Candidates Hillary Clinton and Donald Trump have been sounding off about the loss of U.S. manufacturing jobs and how trade agreements that promise to make things better could really make things worse. Each one has argued that if elected, she or he will strengthen the manufacturing economy and bring back jobs. But making good on those promises is easier said than done.
Right now, there is a job crisis in America — but that’s not because of a lack of manufacturing job openings. The crisis is about too few workers to fill those jobs. If the next president does bring jobs back to these shores, he or she may have to bring back workers, too.
So, let’s consider some data.
While there are clearly trade-induced shifts in the job market that have affected some workers and major U.S. manufacturing industries — such as in furniture, textiles, and some parts of the steel and automobile industries — America has competed handily overall as a global player. In fact, since 1980 U.S. real manufacturing exports have increased fourfold, according to the President’s Council of Economic Advisors.
Obviously, the composition of America’s exports has changed. Perhaps of greater interest is that, thanks to the rise of the U.S. knowledge economy, the service sector’s exports have set the higher pace for U.S. trade. Trade in that sector has grown sixfold since 1980. The share of service-related exports increased from 18 percent in 1980 to 30 percent in 2014, while manufacturing’s share held right at 60 percent.
Of course, we shouldn’t forget that there are winners and losers when manufacturing exports are considered. Textiles and apparel are down; electrical machinery and aircraft are up. The data tell us that on the national level, the gains outweigh the losses. Services, which include finance, insurance, intellectual property rights, construction management and healthcare, are booming.
Clearly, the skill and educational requirements that equip one for manufacturing don’t easily lend themselves to the expanding service sector. And that’s where the rub comes in. Worker transitions do not come easily.
So America’s real job crisis, it seems, is not about manufacturing jobs, or even job losses more generally. It’s about finding a way to connect displaced workers with employers who are already looking to hire people with the right skill set.
Recent data from the Bureau of Labor Statistics show a growing gap between job openings and job hires since 2014. The current gap is 100,000 unfilled jobs. Apparently, there are just not enough qualified workers to fill the openings.
So what happens, if by some magic, a newly elected political leader does generate or “bring back” more job openings? The gap would only get larger, unless the happy leader also delivered workers with the right skills to fill the jobs. In the current environment, the U.S. challenge is not about jobs, generally speaking, it is about job dislocations in particular locations and equipping people for the changing world of work. The first step in solving the real problem is to stop focusing on the wrong one.