This is a key point often missed in the debate over whether it’s trade or automation that has displaced American jobs. Automation and trade are deeply entwined phenomena; trade increases pressures to automate or export simple jobs, but also incentivizes the U.S. to specialize and create more high-paying jobs.
In some ways, the whole narrative that manufacturing is disappearing is flawed, Hicks says. Manufacturing, like most other industries in America, has modernized and become more sophisticated over the decades. To be sure, it employs millions fewer people than it did in the past. But manufacturing still makes up about 12.5 percent of America’s gross domestic product, the same as it did in 1960. People who can work in modern manufacturing—those with computer skills and advanced degrees—are in demand. The average manufacturing worker now makes $26 an hour, according to the Bureau of Labor Statistics.
The catch is that traditional manufacturing workers don’t have those advanced degrees, and can’t get those jobs. “Maybe the problem isn’t so much the industry job losses, but that the men and women in manufacturing had much poorer educational attainment, and had been in less technically dynamic workplaces, Hicks told me. “ So, when the world changed, they could not.”
Half a century ago, almost no manufacturing workers went to college; they graduated from high school and went straight to the factory, where they could find a good job for life. Now, it’s becoming more and more common for manufacturers to hire workers who have some higher education. Nearly 20 percent of the manufacturing workforce had a bachelor’s degree in 2012, up from 16 percent in 2000. Just 10 percent had less than a high-school education, down from 14 percent in 2000. Nearly 9 percent of the manufacturing workforce has a graduate or professional degree.
Advanced manufacturing presents a glimmer of hope for Rust Belt states such as Indiana, which lost huge numbers of jobs over the last two decades, creating a class of people with few prospects. Manufacturing employment in Indiana fell by 35 percent, from 671,000 in 2000, to 439,000 in 2010. Yet Indiana has the highest share of advanced manufacturing in the country, according to a study from Ball State University, with 53 percent of manufacturing jobs in the state in advanced manufacturing. There are now 516,200 people working in manufacturing in Indiana.
Examples of advanced manufacturers in Indiana include Rolls Royce, which makes jet engines and employs thousands of engineers in Indianapolis; Cook Medical, which makes medical devices in an old RCA television plant in Bloomington; and Zimmer Biomet, which makes surgical products in Warsaw, Indiana, which is a national hub for orthopedic devices.
“In a higher-wage environment like Indiana, competing on lowest cost is simply not going to be effective,” Mohan Tatikonda, a professor at Indiana University’s Kelley School of Business, told me. “What can be done in higher-wage environments is making products that are more innovative, more customized to customer requirements.”