Where Have the Jobs Gone?

Columnist Hale Stewart wrote last year in the popular Huffington Post online magazine, that improvements in manufacturing processes- rather than outmigration of jobs overseas- have resulted in the huge layoffs we’ve experienced over the past decade. Even though the national unemployment rate is currently over 9%, Stewart notes that manufacturing productivity has never been higher; we manufacture more goods today than we did a decade ago with only 4-5% unemployment. 

While looking at these numbers, I kept thinking about Chickasaw County in NE Iowa. Between 2000 and 2003 I was an SBDC director for UNI and worked quite a bit in New Hampton, watching as the region lost multiple manufacturers and hundreds upon hundreds of jobs through manufacturing downsizing and closures. Leading the exodus was a major Sarah Lee plant employing 650 workers. Sarah Lee had operated in New Hampton for decades and the closure was devastating to the residents, many of whom had parents, brothers, sisters and extended family employed there. Sarah Lee moved their Midwestern plant operations to Mexico and capitalized upon lower international wages.   But soon after the Sarah Lee property became a wasteland, a Con Agra cheese manufacturing plant up the road from New Hampton announced they were closing too. At its peak, the Con Agra plant had employed more than 350 people in tiny Fredericksburg, Iowa. Rather than taking those jobs overseas however, ConAgra built the same plant on the east coast with new advanced cheese processing equipment, allowing them to produce three times the amount of cheese as the old plant with one third the employees! Ultimately, between 2000 and 2003 Chickasaw County Iowa lost nearly 1,300 jobs- in a county of 13,000 people. Many of those displaced workers- from both Sarah Lee and Con Agra- ended up in my office trying to figure out how to convert years of manufacturing line expertise into some kind of small business.

Do we really understand what is happening and what it means for the coming decade between now and 2020? We can’t just sit back and wait for manufacturing jobs to return.  Child labor, weak environmental laws and other contributing factors will keep labor costs lower somewhere else into the foreseeable future; China or some other country will always have lower labor costs. If the economists  like Stewart are correct, the off-shore jobs aren’t really the problem anyway- it’s technology innovation.

For most of us, innovation is a just a buzz word disconnected from our daily lives yet, in  reality, innovation is all around us and sometimes it changes our lives in ways we don’t connect to jobs. Do you remember for example, when grocery store clerks hand stickered price tags on every item on the shelves and check-out clerks hand entered those stickered prices into cash registers? I do. The application of sensor technologies a decade ago was nothing short of revolutionary and the grocery industry was the first to benefit. Bar codes came imprinted on food products direct from the processor; check-out clerks simply waved those bar codes over a scanner and the price got entered into the cash register. No numeric mistakes; no time lags while the clerk tried to read the price on the tag. Those were huge changes. The grocery store didn’t have to put a price on every product and many of those stocking/pricing jobs became expendable- fewer checkout clerks were required to serve the same number of customers and the check out process became a ‘blip’ rather than a manual exercise associated with punching in $1.97.  Recently, a new grocery cart developed in Indiana can be pushed past a floor standing sensor and everything in the cart is instantly scanned- no hands- no humans- at all.  These technology innovations and subsequent industry changes are just getting started too; every industry on the planet is being cross-pollinated by technology innovation.  Think about this: the same grocery store scanner technology is useful to libraries to check out books, in health clubs to allow 24 hour access to gyms and even in hospitals where that scanner can insure the correct leg is about to be amputated. Same technology, different industries, fewer jobs. That is our future.

The future? Entrepreneurs.