Jobs: Even Less Is 'Made in America'

While job losses slowed in most sectors, manufacturing lost more jobs in May than in April. The outlook for the sector and its workers is dark

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Job announcements this week by two big U.S. companies provide a snapshot of the current state of U.S. employment. First General Motors, now in bankruptcy, said it would close or idle 14 plants across the country, putting as many as 20,000 out of work. Several days later, mega-retailer Wal-Mart (WMT) announced plans to create 22,000 jobs in 2009—including cashiers, sales associates, and pharmacists—to staff new and expanded stores.

The juxtaposition of these messages—from the country's formerly largest employer, GM, and its successor, Wal-Mart—sparked questions about how rapidly the economy is shedding well-paid jobs and to what extent they can be replaced. The U.S. Labor Dept.'s May jobs report, released June 5, provides more fodder for the debate. It showed that while job losses slowed in most private-sector industries, including retail, manufacturing employment fell at an accelerating pace—by 156,000 jobs in May, compared with April's loss of 149,000 jobs.

So while the stock market was buoyed by May's less-than-expected overall job losses, many saw the report as grim. "The concern is that we're replacing $25-an-hour jobs with $12-an-hour jobs," says Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland. Morici says this trend has been going on for decades in the U.S., but that "the recession is exacerbating this weakness in the economy."

How Many Well-Paying Jobs Persist?

There are many reasons the U.S. manufacturing sector has been in decline. In GM's case, the cuts reflect the long slide in the company's sales and market share. Job automation and competition from countries with lower wage rates contribute to the general problem. And economists such as Morici also cite the low valuation of China's currency, which makes it much cheaper to produce goods in China than in the U.S. "Manufacturing, including the auto sector, has been clobbered by China's [monetary] policy," says Morici, who is critical of President Barack Obama's policy toward that country. "The U.S. is appeasing, not challenging China."

Tig Gilliam, CEO of the North American group of temporary-help giant Adecco (ADEN.VX), disputes the notion that just because the service sector is doing better than manufacturing, growth will come only in low-wage jobs. "Some of the strongest industries for job growth are bookkeeping, finance, health care, and education," he says. "They're not all graduate-degree jobs, but they're well-paying jobs."