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Communication Breakdown

12.11.2011

We have a long way to go on the communications front when it comes to economic development. Thomas Friedman on manufacturing in his column today in the New York Times:

“The days when Ford or General Electric would come to your town with a 25,000-person factory are over. That factory, notes Katz, is now 500 people operating machines and robots. Manufacturing can no longer carry America’s middle class.”

Now, I realize there is not much room for nuance in a weekly column, but going from a 25,000-person factory to 500 people and robots to manufacturing is dead in the span of three sentences strikes me as needlessly simplistic and a little misleading. We’re talking rhetorical leaps that would rival Usain Bolt taking up long jumping. Not only are there plenty of examples of new facilities topping 500 employees, even during the recession, but Friedman completely ignores the role U.S.-based operations play in leading global supply chains. This is not a choice of either blue collar production worker or creative class professional, as Friedman suggests. Yes, manufacturing in the U.S. has evolved in a way that dramatically reduces human capital requirements on the production floor. But U.S. manufacturers these days are sophisticated, global operations that require many types of workers–blue collar, white collar, and everything in between. The policy goal here should be: (1) to make sure that we’re doing everything we can to help U.S. firms compete globally and create jobs; and (2) to invest in workforce development programs that help workers move up the value chain to earn higher wages.

And then there’s this:

“We need to think of the future middle class as being generated not by factories “but by hubs,” argues Katz. These are networked urban areas like Austin, Silicon Valley and Raleigh-Durham, where people learn, imagine and create value rapidly by combining universities, high-tech manufacturers, software/service providers and highly nimble start-ups that collaborate and compete to invent things that make people’s lives more entertained, productive, healthy, educated and comfortable. The knowledge workers in these hubs will be the big profit generators. Their profits can and will support lots of other middle-class jobs, but those, too, will require more skills. They will require workers to bring something extra, something creative — “like the artisan” of old — to whatever job they do, says Katz, and through this extra command more pay.”

Like the artisan of old? I know I’ve been in the Washington bubble for a year, so maybe I’ve missed the sudden surge of self-employed cobblers in Austin who can afford homes in Tarrytown and store fronts in the Second Street District? While there is plenty of evidence showing that clusters drive new startups, job creation, firm profitability, and exports, there is a glaring lack of conclusive data showing that the benefits of cluster development result in higher wages, household incomes, or reduced poverty at the regional level. Clusters create spinoff jobs in other industries, as Friedman and Katz argue, but I’m not aware of any recent studies showing how these spinoff jobs are any different than the predominantly low-wage, service sector jobs that have been propping up many “high-performing” regions since the recession ended in 2009. Examples of cluster-based initiatives addressing this disconnect are slowly emerging–see the Pittsburgh winner of EDA’s 2011 Jobs and Innovation Accelerator Challenge–but at this point are only promising models.

Clusters are the right foundation for economic development, and manufacturing should not be downplayed. We need to do much better than Friedman’s column in explaining why they are worthy of future investment.