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Manufacturing: A Silver Lining to the July Jobs Numbers


Will manufacturing jobs save the economy? Probably not for the youngest generation of workers.

MINYANVILLE ORIGINAL This morning's jobs report had a little something for everyone, politically speaking.

Mitt Romney chose to emphasize the household survey, which showed a small uptick in the unemployment rate, despite a 0.1 percentage point fall in the civilian participation rate.

"We've now gone 42 consecutive months with the unemployment rate above 8%," Romney said in a statement. "Middle-class Americans deserve better, and I believe America can do better."

Wall Street got a boost, with the major indices starting a huge rally because the jobs numbers came in considerably higher than expected. The Dow (^DJI) jumped 1.82% and the Nasdaq (^IXIC) climbed 2.16% by lunch time.

One bright spot shone through the numbers. The sector with the second-biggest gain in employment in July was manufacturing, after leisure and hospitality. The US gained 25,000 manufacturing jobs and 27,000 jobs in the hospitality business.

As Alan Kreuger wrote on the White House Blog:

After losing millions of manufacturing jobs in the years before and during the recession, the economy has added 532,000 manufacturing jobs since January 2010 – the strongest growth for any 30-month period since June 1989. Within manufacturing, motor vehicles and parts added 12,800 jobs in July, its strongest monthly growth since January 2011, partly reflecting fewer seasonal layoffs last month. To continue the revival in manufacturing jobs and output, President Obama has proposed tax incentives for manufacturers, enhanced training for the workforce, and measures to create manufacturing hubs and discourage sending jobs overseas.

The Obama administration's focus on manufacturing makes a lot of sense for the economy. Not only do manufacturing jobs have typically higher wages than service jobs, they also come with a higher 'job multiplier.' That is to say that manufacturing jobs support other industries. One statistic that pro-manufacturing people like to tout is that every dollar produced in manufacturing supports $1.43 in economic activity for other sectors and up to four jobs in non-manufacturing sectors are supported by a base of manufacturing workers.

Also, according to the Manufacturing Institute, this multiplier has an effect on jobs as well. The think tank estimates that in 2009, 6.8 million non-manufacturing jobs were directly supported by the manufacturing economy. So the growth of manufacturing employment is a definite plus from a macro perspective.

Paul T. Conway, the former Chief of Staff of the US Department of Labor and head of Generation Opportunity, an organization that seeks to mobilize the 'millennial' generation on labor issues, is glad to see an uptick in the manufacturing sector.

"What we are seeing is that the manufacturing upticks are very good things for those that went into trades, and vocational training, very good sign for growth from them," he said. "In today's world manufacturing is different from 30 years ago. It involves a great deal of work with computers and keeping up with changing technology. Manufacturing jobs require people that are pretty savvy and we are seeing a lot of young people seeking these jobs for the higher hourly pay."

Unfortunately for those 18-29 year olds who chose four-year colleges and the debt burden that this comes with, these jobs aren't easy to get. Generation Opportunity commissioned a poll that showed that 77% of people in that age group are delaying major life decisions such as buying a home, paying off debt, starting a family, or saving for retirement because of economic factors.

"The setback for careers is stunning," Conway said. "That's the human cost of a bad economy right there. It's gut wrenching."

Twitter: @vincent_trivett
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