Can manufacturing help heal our economy?
In his State of the Union address, President Obama singled out manufacturing as a key to reviving the economy. But with unemployment still hovering at 8.2 percent, can one sector generate enough jobs and spur enough growth to heal our economy?
Manufacturing may not be a one-stop solution, but it can certainly make a difference, according to Cameron Jacobson, director of the National Industry Strategy Group (NISG) at University of Phoenix, and a marketing and management instructor at the University of Phoenix Chicago Campus.
“What’s really interesting about the manufacturing sector is that it has a 140 percent multiplier effect,” Jacobson says. “That means that every dollar that’s created in manufacturing has a 1.4 multiplier effect on the entire economy.”
Manufacturing stimulates the economy more than other sectors do because whenever a product is made, it doesn’t simply sit there — it has an afterlife. “In other words, every good that’s created in the U.S. then has to be transported and warehoused, and it has to be retailed. There’s also post-consumer service, so you have a big boost to the economy,” Jacobson explains.
What's really interesting about the manufacturing sector is that it has a 140 percent multiplier effect on the U.S. economy.
The sector also contributes to the economy by investing in new product development. When companies spend time and money researching and developing new products to put on the market, it fuels innovation, which also stimulates growth in the economy, Jacobson says. As a result, countries with the most innovation boast the highest standard of living.
Unfortunately, U.S. manufacturing has shrunk in the last 50 years due to competition from expanding overseas markets, with the U.S. gross domestic product shrinking from 27 percent in 1950 to 11 percent of GDP today.
Another factor holding our manufacturing sector back is the lack of skilled laborers in the U.S. “There are currently 600,000 jobs in manufacturing that are unfilled,” Jacobson says. “And the reason why those 600,000 are going unfilled is that our workforce doesn’t have the skills.”
With an eye on helping the manufacturing sector educate its workforce and boost our economy, University of Phoenix recently collaborated with the Manufacturing Institute to offer 20 full-tuition scholarships for manufacturing workers nationwide. Manufacturing workers can apply for one of these full-tuition scholarships to the undergraduate or master’s degree program of their choice.
Recently, the federal government has begun offering new tax breaks to the manufacturing sector to encourage bringing back jobs from overseas. But part of the process of bringing back manufacturing, says Jacobson, who has also worked as CEO and owner of a marketing firm, involves changing public perception about the sector.
“A lot of folks still think manufacturing means dirty nails and loud factories,” she says. In fact, manufacturing employees today work in clean, state-of-the-art facilities and boast some of the highest wages. “In 2009, the average U.S. manufacturing worker earned $74,000 annually, while the average worker made only $56,000,” Jacobson says.
That’s a message we need to explain better to young people in college because, Jacobson says, there are “a lot of misconceptions about the sector.”