Loss of Manufacturing Jobs

Assume that Z, Inc builds a new factory to manufacture widgets.
There are many construction jobs created in order to build the
factory. When the construction is complete, those jobs are
“lost.”
With input from the workers, innovative ideas are used to make
the manufacturing process more safe and efficient. Dangerous
and repetitive work is automated. Productivity increases.
Some of this increase is due to workers becoming more skilled
in their assigned functions. Most of the increase is due to
automation. The workers should be paid more for the
productivity increases due to their increased skill. The
investors should be paid more for the productivity increases
due to their investment in automation. With continued
productivity increases the number of widgets required to meet
demand can be manufactured with fewer workers. Jobs are “lost.”
If workers demand higher wages than justified by their share of
the productivity increases, then management may decide to
increase automation or rebuild the factory where wages are lower.
Either way, jobs are “lost.”
This is a simplified description of how manufacturing matures
and how jobs are lost. I have known this since I read Future
Shock four decades ago. Those who have a vested interest in
wages would deny it and say that management and investors are
greedy. It is a simplified description because it ignores tax
policy, the effect of government regulation, competition from X
and Y, Inc and foreign companies and many other variables.
It is not a catastrophe to lose jobs in labor-intensive
industries – except to low-skilled workers – while higher-paying
jobs are created in high-tech, high-touch industries like
computers and medicine. The jobs are not “shipped overseas,”
but the manufacturing matured. China and India, with billions
more workers have lower wages because of the much greater
supply of available, skilled labor.