggests that an explosion of trade with ChinaChina, not Mexico – and its suite of mercantilist trade policies was a much more likely culprit for the sudden drop-off in American manufacturing employment.

Nager points to a number of other scholars who have drawn the same conclusion.

In sum: Yeah, the robots are coming, man. But are they actively stealing our jobs? It’s just as likely (if not more) that it’s a foreign government that’s trying to do that.

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Reposted from AAM.

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Photo by John Martin.

Before coming to AAM, Matthew worked for the communications department at Council for a Strong America, a childhood advocacy nonprofit, and at community newspapers in Virginia and California. He is a 2006 graduate of Indiana University, and hails from Northwest Indiana. You can follow Matthew on Twitter at @mpmcmullan.

Posted In: Allied Approaches

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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