More Future Of Pittsburgh Manufacturing

To continue the conversation about Pittsburgh manufacturing, I thought today's post from the the Federal Reserve Bank of Chicago might help to advance the thinking:

By 2006, the U.S. economy employed about as many workers in manufacturing as in 1950, just over 14 million. And so, looking at manufacturing employment alone leads one to believe that the sector is in decline or at best stagnant.

However, a very different conclusion emerges if you focus on the amount of goods being produced by the manufacturing sector. While employment has changed very little over the past 60 years,[3] output in manufacturing has increased at an annual rate of 3.4%. Manufacturing output in 2007 (the recent peak in manufacturing output) was over 600% higher than in 1950.

Manufacturing can help to grow the economy, but it isn't much of a jobs creator. Exporting more will only exacerbate the lack of employment opportunities. This observation gets out the heart of German manufacturing and the importance of that country's demographics. The low demand for workers is a perfect match for the low supply of talent.

Manufacturing already located in Pittsburgh is unlikely to improve efficiency by relocating. Better would be an oversupply of talent that drives down wages. Of course, lower taxes would improve margins and make the industry more export competitive. But I don't understand how it would stimulate significant job creation and provide relief to the army of unemployed. Meanwhile, the din that the labor market suffers from structural issues gets louder.