Are Good Manufacturing Jobs Bad News for Education?

Here’s a fascinating new working paper from Yale economist David G. Atkin, called “Endogenous Skill Acquisition and Export Manufacturing in Mexico” (abstract here; PDF of an earlier version here). The gist:

This paper presents empirical evidence that the growth of export manufacturing in Mexico during a period of major trade reforms, the years 1986-2000, altered the distribution of education.  I use variation in the timing of factory openings across municipalities to show that school dropout increased with local expansions in export manufacturing. The magnitudes I find suggest that for every twenty jobs created, one student dropped out of school at grade 9 rather than continuing through to grade 12.  These effects are driven by the least-skilled export-manufacturing jobs which raised the opportunity cost of schooling for students at the margin.

It makes sense, of course, that students on the margin might happily abandon school in favor of a good job. But is that necessarily a bad thing? How should a society balance jobs and educational ambition? And who should be thinking harder about this issue — India or China? Or perhaps the U.S.? Here, from today’s Times, is a long article about how the Japanese automaker Nissan created thousands of jobs in the U.S., how perhaps American tech firms might consider doing the same:

For years, high-tech executives have argued that the United States cannot compete in making the most popular electronic devices. Companies like Apple, Dell and Hewlett-Packard, which rely on huge Asian factories, assert that many types of manufacturing would be too costly and inefficient in America. Only overseas, they have said, can they find an abundance of educated midlevel engineers, low-wage workers and at-the-ready suppliers.

But the migration of Japanese auto manufacturing to the United States over the last 30 years offers a case study in how the unlikeliest of transformations can unfold. Despite the decline of American car companies, the United States today remains one of the top auto manufacturers and employers in the world. Japanese and other foreign companies account for more than 40 percent of cars built in the United States, employing about 95,000 people directly and hundreds of thousands more among parts suppliers.

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  1. Aditya Jayaram says:

    Interesting article . I work for McGladrey and there’s a annual report on the State of Manufacturing on the website ” ” with insights from industry experts it offers good information readers will find useful.

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  2. John Doey says:

    Hidden due to low comment rating. Click here to see.

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  3. Mike B says:

    This is related to something I noticed when it came to well paid and secure low skill Union jobs such as toll both or transit station agents, doormen, food service personnel, etc. Basically is it counter productive for a society to provide high compensation to employees in low skill jobs where the supply of replacement workers for such jobs are high. Someone who is in a high compensation, low skill job is clearly getting a deal as their compensation is above that dictated by supply and demand. Therefore people given the opportunity to take one of these jobs will tend to seize it and then hold onto that job even when presented with other opportunities, normally considered by other workers to advance a career. This includes forgoing college, continuing education or changing jobs, locations or industries. Eventually the protected low skill worker may end up with lower late career compensation due to the forgone opportunities or may end up structurally unemployed if market forces cause the elimination of their job or the reduction in compensation to market rates.

    In my opinion the expectation of life long, low skill employment has been one of the critical factors that has so hobbled the US labor market. For the last 30 years those who were promised employment in return for hard work have been having to adjust to the reality that skills are valued, not a pair of strong hands and a pulse. However so much of the American psyche is geared to the idea that “hard work” is all that is necessary for success.

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  4. Nosybear says:

    This is not a new phenomenon: My father quit school in rural western Kentucky in the 1950’s to go to Gary, Indiana to work in steel mills, as did many of his contemporaries. As long as education is not a priority in a country, as is true here, paying jobs win. In our case, the next generation, the generation with the means to educate themselves and without the subtle pressure needing to eat and keep a roof over ones’ head brings, chose education over early work. Get out of the ivory tower, guys. Given a choice between food and education, food wins. Only if the job requirements specify education does education eventually win.

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  5. Enter your name... says:

    Is it a bad thing for students to stop school in favor of a job? It depends in part on which students are dropping out, and how long that low-skill opportunity will persist. You don’t want potential cancer researchers dropping out, but it probably doesn’t matter so much if the future janitor or truck driver drops out of high school.

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    • Ryan says:

      You are absolutely wrong. It is critical to the future of our society that ‘normal people’ get an education and can think for themselves. These people live in your community. These people vote. You don’t think its important for these people to be educated?

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      • Eric M. Jones says:

        The U.S. is alone among the developed countries to believe that universal education is a good idea. If you have ever been a teacher, you know that this belief is idiotic.

        Lots of kids should leave school early.

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      • Enter your name... says:

        I believe it very important to be educated.

        I don’t believe that most of the important parts of education happen in a classroom.

        I don’t believe that my grandfathers, neither of whom attended high school at all, were uneducated. I do think that they were great members of their community, politically savvy, financially successful, and able to think for themselves. “Attending high school” and “becoming educated” are not identical.

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    • Mike B says:

      One certainly can get ahead by jumping right into a good paying, yet low skill job, however you are taking a serious risk when doing so. It’s basically a game of musical chairs. As long as the music keeps playing you have a job. As soon as the music stops those with the least skills will be out on the street.

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    • James says:

      You also need to consider that the future janitor or truck driver is probably going to be a robot.

