“A lot of policymakers, not everyone, but most, just missed the boat,” says Houseman. “We didn’t have the intelligent debates about what was going on with trade, etc., because a lot of people were just denying there was any problem, period.”
The problem is that manufacturing plays a significant role in the US economy. Manufacturing jobs tend to pay better, and create opportunities for learning skills that are particularly important to workers with less formal education. Factories also encourage innovation by attracting research and development (R&D) facilities, which need access to production lines to translate design into real products and to work out the kinks in prototypes. This is why when plants shutter and are moved overseas, R&D centers almost always go with them, says Houseman. Detached from the innovative feedback loop formed with R&D, US factories struggle to compete.
The received wisdom that the US was simply becoming a service-driven economy also lulled leaders into complacency about the long-term economic and social cost of lost manufacturing jobs. The establishment assumed that the apparent increase in the sector’s output and productivity would eventually solve the problem; where there was wealth, there would be new job openings to replace lost factory work. But, as a growing heap of research shows, workers hit by mass layoffs suffer unusually big wage losses throughout their careers, and many exit the workforce entirely.
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