Saturday, June 7, 2014

Why the good news for Michigan manufacturing not salvation for the average Joe

The second week of this month, May, was Michigan Manufacturing Week. Former governor, John Engler, was recently quoted as stating that Michigan manufacturing is “on the mend.” This sounds like great news for all of us in Michigan and in Kent County who have been holding out hope that the glory years of plentiful jobs and generous benefits might return some day to our fair state.

Business experts and economists have begun to be cautiously optimistic that Michigan, in recession for over a decade, is making strides towards growth and improvement. This is the third year in a row that manufacturers in Michigan have expanded and added jobs. 13,084 jobs were added just in 2013, and there are more than 662,000 people in various manufacturing sectors across the state.

From the standpoint of the historical manufacturing worker in Michigan, however, the increase in jobs available does not translate to more work for him right now. Many of the new jobs are in high tech areas, requiring degrees in STEM (Science, Technology, Engineering and Medicine) fields. Jay Baron, of the Center for Automotive Research said recently, "In Michigan we have a fairly high unemployment rate, yet there are a lot of for-hire signs at these companies," he said. "They need technical-skilled people; technicians who can fix machines when they break down, computer programmers and other sorts of positions."

If you have a smart son and daughter who will be entering college and is math or science inclined, there is some real opportunity for them as well as a reason to remain in state after college. But Michigan’s former prosperity was built on the availability of jobs that the average person, at least one with a good back and decent work ethic, could do.

In 1960 a high school graduate could easily find work he could support a family with, and the money made from those jobs “trickled down” to other jobs created out of the need to spend the excess income of the time. Money from the auto industry indirectly funded teachers, dentists, home builders, restaurateurs, Motown singers, and professional athletes and kept a lot of people fed and housed, clothed and cared for.

In 2013, after years of educators, politicians, and government officials pushing higher education as a ladder out of poverty, only a little over third of Michigan residents (38.7%) had a two or four-year college degree and only a fraction of those degrees were in STEM fields. What’s more, the average graduate of a four-year college or university had $28,840 in student loan debt to pay off and a real lack of possibilities of how to pay those loans off, given that the market for jobs that pay well enough to produce the excess needed to pay off debt is already glutted and shrinking. Essentially, despite any progress made over the last fifty years, and despite the fact that the unemployment rate in Kent County is the lowest in the state, no one can now graduate from high school and get a job that pays enough to support a family now. And by the time young people acquire enough education to get that job, they’ve also acquired enough debt to put off investments in life like marrying, having children, and buying a home.

In the long term, the technical jobs of today will benefit, to some extent, the average worker. Discoveries made and products developed by research and development departments will create more work over time. But the trend among large companies and manufacturers has been and continues to be automation of jobs once done by people. These decisions are not made entirely out of greed, either. With more global competition and future entitlement liabilities, U.S. companies have to keep their costs down to compete.

So what about the average Michigan worker or the one here in Grand Rapids? For now it looks like he’s caught between a rock and a hard place and is faced with a far less secure future unless he can somehow lever himself into a job in demand. This is actually much more in line with American reality before the post-War industrial boom. We would do well to look back at the strategies our ancestors had for economic survival and success - hard work, thrift, cooperation, and pragmatism.