ISU researcher says many Iowa factory jobs not coming back

New technology, efficiency practices diminishing need

While Iowa manufacturing employment grew by 2.5 percent from 2010 to 2011, it is still 10 percent lower than pre-recession levels in 2007 and unlikely to fully recover, according to an Iowa State University researcher.

An annual review of manufacturing by the ISU Extension and Outreach Center for Industrial Research and Service found the state is gaining back some of the factory jobs lost during the most recent recession.

“That’s good news,” said Liesl Eathington, an assistant scientist in ISU’s Department of Economics. “Manufacturing remains a huge part of our economy, but it’s relying on less and less labor over time. That’s something that we’ve been seeing. It’s a pretty long-term trend.”

With changes in manufacturing, Eathington said it is possible that Iowa will never return to pre-recession manufacturing employment levels.

“As companies get more and more efficient, they need fewer workers and are more capital intensive,” Eathington said. “Even if we have a healthy and growing manufacturing sector, it doesn’t necessarily mean that it’s going to be a huge jobs producer for our state anymore.”

Robert Reich, former Secretary of Labor and professor of public policy at the University of California at Berkeley, writes in his daily blog that manufacturing employment is not likely to fully rebound as it did following past recessions.

“Even if we didn’t have to compete with lower-wage workers overseas, we would still have fewer factory jobs because the old assembly line has been replaced by numerically-controlled machine tools and robotics,” Reich writes in his blog post. “Manufacturing is going high-tech. The long-term trend is fewer and fewer factory jobs.”

The ISU review found there are more than 5,980 manufacturing businesses in Iowa and more than half of the state’s manufacturing jobs are located in non-metropolitan areas. The average manufacturing job in Iowa paid $51,120 in wages and salaries in 2011.

Manufacturing plays a significant role in Iowa’s exports with $11.7 billion worth of manufactured goods shipped to other countries in 2011.

Eathington said the recession changed the relationship between many Iowa manufacturing firms and their workers.

“A lot of them have gone to working with contract employees,” Eathington said. “We’ll have to wait and see if that’s just something that they did to be flexible in their payrolls when there was a lot more uncertainty in the economy.

“As things improve, maybe they wlll be moving the workers back to their own payrolls.”

The ISU annual manufacturing review is based on analysis of data provided by the Bureau of Economic Analysis, Bureau of Labor Statistics, U.S. Census Bureau and the International Trade Administration.