When the administration this month released the good news about unemployment, some of the best news was that the long-suffering manufacturing industries made a healthy rebound.
But the bad news was that, despite the brisk clip, manufacturing employment isn't expected to recover completely.
Unemployment made its greatest dip in July since the recovery began last December. Particularly welcome was the decline in the unemployment rate for manufacturing workers, which plunged from 14.8 percent in December to 10.5 percent last month. In addition, consumer sales helped push down business inventories, an indication that manufacturing will be on the rise.
Although unemployment was down in the arena in which goods are actually produced, and industrial production itself has been up, the manufacturing sector still has a long way to go to return to pre-recession levels. The long-term employment shift is still moving away from high-wage, manufacturing jobs like seam-welding and steel-smelting and toward low-paying service jobs such as store clerks and secretaries.
Despite gains from June to July and gains over the last four months, there are still 53,000 fewer manufacturing jobs than there were a year ago. Service jobs, excluding those in government, increased by 810,000 during the same time.
"In the busiest part of the recovery phase, you're going to get a pickup in cyclical industries" such as auto production and metals, said Otto Eckstein of Data Resources Inc. However, looking beyond the business cycle, "the gain is not in those sectors at all," Eckstein said. More than 90 percent of new jobs will be in services and trade while 6 percent to 7 percent at best will be in manufacturing, he said.
"The problems of manufacturing remain" Eckstein continued. For the long term, steel and autos are as much in the soup as ever, he said.
"I can't tell precisely how many jobs will come back or won't come back," said Jerry Jasinowski, chief economist for the National Association of Manufacturers. Jasinowski said that if the recovery now under way is comparable to previous ones, by 1985 at least 800,000 manufacturing jobs lost in the recession still will not be filled.
About 3 million manufacturing workers lost their jobs during the recent recession, Jasinowski said. Most of those jobs that will return will do so within the next two years, he said, although he expects eventually all of them will be returned.
For example, auto industry unemployment is now almost to the levels of 1981, said Janet L. Norwood, commissioner of the Bureau of Labor Statistics. However, she noted that the peak levels of 1978 probably will never be repeated. The July unemployment report noted that auto industry unemployment dropped from 24 percent in November to 9 percent last month.
However, a Department of Labor economist said those figures don't mean that all of the auto workers were recalled to their old jobs.
"Some small percent leave the area," said Eckstein. Others "drift out of manufacturing" and take up jobs pumping gasoline or other unskilled jobs. "They're not going to be going into department stores," Eckstein said.
Others have left the labor force altogether, either by retiring early or just dropping out.
A lot will depend on interest rates. The recovery so far has been fueled by the automobile and housing industries, which will continue to improve through the remainder of the year, according to a report by Data Resources Inc. Consequently, industries that support housing and autos, such as motor vehicle parts, tires, fabricated metals and glass, construction supplies, lumber, hardware and plumbing materials, will depend on what those two major industries do. And they depend on the level of interest rates.
Data Resources predicted that overall growth next year and in 1985 will slow because of rising interest rates. "The industries most affected by this slowdown are the housing and auto-related industries . . . and durable consumer goods such as appliances, TV and radios and household furniture."
In addition, the strong dollar created partly by high U.S. interest rates could increase competition of American goods with relatively cheaper imports and hurt exports. "The poor trade outlook and the slowdown in the recovery keeps production in several industries below their pre-recession peak even by the end of 1985," Data Resources said.
Many of the manufacturing jobs lost will be gained by lower-cost robots and other forms of automation, economists said. Many of the unemployed manufacturing workers will be shifted into fast-growing, but generally lower-paying service jobs. An AFL-CIO report released last week confirms the trend against high paying work.
"As computers and robots take over more and more functions in the factory and office, a two-tier work force is developing," the report said. "At the top will be a few executives, scientists and engineers, professionals and managers, performing high-level, creative, high-paid full-time jobs in a good work environment.
"At the bottom will be low-paid workers performing relatively simple, low-skill, dull, routine, high-turnover jobs in a poor work environment."
The report also said that optimistic forecasting of job opportunities in the future "ignores the need to maintain and restore the strength and competitiveness of the nation's basic traditional, heavy manufacturing industries." It concluded that as many as 6 million of the nation's jobless may become a permanent "labor-surplus underclass."
According to Labor Department data, many of the industries that lost employment over the year tended to be in higher-paying areas while those with job gains tended to pay lower wages.
Within the last year, employment gains in manufacturing were: lumber and wood products, 89,000 jobs; furniture and fixtures, 27,000; electric and electronic equipment, 36,000; transportation equipment, 23,000; textile mill products, 9,000; apparel and other textile products, 42,000; paper and allied products, 1,000; printing and publishing, 17,000; rubber and miscellaneous plastic products, 35,000, and miscellaneous manufacturing, 2,000.
Employment losses in manufacturing were: stone, clay and glass products, 3,000 jobs; primary metal products, 68,000; fabricated metal products, 36,000; machinery (except electrical machinery), 160,000; instruments, 34,000; food products, 3,000; tobacco, 2,000; chemicals and allied products, 14,000; petroleum and coal products, 3,000; leather and leather goods, 14,000.
Of those areas with manufacturing losses since last year, all wages except those in leather and leather goods industries were well above the seasonally adjusted private average hourly earnings of $8.02. Half of those manufacturing areas with employment gains had weekly salaries above the average.
Services--including transportation and public utilities, wholesale and retail trade, finance, insurance and real estate and other services--have registered employment gains of 810,000 since last July. The areas with the largest declines--transportation and public utilities, down 98,000 jobs, and wholesale trade, down 52,000 jobs--had the highest average earnings of the services group. The remainder were well below the total private employment average. They included retail trade, up 112,000 jobs; finance, insurance and real estate, up 129,000, and other services, up 719,000.