The importance of a strong manufacturing sector to our economy . . . and our democracy

This past week, the U.S. Depart of Commerce published an interesting report about the importance of the manufacturing sector for the U.S. economy. Manufacturing, says the report:

is a cornerstone of innovation in our economy: manufacturing firms fund most domestic corporate research and development (R&D), and the resulting innovations and productivity growth improve our standard of living.

Also very important is the fact that manufacturing jobs tend to provide higher pay and better benefits than their nonmanufacturing counterparts:

After controlling for demographic, geographic, and job characteristics, manufacturing jobs experienced a significant 7 percent manufacturing wage premium. In other words, all else being equal, workers in manufacturing tend to earn 7 percent more per hour than their counterparts in other private industries.

[Snip]

Manufacturing workers are more likely than other workers to have significant, highly-valued employer-provided benefits, including medical insurance and retirement benefits. Taking these into account increases the manufacturing compensation premium to 15 percent.

The report minds me of an intriguing argument Thomas Geoghegan makes in Were You Born on the Wrong Continent?, his book about European social democracy. Geoghegan makes several arguments for why the U.S. should develop an economic policy that encourages the creation of more high-skill manufacturing jobs and a stronger industrial base. But his most interesting pro-industrial argument is that, as he says, “without an industrial base, a democracy dies”:

An industrial base makes it easier to organize a labor movement. And a labor movement makes it easier to keep a social democracy in which people have a stake. Look at the voting rate in both the UK and the U.S., which wrecked their middle-class industrial bases. Then compare it with that of France and Germany, which did not. The more manufacturing there is, the more truly specialized skills people have. They’re “numerically” literate, not just facile with words.

Why is that good for democracy? When people get numerical-type skills, they have in effect assets or stakes to protect. They are “experts,” in a way, with a sense of self-worth. That’s why at least they will go out and vote. Besides, as long as there is an industry, at least there will be a labor movement, to pull them into civic life. (pp. 111-112)

I would need more information to evaluate this theory before I would fully sign on to it. But it certainly is a provocative one, and I strongly suspect it is true.

Kathleen Geier

Kathleen Geier is a writer and public policy researcher who lives in Chicago. She blogs at Inequality Matters. Find her on Twitter: @Kathy_Gee