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June 30, 2005

Fact for the Day

Michael Blowhard writes:

Dear Blowhards --

In 1950, New York City had over 1.1 million manufacturing jobs. Today, the number of manufacturing jobs in the city totals 112,000. (Source: The Manhattan Institute.)



posted by Michael at June 30, 2005


As usual Michael, with a simple statement of fact, you have opened a veritable ocean of discussion. You certainly have the knack!

So many factors of explanation for such a statement, but I suspect that the cornerstone begins with a minimum wage labor law. The whole composition of the working population changed in America due to the establishment of the minimum wage which protected the unskilled worker, and in turn created higher wages for the more formal workforce of skilled tradesmen. No small part of this formula is America's closing of the gender gap in wages.

No wonder then that America is losing its manufacturing base to countries with much more lax labor laws, where women and children are exploited. (*as an aside, I also have given consideration to the thought of how manufacturing plants produce pollution and nasty by-products that wreck havoc on water tables, etc. Third world countries could care less about industry standards for pollution control like the US does, and thus the potential for global environmental catastrophe is huge.)

The industrial revolution gave rise to the middle class; without manufacturing and its subsequent employment, will the middle class splinter once and for all into either the upper or lower classes?

This philosophical stone could gather much moss...

Posted by: Cowtown Pattie on June 30, 2005 12:43 PM

I agree with some of what Pattie wrote, with a few teensy substitutions -- It should be:

"the minimum wage, which hurt the unskilled worker" and

"more lax labor laws, where women and children are allowed the opportunity to better their condition."

Posted by: Glen Raphael on June 30, 2005 1:03 PM

So, Glen, are you a proponent of NO labor laws - like letting water(i.e. "the market") find its own level, so to speak? Not necssarily a finger-pointing, just wondering...

Posted by: Cowtown Pattie on June 30, 2005 2:07 PM

At least some of New York's loss of manufacturing jobs has been caused by factors more or less specific to the city as opposed to nationwide trends. In no particular order, these New York-centric factors include:
1) High wages caused by high union membership rates. It's not just that the manufacturers have to pay high wages to their own workers. Their vendors and contractors - cleaning companies, trash haulers, delivery services and so on - also are saddled with costly union contracts and therefore have to boost the prices they charge the manufacturers.
2) New York State's workers' compensation system, which provides benefits to injured workers that are among the nation's most generous. Needless to say, this leads to steep premiums for employers, once again among the top in the country. Manufacturers get hit particularly hard because the nature of their work often puts them into the high-risk category.
3) Meddlesome bureaucrats constantly throwing obstacles in the path of manufacturers and other businesses. It's almost amusing to walk past even a small construction site and see the vast numbers of permits that must be posted. Manufacturers often find that even with all else being equal, the comparative lack of red tape in many other areas makes relocation a wise move.
4) The unavoidable extra costs of conducting business in a densely populated city. Some of these are obvious, such as high rents, while others can be surprising to people outside the city, such as the double-parking tickets your delivery trucks seem to get all the time.
5) A local culture that has little respect for people who work with their hands. "Respectable work" in New York means being a suit-wearing financier (from the point of view of Manhattanites) or a social worker for a taxpayer-supported nonprofit (from the point of view of outer borough residents). But factory workers, even skilled craftsmen? This isn't Chicago or Cleveland. They count for nothing.
6) An inability to tap into the large immigrant population as an industrial workforce, at least compared to what could be accomplished. There are a variety of reasons for this, one major one being the propensity for immigrants (native-born Americans do this too) to get government benefits for specious "disability" claims rather than work.

Posted by: Peter on June 30, 2005 2:32 PM

In addition to the items on Peter's excellent list, one other reason often cited by organizations like the Manhattan Institute for the dearth of manufacturing in NYC is high electricity rates. (Electricity is a big cost for manufacturers.)

- - - - - - -

Also, I think it's important to think through the degree of obsolescence" (or, at least, outmodedness) of NYC's manufacturing neighborhoods themselves. While item #4 of Peter's list talks about some of the problems, these seem most relevant to manufacturing in Manhattan (as in the garment trade). But a very large part of NYC's manufacturing sector was/is located in the outer boroughs, particularly on the borderline between Queens and Brooklyn.

The problems in these areas are sometimes similar, but also somewhat different. For the most part these are heavy manufacturing zones that weren't bothered by high rents or double-parking. These districts were built-up in the age of railroads (sometimes with rail spurs going right down the middle of the street) and steamboats (with factories serviced by barges using canals, like the Gowanus Canal) and the factories were skyscraper (very labor intensive) loft factories. While these factories may have been the biggest and the best in, say, 1910, they became much less competitive in the era of superhighways, tractor trailers, huge single-floor factories (and their single-floor assemby lines), containized ships, etc.

