Manufacturing in America is huge. Over the last 20 years manufacturing output has increased by almost 40 percent, and the annual value of production by U.S. factories has reached a record $2.4 trillion. And the trend continues upward. Taiwanese manufacturer Foxconn recently announced plans to build a massive manufacturing plant in Wisconsin that may eventually employ over 13,000 workers. But the company may struggle to find the talent it needs to staff up the facility. It’s estimated that the U.S. will need to fill 3.5 million manufacturing jobs over the next decade, but 2 million of these may remain unfilled due to a skills gap and other factors.
The 3-D Problem: Drugs, Delusion, and Demographics
Manufacturers increasingly struggle to fill jobs everywhere in America. A key reason is that increasing numbers of applicants — almost half in some areas — fail pre-employment drug tests. Surveys show that more workers are testing positive for drugs than at any time in the last 12 years, with the areas that are dense in manufacturing being especially hard hit. The effect isn’t just limited to current applicants, but is also contributing to a reduction in the labor force.
The Federal Reserve has linked increased opioid abuse to declining participation in the labor force among prime-age workers. The effects are likely to increase as more states legalize marijuana use. In 2016 the number of workers testing positive rose 11 percent in Colorado and 9 percent in Washington over the previous year.
Manufacturing jobs were at one time the ones where people who lacked a college education could earn a good living. But manufacturing has changed while the delusion persists that one can make a decent income with only a high-school diploma. To get a manufacturing job today requires having advanced math, writing, and problem-solving abilities. These require skills that far too many kids in high school simply do not develop. Siemens Energy had more than 10,000 applicants attend a job fair for 800 vacant jobs, but less than 15 percent were able to pass the reading, writing, and math screening.
Demographics are another major contributing factor, though the effects are not exclusive to manufacturing. The labor force participation rate has been steadily declining for the last 20 years. It was 67 percent in 1997 and now stands below 63 percent. A widely cited study found that the reasons include a declining birth rate and consequently an aging population, the recession of 2008, and increased use of pain medication among men of prime working age. Nearly half of all men not in the labor force take pain medication on a daily basis, with about 40 percent claiming that pain prevents them from working. Women of prime working age are also dropping out of the labor force. From a high of 60.1 percent in 1999, the labor force participation rate for women has dropped to about 57 percent.
What to Do?
There are no easy answers for how to address the shortage of manufacturing workers. Employers say education hasn’t evolved with what industry needs, which is partly true since manufacturing has become much more complex and many schools lack the resources needed to buy the equipment to teach advanced manufacturing skills. Apprenticeships may fill the gap. The Apprenticeship Registry maintained by the U.S. Department of Labor has listings for over 21,000 programs or about 500,000 apprentices, but that only represents opportunities for only 1.5 percent of 18- to 24-year-olds. But convincing students to consider the apprenticeship track is difficult. Employers supporting apprenticeships want students who have a strong academic background in math and writing, which many consider is only relevant to go on to college, though completing an apprenticeship typically means getting a starting salary of about $50,000 and having no student loans.
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Manufacturing jobs have an image problem. They are often not considered as desirable as other types of work. Many workers will leave these jobs if given the chance. Manufacturing workers are quitting their jobs at an accelerating rate, suggesting they’re leaving for better pay and working conditions in other fields. The reality is that about 40 percent of middle-skills jobs of the type that exist in manufacturing pay more than $55,000 a year. About 14 percent pay more than $80,000. By comparison, the median salary for a someone graduating with a bachelor’s degree is $50,000.
There is cause for hope. There has been an increase in the number of high-school grads applying for apprenticeships — up 35 percent from the last year. Widespread adoption of VR and AR technologies may make manufacturing appealing to job seekers. Pay increases may also attract more people to work in manufacturing but ultimately manufacturing jobs may just be automated away, which is already happening everywhere, even in countries like China.