Think Tank Head Faces Backlash Over ‘Offensive’ Remarks About US Manufacturing Workers

Sub-assembly worker Joel Dykema works on the sub-assembly of a transformer in the RoMan Manufacturing plant in Grand Rapids, Michigan, U.S. on Dec. 12, 2018. (Rebecca Cook/Reuters)

Concerns over U.S. manufacturing employment is an obsession for keeping “white males with low education” in “powerful positions,” says Adam Posen, an economist and president of the Peterson Institute for International Economics, a Washington-based think tank.

Speaking at a Cato Institute event on Oct. 6, Posen expressed his disapproval over the constant attention given to domestic manufacturing as opposed to other industries that have experienced job displacement, whether from economic downturns or automation.

“The fetish for manufacturing is part of the general fetish for keeping white males of low education—outside the cities—in powerful positions they’re in in the U.S.,” he said.

Posen explained that there hadn’t been a comparable concern for the displacement of blacks during recessions or single women who were replaced by computers beginning in the 1970s. These developments, he argued, didn’t receive much political attention.

“But when it started being the white male manufacturing people in the so-called Heartland, which by definition was not urban, then suddenly this was a crisis.”

Posen’s comments garnered backlash from many parties, including the Alliance for American Manufacturing (AAM), a non-profit organization to strengthen domestic manufacturing.

“Not only are Posen’s remarks stunningly condescending, his offensive argument is just factually incorrect,” the group wrote on Twitter.

“What Posen is trying to do, on behalf [of] big corporations who want to keep outsourcing jobs, is convince people we shouldn’t worry when ‘low education’ white workers complain when their livelihoods are taken away in order to pad some shareholder’s bottom line. DON'T FALL FOR IT.”

Rana Foroohar, a columnist and author, remarked that his comments show “how out of touch most economists are with how business actually works.”

“If you are a country today with no ability to make crucial goods or access them from allied nations, God help you,” she said.

Matt Stoller, author and director of research at the American Economic Liberties Project, also reacted to Posen’s comments on Twitter.

“I can’t think of a better recipe for inducing racial tension than having D.C. elites financed by Wall Street pushing offshoring and then saying that anyone who opposes having their community and livelihood destroyed is racist,” he stated.

Moreover, critics have pointed out that Chinese tech giant Huawei Technologies donated to the Peterson Institute between 2010 and 2018 (pdf). The think tank did not respond to The Epoch Times’ request for comment.

Workers assemble Ford vehicles at the company's Chicago assembly plant on June 24, 2019. (Scott Olson/Getty Images)

The State of US Manufacturing

The U.S. manufacturing industry has greatly transformed over the last 50 years when many workers would go to work at the local factory and construct everything from automobiles to steel.

National manufacturing output had steadily increased since 2000, topping $2.3 trillion before the coronavirus pandemic, which was higher than Japan ($995 billion), Germany ($699 billion), and South Korea ($406 billion) combined. However, during this same span, it has represented a smaller portion of the nation’s gross domestic product, accounting for about 11 percent, down from 15 percent in 2000.

But while domestic manufacturing has enjoyed greater output, employment levels peaked in 1979 at 19.5 million, falling to below 13 million in 2022.

Experts cite two reasons for this trend: China and technology.

Some of the largest companies in America shifted operations to China, resulting in 3.7 million lost U.S. manufacturing jobs between 2001 and 2018, according to the Economic Policy Institute (EPI).

However, there has been a gradual reversal since the COVID-19 public health crisis, with many U.S. companies leaving China and reshoring their businesses in the United States. The Reshoring Initiative reported (pdf) last month that American businesses are on track to return close to 350,000 jobs this year, the highest on record since records began in 2010.

From supply chain snafus to geopolitical challenges involving China, companies have desired to bring their operations closer to home.

Despite Posen’s contention that this has largely been a problem for uneducated white people, AFL-CIO chief Economist William Spriggs and his team reported that the China trade shock that decimated U.S. manufacturing exacerbated racial inequality by reducing the percentage of black employment and hire rate.

Black, Hispanic, Asian American, Pacific Islander, and white workers without a college degree all earn significantly more in manufacturing than in other industries, according to the EPI.

“For median-wage, non-college-educated employees, Black workers in manufacturing earn $5,000 more per year (17.9% more) than in nonmanufacturing industries; Hispanic workers earn $4,800 more per year (+17.8%); AAPI workers earn $4,000 more per year (+14.3%); and white workers earn $10,100 more per year (+29.0%). Manufacturing wage premiums are also substantially larger for all workers at the 10th percentile of the wage distribution,” the organization wrote in a Jan. 2022 report.

Technology and automation also played a significant role in both manufacturing and the overall U.S. labor market.

Economist Scott Sumner wrote in 2016 that 20 million manufacturing jobs had been eliminated through automation.

“When people say they are upset about trade, I think that what really bothers them is that automation is allowing us to produce 85% more manufactured goods with far fewer workers. That transition has been painful for many workers, but it’s not about trade,” he said.

In a working paper published by the National Bureau of Economic Research (NBER), automation has eviscerated up to 70 percent of middle-class jobs since 1980.

But while productivity has increased with fewer workers, it has been at the expense of employment.