Fighting Income Inequality Requires a Return of Manufacturing Jobs

A recurrent theme in this administration is often spellbinding rhetoric followed by … well, very little in the way of follow-through programs. Lately, there has been the inequality issue. Taken up once more in the State of the Union (SOTU) address, the remedy proposed was an increase in the minimum wage. Yes, it needs to be raised but to focus on it alone simply evades the complexities to be navigated to confront the challenges of inequality.

One major cause is the export of well-paid manufacturing jobs and with them proprietary technology and skills. Higher and higher level jobs (and concomitant expertise) are being exported. Ross Perot’s ‘whoosh of jobs’ in the wake of NAFTA will become a hurricane (or more accurately a typhoon) as the Trans Pacific Partnership (TPP) is realized. Yet, the administration sees no contradiction in promoting TPP vigorously and attacking income inequality rhetorically. NAFTA failed to render a level playing field for the American worker by excluding environmental safeguards, working conditions, worker safety and benefits (even on a purchasing-power-parity equivalence). The secretive negotiations for TPP are expected to do the same.

As a result, almost everything we use in our daily lives is made abroad: refrigerators, ovens, microwaves, dishwashers, TVs, computers, phones, fixtures, fittings, clothes, shoes, automobiles among which even iconic names often have innards imported, pet foods, toys, etc., etc. Gone with them are the jobs of the men and women who built them. Even high-end airplane manufacture is not exempt. Consider the new 777: While Boeing is responsible for a major portion of the structure, Mitsubishi, Kawasaki and Fuji are significant contributors furnishing fuselage panels and the wing center section. Other bits and pieces have been contracted elsewhere in the world including Australia, Brazil, Korea and Italy. The concept differs from Airbus which retains almost all its jobs and technology in Europe. Also in contrast, Boeing recently threatened to pack up and shift the manufacture of the 777x forcing machinists into benefits concessions.

Germany which exports few jobs follows a model encouraging job retention. Very simply a company’s supervisory board has equal management and labor representation (10 members from each side). It must approve major decisions, and it appoints the management board. No surprise that jobs stay home.

A line in the SOTU address mentions job training. Here too the long-standing German apprenticeship model, which develops highly skilled workers and offers alternative skills to a university education, deserves a closer look. But the least anyone undertaking such programs can expect is a job. Yet, just about every jobs report in the last half-dozen years shows most jobs generated are in the low-paid, low-skill service sectors like the hospitality industry and ambulatory care.

What we need desperately are policies and programs to bring back manufacturing jobs, and to restore our crumbling infrastructure. The latter not only alleviates unemployment but together with education and job training enhances the attractiveness of relocating manufacturing jobs to this country.

Now that would be a step towards reducing income inequality.

Arshad M. Khan is a retired professor. He can be reached at: Read other articles by Arshad M..