(Reuters) – U.S. factories are hiring again, and Democratic President Barack Obama and some of his Republican rivals are pitching tax breaks to fuel a rebound in manufacturing and help rebuild a battered middle class.
A focus on manufacturing may be good politics, as Rust Belt states like Michigan, Ohio and Pennsylvania are likely to be hotly contested in the November 6 election.
But is it good policy?
Economists on the left and the right say promises to bring back factory work may yield more votes than jobs.
Industry experts say the United States is long past the days when steel mills, auto plants and machine shops boosted millions of unskilled Americans into the middle class.
“The days where you could get a job right out of high school, step on a (factory) line and make 35,000 dollars a year, 40,000 dollars a year, are pretty much not out there anymore,” said Rich Peterson, a vice president at Astro Manufacturing and Design here in suburban Cleveland.
Astro, which makes products ranging from torpedo fins to medical scanner beds, is a good example of the new face of U.S. manufacturing. The company is hiring, but it needs workers with advanced mathematics and computer-programming skills.
Decades of productivity enhancements mean that factories have little need for unskilled workers. Though the sector added 237,000 jobs last year, the Labor Department projects employment will shrink by 2020.
Service-sector employers, by contrast, will add 18 million jobs by then.
Economists say the middle class would benefit more from efforts to boost the economy as a whole, rather than a particular sector such as manufacturing.
Still, that hasn’t stopped some candidates from suggesting that a resurgence of factory work would revive the fortunes of blue-collar workers who have seen their prospects dwindle as low-skilled manufacturing jobs have left for China or Mexico.
Obama, backed by labor unions that play a large role in the manufacturing sector, has made the government bailout of the auto industry a centerpiece of his re-election campaign. He has called for tax breaks and other policies aimed at re-opening shuttered factories and bringing jobs back from overseas.
Republican presidential candidate Rick Santorum, a former senator from Pennsylvania, says manufacturers would create more jobs if their corporate taxes were eliminated entirely.
Like the auto industry’s resurgence, such proposals may strike an emotional chord with recession-weary voters who have suffered through two financial bubbles in the last 12 years.
But they would not be an effective way to rebuild the middle class, tax experts say.
“Manufacturing is something that’s tangible and is easily seen by the voter,” said Will McBride, an economist with the business-friendly Tax Foundation. “That’s what’s going on here – it’s not based on any sort of economic reasoning.”
Joseph Rosenberg of the non-partisan Tax Policy Center agreed.
“There’s a political aspect” to the manufacturing proposals, he said. “It sounds good, it has sort of a patriotic feeling to it.”