A Good Jobs Agenda Should Focus on More Than Manufacturing

April 27, 2017

“It’s everything related to jobs… shipyards, ironworks, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks.”

-Donald Trump

Amid discussion of the Trump administration’s plans for bringing back manufacturing, we should not lose sight of one of the best opportunities for job creation: investing in the sectors of the economy that are already growing, so that everyone who wants a good job—including working-class white men and rural workers—can find one.

Smart industrial policy that focuses on the manufacturing jobs of the 21st century is important, as are policies that tighten the labor market overall, like effective monetary policy. But today, 80 percent of the jobs in our economy are in the broader service sector—everyone from baristas to IT to childcare workers. The Bureau of Labor Statistics projects that the service-providing (rather than goods-producing) sectors will add nearly 10 million jobs by 2024, which will be 95 percent of all jobs added since 2014. The health care and social assistance sector (primarily composed of social work and child day care services) will account for over a third of that job growth, reaching 21.9 million jobs—an annual growth rate more than triple that of jobs overall. Manufacturing, in contrast, is projected to fall to 7.6 percent.

Why not use this reality to focus our policymaking? Without more public investment, jobs in health care, day care, and social work will continue to be culturally devalued, which contributes to their low wages and poor job security. We can make these health and social sector jobs ones that workers can raise a family on, and we can work toward a labor market in which workers—including white men—want these jobs.

The BLS bases its projections on the current level of investment and real output growth; their projections cannot account for a real increase in wages and the job multiplier effect. Researchers at the Levy Institute estimate that a $50 billion investment in the social sector (specifically early childhood development and home-based health care) would create more jobs than any other sector-based investment, both directly and through indirect job multiplier effects. Using input-output analysis, they find that early childhood education and home-based care investment generates more than twice the number of jobs as infrastructure spending, and one-and-a-half times as much as green energy spending. Their complementary microeconomic analysis finds, unsurprisingly, that job creation would be strongest for lower-income workers and women, who are more likely to take the wages that the sector currently offers.

Even if new jobs are created, right now they likely won’t be good jobs—defined as jobs that pay a family-sustaining wage, with benefits. It’s no wonder that we’re longing as a nation for manufacturing jobs, because they pay better—but this is an institutional choice, not a fixed economic truth. Women and particularly women of color have always made up the majority of workers in the social sector, so deep, structural race and gender barriers have shaped how that work is valued. Recent work by Nancy Folbre and Kristin Smith demonstrates the enduring care penalty: Managers and professionals in care industries face a wage penalty of 14 percent and 20 percent, respectively, and because there’s no performance-based pay in care work, the analysis likely underestimates the penalty.

The institutional set-up of care work means that it is concentrated in government and private non-profit entities, and the cultural expectation that this is “women’s work”—where selfless dedication rather than selfish profit-maximization is expected—all contribute to the wage penalty. Further research is needed to estimate the impact of higher wages across the social sector, in terms of both direct and multiplier effects. But it’s a useful thought experiment: What if a preschool teacher or a home health aide made $50,000 a year? And what if all of these jobs had strong unions?

One major barrier to imagining the labor market of the future may be cultural. Do we assume that white men need manufacturing jobs—that they won’t take low-paid jobs that involve taking care of other people because those are for women and people of color? Don’t “real,” “manly” men work with their hands, making stuff?

But manufacturing jobs weren’t always considered family-sustaining or nostalgia-inducing. Once, they were dirty, dangerous, and low-paid, just like today’s service jobs. It took the labor movement and a resulting series of laws to transform that industry. We’re not nostalgic for the jobs in The Jungle; we’re nostalgic for the security that post-war industry brought to (mainly white) America. But that security should be equitably shared, and won’t be brought back by a false promise that coal and heavy industry will rise again.

Social sector jobs have several advantages:

  • They can be located anywhere. Rural areas have been left behind in the economic recovery since the financial crisis, and nonmetropolitan areas are just as well-suited as big cities for care work.
  • Newly created jobs don’t require new factories or physical infrastructure; compared to other sectors, it’s relatively easy to expand capacity.
  • The demand for this work will only grow over time as population demographics shift.
  • Public investment in this sector would not need to be filtered entirely through corporate America, where it would more likely be paid out to shareholders.

America has plenty of wealth. Forthcoming research by the Roosevelt Institute will present revenue estimates for tax reform policies that would provide billions of new public dollars to fund these investments. With smart tax policy reform, we could certainly pay for infrastructure and industrial policy as well as invest in the social sector. But we can’t ignore the fact that manufacturing jobs have been declining across all industrialized countries, and have even started to flatline in China.

That’s why, though frat-boy-in-chief Donald Trump may not see things this way, the best way to create good jobs for everyone in America is to invest in making sure the jobs of the future are good ones. We don’t need to appeal to the lost 1950s. Policymakers should focus on the incredible opportunity to create collective prosperity in the 2020s and decades to come.