Rhode Island has finally stopped losing manufacturing jobs

It seems as if Rhode Island has been losing manufacturing jobs for about as long as anybody can remember. But it looks like that bit of conventional wisdom needs to be updated.

The number of manufacturing jobs in Rhode Island fell to 39,200 in January 2012, the lowest level since records began in 1990. However, manufacturing employment in the state has increased by 2,000 jobs over the nearly three years since then, and has now returned to the same level as in July 2009, a WPRI.com review of U.S. Labor Department data shows.

Certainly, adding 2,000 manufacturing jobs may not seem like a particularly big deal when you consider that Rhode Island has lost more than 56,000 manufacturing jobs since 1990. Yet what’s noteworthy is that this marks the first time in the last quarter-century that the seemingly endless slide in local manufacturing employment has come to a halt, as this chart shows:

As the saying goes, flat is the new up.

Again, these figures should be put in perspective: the number of factory jobs in Rhode Island peaked at an all-time high of 127,000 during the late 1960s, according to the scholar Neal Pierce, so today’s total is only about one-third of that level. And manufacturing’s share of overall employment in Rhode Island has slid from 21% in 1990 to 9% as of last month.

But this is still a noteworthy change for an industry that continues to attract a lot of attention from Rhode Island policymakers and average residents alike. It’s also different from what occurred after the previous two recessions, when manufacturing employment continued to drop during the recovery. Perhaps the impact of forcing Rhode Island’s manufacturers to compete with China has finally played itself out.

Also, it’s important to remember that just because local manufacturers employ fewer people doesn’t mean they’re producing fewer goods; that raises other concerns, though, as MIT’s Andrew McAfee has written:

Because of advances in sensors, software, chips, and the other components of robots, and because of lots of innovating and tinkering with them, the industries that deal with physical products — distribution, transportation, wholesaling, and so on — are about to become a lot more productive. My guess is that their output-vs.-employment graphs are going to start to look a lot like the manufacturing one above.

And because of similarly impressive advances in artificial intelligence, machine learning, crowdsourcing, and exploitation of Big Data, the same will in the near future be true of industries that deal with virtual products like knowledge, information, media, decisions, and communication. In many cases, their employment will start to trend downward even as their output rises over time.

I don’t know of any economic law that prevents this from happening. Yes, I’m aware of the “lump of labor fallacy.” But I think the more up-to-date fallacy is the assumption that a growing industry means that there will be more work for people to do, rather than for ever-more capable machines to do. The graph above shows that this has clearly not been the case for US manufacturing over the past 30 years.

In an era of astonishing technological progress, why won’t the same be true for other industries in the US and elsewhere? If you have some faith that employment must keep rising as output does, please leave a comment and explain where it comes from. Because the evidence, both past and present, is making me a skeptic.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi

More coverage of Rhode Island manufacturing on Nesi’s Notes: