The Divisive Election Reflects a Divided Economy

Last Sunday’s New York Times Magazine carried a story about how the Amtrak ride from New York City to Washington offers a microcosm of the new American economy: at either end of the trip, prosperous cities fueled by government and finance, and in between, struggling cities plagued by high unemployment. This portrait represents the challenge that confronts the second term of the Obama Administration.

The article correctly points out that the nostalgia for good-paying manufacturing jobs, expressed so often in campaign speeches during the previous months, overlooks the reality that “the dollar value of goods made in America is at an all-time high of $1.9 trillion, just about even with China. The catch is that the number of American workers needed to create all that value has dropped steadily. In the mid-1940s, more than half of the New Jersey work force was in factories; today around 7 percent [are].” Modern manufacturing facilities employ “a handful of highly trained workers guiding machines that return huge value to shareholders while all the time finding ways to produce more goods with fewer workers.”

The writer, Adam Davidson, notes that the train ride also offers views of shiny office buildings housing “law firms and engineering companies and I.T. firms.” He is mistaken when he identifies the workers in these buildings as having “nothing to do with manufacturing.” That is true for many of these office workers, certainly, but the nation’s high-dollar-value manufacturing industry depends on engineers and I.T. workers who apply new technologies, as well as lawyers who work out contracts and fight patent infringements, to keep their companies competitive.

It’s highly significant that General Motors has done a U-turn on its previous trend of outsourcing information technology jobs, according to an article in MIT’s Technology Review. When GM’s current chief information officer came on board in February, 90 percent of the company’s I.T. work was being done outside of GM. Now GM plans to open four software innovation centers around the United States and may hire as many as 10,000 workers to staff them. This shift recognizes the fact that as manufacturing—from the design process to the assembly floor—has become thoroughly computerized and automated, and as the automobiles themselves have integrated many computerized components, it is expertise in I.T. that gives American carmakers the competitive advantage over foreign firms.

Where Davidson is very much on point is his observation that these white-collar service jobs are not as easily obtained as the manufacturing jobs of the old economy: “For people with advanced training, the service sector means an above-average wage, a below-average risk of unemployment and days sitting at a desk. For those with only a high-school [diploma] or no degree at all, far fewer jobs are available, and the ones that are pay poorly and disappear quickly.”

During the presidential campaign that just ended, you probably heard a lot about policy differences between the two major parties. Many of these policies had implications for the new economy outlined in this article: for education that will equip workers with advanced skills, for innovations in technology that will keep us competitive, for health care that will keep us productive at costs that are not crippling, and for infrastructure that will allow industries to function efficiently. We voters have now chosen government leadership that is highly divided on which policies will achieve these ends. Let’s hope that our leaders can move past the gridlock of the past several years and find ways to keep our industries strong without leaving behind a large segment of the population.