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  6. Roger Dooley says:

    It seems unlikely that well-paying manufacturing jobs would suck a lot of future cardiac surgeons and computer architects out of the academic talent pool. In general, a mix of good jobs – both for college grads and those who don’t pursue a degree – is no doubt a good thing. The main danger is for those who enter the workforce with an expectation that their job will last forever. That may have been true a couple of generations ago, but certainly isn’t the norm now. If they not only skip earning a degree but also fail to acquire marketable job skills, perhaps with appropriate certifications, they’ll find it hard to cope if their great job vanishes.

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  7. Ryan says:

    The worst thing you can do in a conversation about education is argue from the position that the main value of an education is to get a better paying job. It doesn’t matter if you make minimum wage working at McDonalds or four times that in manufacturing, the material wealth you create will not exist a few decades from now. However, the way the uneducated shape our society and the effects of their voting patterns will.

    The purpose of a general education is NOT to get a better job. Its to learn how to think and be a better citizen and individual. The value of this is enormous. Those who drop out of school early might make a few more bucks than if they had stayed, but the negative impact they have on society far outweighs any short term gains.

    And it’s not just that one person that’s affected. There’s a domino effect where their kids will be less likely to finish school. The negative aspects of this might still be felt generations down the line, all for a few dollars.

    I’m not saying our public schools are amazing, or that you can’t learn anything if you drop out, or that you’re necessarily a bad citizen if you didn’t finish high school. This is a defense of education in general, the classical Greek idea of an education being the necessary subjects of study for a free person. As long as we treat education as job training, out society will continue to decay.

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    • LB says:

      I am with you when you say ” As long as we treat education as job training, out society will continue to decay.” Learning should be for the sake of learning and has more to do with society as a whole than just learning about algebra and Shakespeare. I have the option to take a pretty good paying job or suck it up, possibly lose everything, have no benefits, go deep in debt and go to college to learn and get a job I truly want. I may be crazy but learning makes me happy and if I die early from cancer or something else because I couldn’t afford to go to the doctor, at least I will die happy.

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  8. diggler says:

    Perhaps I’m wrong here, but isn’t there a relationship between wealth and education? Where wealthier nations or peoples continue to get better or more education?

    In which case people who are have nots are better served taking better paying jobs now so their children can then have a better education and then ideally become wealthier themselves in the future.

    Do we not see the inverse taking place in America? America’s education is faltering while at the same time the manufactoring jobs are dissapearing (low skill yet good paying jobs). I get the impression that while leaving school for a job may not be in the best interests of maximizing the potential of an individual, it is perhaps in the best interest of a society as a whole.

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    • James says:

      Except that American education at the university level is not faltering: it’s still turning out tens of thousands of skilled scientists & engineers. That a great many of them (probably a majority) are foreign students is not the fault of the education system, but of a culture which systematically devalues science and science education.

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      • Enter your name... says:

        Or perhaps the problem is an American culture that systematically overvalues what above posters might call the “learning how to think” subjects (fine arts, English literature, minority studies), and then being “shocked, shocked to discover” that these don’t translate into well-paying careers. I think the reason that our immigrant students are pursuing STEM subjects is specifically because they know that there is money at the end of that program.

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      • James says:

        On the contrary, I would call most of the fine arts, English literature, minority studies, and such like “learning how NOT to think” studies. You’ll perhaps have noted, if you spend any time around university campuses, that there are few if any foreign students majoring in these areas.

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      • Don says:

        No – we always need more lawyers! Where would we be without psychology graduates working for marketing companies? Who is going to come up with things like Collateralized Debt Obligations if we don’t have economists? Every country needs needs to innovatively find new places to plaster advertisements and place products. Otherwise they will just wind up making things.

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  9. econobiker says:

    “Only overseas, they have said, can they find an abundance of educated midlevel engineers, low-wage workers and at-the-ready suppliers.”

    All are low wage salaries overseas. And overseas those companies don’t have to care about pollution issues or worker health,safety, social issues so there are less overhead costs for those items.

    Going offshore is really about the Wal-Mart effect: forcing vendors to build goods at 3rd world costs in order to allow the company to sell at 1st world prices. It has nothing to do with education.

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  10. Douglas says:

    “Are Good Manufacturing Jobs Bad News for Education?”

    It depends on the quality of the education system and how much people would have learned by staying in school a little longer vs. how much they would learn on the job. That’s often quite difficult to quantify.

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  11. Voice of Reason says:

    I guess it’s the age old philosophic argument of whether it makes sense in a society to compensate and divvy up resources based on merit and contribution, or if it makes sense to give better lives to people just because you can, and it wouldn’t hurt those who have as much, despite their being no practical reason beyond those people simply living better lives. From a utilitarian and humanist standpoint it makes sense, but from a long-term, “advancing society” standpoint, supply/demand rules.

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  12. Dan (Empirical Magazine) says:

    Another issue that pertains to this is the automation of manufacturing work, which could rise significantly in the near-future:

    The result, according to this article by John F. McMullen, would be a significant reduction of less-skilled jobs in the manufacturing sector and increased demand for higher-educated workers there.

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