Gene Sperling: Fukushima and wage stagnation sure have helped U.S. manufacturing

At today's Commerce Department-orchestrated investment shindig, National Economic Council Director Gene Sperling laid out his understanding of why manufacturing is starting to come back to the United States (or at least, why they think it's a trend).

It started in 2011, Sperling explained, when consulting firms started noticing trends that led them to advise their clients to consider investing more in the United States. Along with the natural gas bonanza, two factors helped change the equation. (The clip starts at 26:00).

One: Wage stagnation. "When you look in the future for the next 10 years, which is where you should be considering for a location decision, the wage productivity factor now has turned around and will favor the United States."

That's sure true. In what's often considered to be something of a curse for the American worker and the economy writ large, since fewer people can do the jobs of many and most don't have enough income to generate demand, wages and productivity have been separating for decades:


(Economic Policy Institute)

And two: The nuclear disaster at Fukushima. "There's also a greater realization of the more hidden or uncertain costs with having an overly diffuse and remote supply chain," Sperling said. "Perhaps that was spurred by the disaster in Japan."

Also true. The electricity outages that resulted from the reactor explosions threw a wrench into manufacturing networks all over the world, creating a huge headache for companies that source globally. Having your manufacturing close to your end market is one way to take risk out of the process.

"The U.S. may be the most competitive for location of jobs as it's been in two to three decades," Sperling said. "This is a moment of opportunity. If you have a positive trend, you want to put more wind at its back."

In other words: Japan's pain was our gain, and low wages have an upside. Hopefully.

Lydia DePillis is a reporter focusing on business policy, including lobbying, government contracting, and international trade, with a bit of urban affairs and infrastructure on the side.
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