Plus, many of the manufacturing areas of NYC in Queens and Brooklyn (which I believe were the really big manufacturing areas in NYC's manufacturing heyday -- NYC's "little Pittsburgh") never had direct rail connection to the rest of the USA. While transporation of goods by rail is not what it used to be, the lack of direct rail connection still makes these areas even less competitive. (In the old days, railroad box cars used to be put onto specially constructed barges and "floated" across to the mainland. This, obviously, adds a great deal to the cost of shipping merchandise and is barely done these days -- if at all.)

In the well-researched and thought out opinion of Jane Jacobs (especially in her "Economy of Cities") part of this is "natural" -- as, historically speaking, manufacturing usually has begun in cities and then has been exported to the countryside. But Jacobs also feels that cities need manufacturing to have well-rounded economies and that cities like New York can still be competitive in certain kinds of manufacturing. Boosters of urban manufacturing point to particular kinds of goods that don't need vast assembly lines to make them competitive and which benfit from close physical proximity to designers and/or customers.

Posted by: Benjamin Hemric on June 30, 2005 6:05 PM


Yes, I'm a proponent of NO labor laws. I think most workers would be somewhat better off without them, not only financially but also possibly in terms of safety.

Incidentally, I spent some time in '98-99 working in a factory in southern China, so I do have some direct personal experience with what cheap third-world assembly-line labor looks like.

Posted by: Glen Raphael on June 30, 2005 6:56 PM

That's interesting...about China. So, what was your impression of the factory and its output? Were there limits on the amount of hours employees could work, etc.?

Posted by: Cowtown Pattie on June 30, 2005 10:48 PM

Benjamin -
Very good points about Brooklyn/Queens manufacturing districts. From what I can tell, some manufacturing still goes on in those areas, though of course at levels far below those of the past. Plans to solve the rail transportation issue by means of a cross-Harbor tunnel have been poking around for years, but nothing's ever gone beyond the talking stage. Actually, I believe that the lack of easy highway access to many of those areas is an even bigger obstacle than the rail issue. And solving that problem would be well-nigh impossible.
By the way, the New York Cross Harbor railroad still operates some railroad car-float services.

Posted by: Peter on June 30, 2005 10:58 PM

Here's a picture of the factory floor:

The young women on the line were paid something like $20/month plus room and board. It's transitional employment, like working at a McDonald's here; they'd work for this factory for a few years and develop skills and experience that would make them valuable enough to get a better job elsewhere - there was very little promoting-from-within.

The factory floor was clean, safe, air-conditioned and well-lit - a huge improvement over most work environments outside the factory. A typical shift was about 10 hours with a few breaks. Not continuous work - there's an awful lot of sitting around waiting for some problem to be resolved. The job seemed like a great opportunity for the workers. Not great relative to, say, working at a Dairy Queen in San Diego, but great relative to working in the fields back home or working as a prostitute nearby - that seemed like the relevant metric. It was their best available job option, and that's why they took the job.

The assembly lines upstairs were wonderful as far as I was concerned. The part that *was* disturbing to my westernized eyes wasn't on this floor; it was down below where the guys worked the heavy machinery, making molds and such. Sparks and metal shavings flying everywhere as people weld and run a drill press and such. Safety glasses were available but as a matter of comfort or convenience most people tended not to wear them most of the time, and there was no insurance inspector forcing them to. Ick.

Posted by: Glen Raphael on July 1, 2005 12:39 AM

All the workers seemed really happy to be there; it was a social atmosphere as well as a work environment. People would decorate their work areas and continuously gossip quietly among themselves. A whole lot of smiling and giggling going on. But the main attraction (in Dongguan in the middle of the summer) really is the air conditioning - it was better than almost anywhere else in town including my hotel.

Big caveat, though: it's quite likely garment workers and shoemakers have worse working conditions than do electronics assemblers. Why do I say that? An electronic device has to work. If the environment is humid or full of dust or smoke or poorly lit or the workers are tired enough to be a little sloppy, the calculator that comes off the line at the end doesn't turn on or doesn't operate properly and is in fact completely useless. Electronics are unforgiving of error in a way that shoes and shirts aren't. (If the stitching on clothing is a little inconsistent the end product can probably still be sold at walmart.) So some of the reasons the work environment is nice have very little to do with concern for the comfort of the workers.

Posted by: Glen Raphael on July 1, 2005 12:57 AM

Interesting! Actually, except for the pay and OSHA, sounds a lot like the assembly plant at Lockheed - gossip and such!

Posted by: Cowtown Pattie on July 1, 2005 11:02 AM

The interesting thing is that they sent money home on that rate of pay, helping to support parents and siblings! Another difference with Lockheed is that the girls on the line were mostly around 16-20 years old -- roughly high school age in America. It was clearly a full-time job so it would be denounced as "child labor" in the US.

A note on observer bias - as a westerner, my presence was a source of amusement. They rarely got to see any Americans. So some of the giggling and gossiping I saw was probably about me.

Posted by: Glen Raphael on July 1, 2005 1:03 PM

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