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Money | While manufacturing employment has declined 20 percent in 15 years, manufacturing production has increased 61 percent during the same period

Issue: "Beyond hate speech," Aug. 20, 2005

The economy is growing and inflation is relatively low, but if the Democratic Party is certain of one thing, it's that any good economic news must be masking a devastating decline in manufacturing.

During the recent debate over the Central American Free Trade Agreement (CAFTA), House Minority Leader Nancy Pelosi (D-Calif.) pointed out that "we have lost millions of manufacturing jobs" under President Bush. "As our manufacturing base erodes, as our industrial base erodes, we have a president who is contributing to the further erosion of that base."

Some Republican opponents of CAFTA, such as Rep. Virgil Goode (R-Va.), also worried about losses in U.S. manufacturing jobs, predicting that the trade deal would cause a "downhill slide to Third World status."

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At first glance, Reps. Pelosi and Goode would seem to have a point. According to the Bureau of Labor Statistics, the number of Americans employed in manufacturing has fallen from 17.8 million in June of 1990 to 14.3 million in June of this year, a drop of almost 20 percent in 15 years.

But a closer look at the data should allow Reps. Pelosi and Goode to breathe easier: U.S. manufacturing is actually stronger than ever. For while manufacturing employment has declined by a fifth in 15 years, manufacturing production has increased by 61 percent during the same period, according to an index produced by the Federal Reserve.

What's happening is that better technology is allowing U.S. manufacturers to become more efficient, to make more and better products with fewer workers. Other companies, meanwhile, are picking up the employment slack by creating millions of new jobs.

While this process has no doubt caused difficult dislocations for some workers, it has kept the overall U.S. employment picture very bright: Even while manufacturing industries have shed jobs, household incomes and employment rates have increased.

An Aug. 5 report from the Labor Department provided a snapshot of that process in action: The economy lost 4,000 manufacturing jobs in July but gained 207,000 new non-farm jobs overall. Meanwhile, hourly wages increased 0.4 percent during the month and the unemployment rate stood at a historically low 5.0 percent.

Such news, however, is anything but good for one group: the big industrial labor unions that have depended on manufacturing workers for membership. Union membership has been falling for decades and is now down to less than 8 percent of private-sector workers.

Frustration over the falloff was one reason that the Teamsters, the food workers, and the service workers split from the AFL-CIO last month. They complained that AFL-CIO president John Sweeney was spending too much money on politics and not enough on organizing (see "The Buzz," Aug. 6).

Some analysts say the split will lead to less campaign money for Democrats and perhaps even an opportunity for Republicans to make inroads in the labor vote. "This put labor up for grabs in American politics again," Peter Morici, a business professor at the University of Maryland, told the Associated Press.

Which gets to the real problem for Democrats: Despite Rep. Pelosi's contention, what's eroding is not the nation's manufacturing base; it's her party's political base.

Timothy Lamer
Timothy Lamer

Tim is managing editor of WORLD magazine.

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