Economy: The High Public Price Tag of Manufacturing Jobs


Two Trends Show America Heading in Opposite Directions — One of them Threatens to Bankrupt the Country


Dec. 12, 2016 –

Donald Trump’s election has prompted a surge in optimism for the economy and stock market, according to authoritative polls.

The CNBC All-America Economic Survey said 74 percent of respondents are excited about economic prospects – the highest level since 2008.

It said 56 percent of respondents now back the policies of Mr. Trump compared to 43 percent before his election.

The increase in optimism stems from 91 percent of Republicans and 54 percent of independents and 23 percent of Democrats.

When asked to name the No. 1 priority for Mr. Trump, 40 percent said keep jobs from going abroad.

Consumer confidence also soared in another poll – the University of Michigan consumer confidence survey.

Blue-collar worker worries

You might recall Mr. Trump’s biggest support came from blue-collar workers.

One reason for their support is clear.

More than 33 percent of U.S. manufacturing workers and 50 percent of manufacturing workers hired through temporary agencies are on at least one welfare program.

That’s according to research by the University of California, Berkeley’s Center for Labor Research and Education.

The aggregate price tag to taxpayers is $10.2 billion.

In 1991, 1 percent of manufacturing jobs was temporary. In 2016, it’s 9 percent.

In median wages, temp workers make $10.88 an hour. Permanent jobs pay $15.03.

“Manufacturing has long been thought of as providing high-paying, middle-class work, but the reality is the production jobs are increasingly coming to resemble fast-food or Walmart jobs, especially for those workers employed through temporary staffing agencies,” says Ken Jacobs, chair of the Labor Center and co-author of the report.

“While employment in manufacturing has started to grow again following the Great Recession, the new jobs created are less likely to be union and more likely to pay low wages,” he adds.

The five most-utilized benefit programs:

  • Medicaid
  • Children’s Health Insurance Program (CHIP)
  • Federal Earned Income Tax Credit (EITC)
  • Food stamps (the Supplemental Nutrition Assistance Program, or SNAP)
  • Household income assistance (Temporary Assistance for Needy Families, or TANF)

Additional key report findings:

  • Eight of the 10 states with the highest participation rates in public assistance programs that support frontline production workers’ families are in the American South; the other two states are New York and California. Mississippi has the highest participation rate, at 59 percent.
  • This high use of public safety net programs by frontline manufacturing production workers is due to low wages, not limited work hours. The families of 32 percent of all manufacturing production workers, and 46 percent of those employed through staffing agencies who worked at least 35 hours a week and 45 weeks during the year, were enrolled in one or more public safety-net program.

Economic solution

The obvious solution to the low-wage manufacturing-job and public-assistance situation: Grow the economy.

Despite claims of Democrats and media pundits, President Obama is not leaving Mr. Trump an ideal economy. True, Mr. Obama assumed a financial crisis and recession.

The unemployment rate was 10 percent and in his eight years 14 million jobs were created. But federal data shows a majority of jobs is only part-time.

In the first 26 quarters of Mr. Obama’s recovery, the gross domestic product only increased an average 2.1 percent.

President Reagan faced a much tougher situation than President Obama – a 10.8 percent unemployment rate, double-digit interest rates and a debilitating recession. But his policies led to 19 million jobs and fuller employment.

Unlike the tepid Obama recovery, in the first 26 quarters of Mr. Reagan’s recovery, GDP exploded to an average 4.6 percent annually.

Like President Reagan, Mr. Trump knows he has to clear a path for companies to invest and increase salaries.

To spark economic and business growth, three key strategies:

Decrease the business tax rate from 35 percent to 15 percent and will eliminate the corporate alternative minimum tax.

Reform the regulatory code and revoke all over-reaching Obama executive orders that kill jobs but fail to enhance public safety.

Implement cost-cutting measures and reduce the skyrocketing national debt.

From the Coach’s Corner, more public-policy articles for economic solutions:

Downward Revision of GDP Should Set off Alarm Bells — To gauge the health of America’s economy, the gross domestic product (GDP) is, of course, an important indicator. It’s been revised downward — again.

