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Manufacture This

The blog of the Alliance for American Manufacturing

Retail's struggles highlight the need for effective job creation policy.

The New York Times published an interesting story over the weekend about Johnstown, Pa., a former steel town located 67 miles east of Pittsburgh.

Generations of Johnstown residents once worked in the city’s steel mills — “people could walk out of high school and into a steady factory job,” the Times notes. But like many factory towns, Johnstown saw many of its facilities close by the mid-1990s.

Many of those manufacturing workers ended up in retail, often working for big-box retailers like Walmart. But now, the rise of e-commerce is putting retail jobs in Johnstown and other blue-collar towns in jeopardy:

“Small cities in the Midwest and Northeast are particularly vulnerable. When major industries left town, retail accounted for a growing share of the job market in places like Johnstown, Decatur, Ill., and Saginaw, Mich. Now the work force is getting hit a second time, and there is little to fall back on.”

It’s not just the industrial heartland facing retail woes, of course — at least 89,000 retail jobs have been lost across the country since October 2016. Mall mainstays like The Limited and Wet Seal have shut their doors, stalwarts like Macy’s and J.C. Penney are also cutting jobs, and Sears continues to announce store closures (although it’s a pleasant surprise that the company remains in business at all).

It’s safe to assume that, like the residents of Johnstown, at least some of the retail workers losing their jobs now have been through a wave like this before.

When manufacturing suffered big job losses in the mid-2000s, retail saw job gains. Many of those new retail positions were filled with former factory workers looking to make ends meet. Retail jobs usually paid less than factory jobs, especially union jobs — but it was something.

Back in 2014, for example, my colleague Jeff Bonior looked at what happened to some of the manufacturing workers who lost their job because of trade with China. One of them was Wanda Perdue, who worked 37 years at the Stanley Furniture factory in Virginia.

After the factory moved operations overseas in October 2010, Perdue landed a part-time job at Walmart. She used Trade Adjustment Assistance to study for a career as an office administrator, but had no luck finding work. She stayed at Walmart, because it offered health insurance for herself and her husband.

Now the retail landscape is shifting, as online giants like Amazon grab market share and many traditional retailers conclude that they’ve overbuilt. Tens of thousands of retail workers are being laid-off — and more layoffs are likely to come.

Some pundits have pinned that the response to retail job loss has been unfairly quiet compared to that of manufacturing, noting that while politicians (most notably, the current president) often visit factories for photo-ops, they tend to ignore what is happening down at their local mall.

But debating whether manufacturing or retail workers deserve the most attention does everyone a disservice, as The Atlantic noted earlier this year:

“They are both victims of the familiar forces of globalization and technology, which have conspired to make clothes cheaper and accessible online. Both forces can make the country richer while specific areas suffer. For example, the loss of Ohio manufacturing jobs or an exurban department store can have severe local costs—like high poverty in an eastern Ohio steel town, or the shuttering of a downtown mall—while elsewhere the country flourishes, with rising industrial productivity and better access to cheaper clothes.”

Instead of debating whether manufacturing or retail workers are more deserving of our attention, we should be working to create opportunities that will lift all workers. Manufacturing and retail are more connected than we realize — indeed, communities are built upon multiple industries working together.

Take the steel industry. While it’s unlikely to ever employ the same number of workers as it did in the post-World War II era, America’s steel industry is still a power player. About 1 million people have a job in the United States because of the steel industry, and one direct steel job creates seven jobs in other economic sectors.

Or look at autos. The American auto industry supports 7.25 million jobs; one in 25 jobs nationwide are dependent on the auto industry. One auto factory job creates 11 jobs in other sectors.

That’s not even counting all of the positive economic impacts, innovation, research and development and other benefits that comes with manufacturing — or its role in creating other types of jobs, including in sectors like retail or hospitality.

That’s the case in Anniston, Ala., where Dad’s Bar-B-Que is supported by local manufacturing, as owner Thomas Coleman explained last year.

“Us small businesses have it harder than, I think, the large corporations. We need everybody to be working around us to be our customers,” Coleman said. “The more you Buy American, the more these people, our customers are working, they can come eat with us.”  

So, what can we do to support middle-class job growth across all sectors?

Infrastructure investment is a start. Not only will this spur big job growth in sectors like manufacturing and construction —a bill worth $114 billion annually could create 2.5 million jobs, for example — but doing so will help make America more competitive. That will create new opportunities for millions more across the country.

We also should invest in workforce training, helping Americans get trained and ready for the good-paying jobs that are out there (and the opportunities of the future). We should also work to foster innovation, ensuring that America remains at the forefront of technological advancements. And as always, we should enforce our trade laws, which level the playing field for U.S. jobs and companies against unfair foreign competition.

Above all, we should focus on finding ways to institute policy that helps create good-paying middle-class jobs for all Americans, whether they work in manufacturing, retail, hospitality, health care or other sectors.

An us-versus-them mentality is not useful — we all benefit when opportunity is extended to all.