Governments – from Cities to Federal – Dangerously in Debt — The U.S. economy has been slowly mending. However, the situation is bleak for governments at all levels. Why? High debt is dangerous and economic growth is dreadfully slow. This is best illustrated by the enclosed U.S. Debt Clock.

Ideas to Accelerate Slowest Economic Recovery in Decades — Most voters are likely to vote their pocketbooks. So for them the positive spin on the economy by Hillary Clinton and President Barack Obama doesn’t reflect reality.

Analysis: Trump’s Vision to Fix Trade Deficit, Create Jobs — Donald Trump acts positively: Americans are tired of the reign of politically correct terror, the movement for income redistribution, and the massive loss of good-paying jobs.

5 Shocking Lessons from Donald Trump’s Taxes — In analyzing the mess from the mud-slinging over Donald Trump’s taxes, we can reasonably arrive at five conclusions.

“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

-Ronald Reagan


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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.





Photo courtesy markuso at www.freedigitalphotos.net


Why Manufacturing Jobs Are Beginning to Come Back to U.S.



Reshoring is underway. Forty percent of manufacturers have moved their operations back to America from China and India, according to a 2012 academic study sponsored by the Council of Supply Chain Management Professionals.

“Going overseas is not the panacea that it was thought of just a decade or so ago,” said Tobias Schoenherr, assistant professor in MSU’s top-ranked Department of Supply Chain Management.

ID-10087387 Stuart Miles“Companies have realized the challenges and thus are moving back to the United States,” the study co-author said.

Why?

He said the respondents – involving 319 manufacturers – cited labor costs, oil prices, transportation costs, political instability and other reasons.

Other factors included the attrition of intellectual property as well as poor product quality.

Those are challenging problems exacerbated by differences in time zones, languages and cultures.

The reshoring trend includes aerospace and defense; industrial parts and equipment; electronics; and medical and surgical supplies.

“We were surprised by the large percentage of firms indicating that they are considering reshoring,” said the researcher.

Thirty-eight percent of respondents explained that their competitors have also brought back jobs.

More good news:

“From my communication with some firms, I also sense a genuine desire to help the U.S. economy and to bring back jobs,” he added.

Other study co-authors: Wendy Tate and Kenneth Petersen of the University of Tennessee and Lisa Ellram of Miami University (Ohio).

From the Coach’s Corner, related reading:

Strategies for Manufacturers to Increase Profits — When it comes to revenue for capital-equipment manufacturers, the key pivotal factors are innovation and service levels. It might be an obvious conclusion, but it’s confirmed by the IDC Manufacturing Insights’ 2013 white paper on the global capital equipment manufacturing industry.

Your Supply Chain Can Meet the Expected Standards of Customers, If…A company that fails to meet customer expectations on store inventory and delivery has problems in supply chain management. Such a company minimizes its profits. Worse, it’s a red flag about competitiveness and long-term sustainability. For many consumers – on a mass basis – expectations of fast service started a few decades ago with McDonalds.

Why Kaizen Philosophy Works in Lean Principles for Business and Public SectorLean thinking has become imperative for business and government. Budgets are strained, but pressure continues to mount for better customer service. The bottom-line: Both the private and public sectors need to save time and money while providing exemplary service – with existing resources.

Developing Trends, and Solutions for Manufacturing SuccessU.S. manufacturers are getting a reminder about how to be successful – it’s important to evaluate whether they have the human capital, processes, equipment and strategic plans for success. 

Study: Why Lean Manufacturing Principles Often Don’t Work — Many businesses love cutting waste and costs for profits by using lean manufacturing principles, but many global manufacturers have failed. The companies used the popular Six Sigma, Kaizen and Value Stream Mapping. But a study says the processes would work if implemented properly.

“The American consumer is also the American worker, and if we don’t do something to protect our manufacturing base here at home, it is going to be hard to buy any retail goods.”

-Lindsey Graham

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Photo courtesy of  Stuart Miles at www.freedigitalphotos.net

Seattle business consultant Terry Corbell provides high-performance management services and strategies.