A More Vital Economy
A website devoted to strategies to revitalize the U.S. economy

Resources and Comments

This section is devoted to useful/interesting resources and thoughtful comments and criticisms on the issues discussed on the website. Suggestions for additional resources would be very welcome. These can be submitted on the "contact us" page. 


National Studies and Commissions

Added October 31, 2011:
The President's Council on Jobs and Competitiveness released its Interim Report "Taking Action, Building Confidence: Five Common-sense Initiatives to Boost Jobs and Competitiveness," in October 2011.  An earlier report had identified five broad areas of focus: invest in infrastructure and energy; encourage entrepreneurship and the number of young, high-growth businesses; encourage private investment in the United States; simplify regulatory review and streamline proposals; and ensure the United States has needed talent.  The Interim Report develops some specific recommendations under these broad headings.  Some of these relate to manufacturing specifically; for example, under ensuring talent availability, it calls for an accelerated version of the manufacturing skills certification system.  Other recommendations would affect manufacturing as well as other industries; for example, recommendations to encourage more foreign direct investment and accelerate visa processing for business travelers.  

In A Framework for Revitalizing American Manufacturing  the Obama Administration lays out its policies pertaining to manufacturing in seven broad areas. Many relate to education. Not all are specific to manufacturing.

Noteworthy: Here is the June 2011 report on advanced manufacturing by the President's Council of Advisors on Science and Technology.   The report is very strong on the benefits of the co-location of manufacturing production and manufacturing R&D.  It calls for an “innovation policy” as compared to industrial policy. The goal of the innovation policy would be to support innovations with potentially widespread applications. Key elements of such a policy would be more supportive tax and business policy; support for research, education and training; and an Advanced Manufacturing Initiative (AMI) that would invest $500 million per year in new technologies and infrastructure that would encourage broad-based innovations.  AMI would be a concerted government effort involving a number of departments (Energy, Defense, Commerce) and offices.  It is clear that a lot of players need to work together.

Boston Consulting Group’s  assessment of innovation climate.  It stresses the importance of the workforce, clusters, and encouraging R&D. 

BCG 2009 report on The Innovation Imperative in Manufacturing: How the United States can Restore its Edge.

The What Works Collaborative has a new (April 2011) report on the Federal Role in Supporting Urban Manufacturing.  The report focuses on small urban manufacturers.  In describing the challenges faced by these firms, the report echoes the concerns of the two studies of manufacturing in New England that appear elsewhere in the Resources section of this website. However, it also stresses land use issues, especially competition for land from non-manufacturing users. It calls for more attention to manufacturing in urban and economic development policies and planning.


March 14, 2013
Under Browne's Observations is a comment on Bureau of Labor Statistics data comparing manufacturing compensation costs with costs in 33 other countries from 1997 to 2011.  U.S. costs have fallen relative to most.
See BLS News Release, "International Comparisons of Hourly Compensation Costs in Manufacturing, 2011," December 18, 2012.

The 33 countries do not include China because of data problems.  However, BLS researchers have done a separate analysis of costs in China from 2002 to 2008.
See Judith Banister and George Cook, "China's employment and compensation costs in manufacturing through 2008," Monthly Labor Review, March 2011.

Added July 11, 2011:

Those interested in innovation in the United States will find the National Science Foundation’s report on Science and Engineering Indicators a valuable resource.  This contains a wealth of data pertinent to U.S. research capabilities and performance.  The report covers k-12 performance in math and science (Chapter 1), spending on research and development over time in the United States and across countries (Chapter 4), global production and trade in high tech (Chapter 6), and state performance on various indicators of R&D capacity (Chapter 8.)  The Overview provides a good summary, and raises concerns about U.S. loss of  ground in high tech exports – although not in value added.  My quick review did not reveal any obvious smoking guns that might reduce U.S. competitiveness. Although federal R&D expenditures have fallen relative to GDP, business R&D has increased; and the United States still spends more than most countries.  But there is a great deal of material to contemplate.  I recommend Chapter 8 to researchers interested in state data; the maps are informative and unusually responsive.

Manufacturing in New England

Advanced Manufacturing  in Massachusetts

Added January 9, 2012

Building Bridges to Growth: A Roadmap for Advanced Manufacturing in Massachusetts.

The government of Massachusetts released a report in November 2011 outlining an agenda for strengthening the competitiveness of manufacturing in Massachusetts, and specifically its advanced manufacturing cluster. A key element of the effort is the formation of a new partnership, the Advanced Manufacturing Collaborative.

Advanced manufacturing is manufacturing that uses advanced production techniques in conjunction with a highly skilled workforce and that offers both the efficiency of mass production and the flexibility of custom manufacturing. Massachusetts has many advanced manufacturing establishments, but the linkages among them are not as strong as they might be.  A key objective of Advanced Manufacturing Collaborative is to strengthen these networks, as well as ties to the state’s research establishment and investment community, with the ultimate goal of building a world-class advanced manufacturing cluster composed of highly competitive and innovative enterprises.

The Collaborative will bring together representatives from government and the private sector to share information and develop policies that will foster a vibrant advanced manufacturing cluster.  A particular target is small and medium-sized enterprises, although the engagement of larger firms is critical to the Collaborative’s success. Earlier discussions identified five priorities for attention: promoting the image of manufacturing; increasing the supply of manufacturing workers; providing technical assistance, particularly to small and medium-size enterprises; addressing the high cost of doing business, especially taxes and energy; and improving access to capital, again with a focus on small and medium-sized manufacturers.  (Most of these priorities were highlighted in the two earlier reports by Northeastern University and the New England Council and Deloitte that are referenced below; both are cited as background to the Roadmap.)

The state intends to take a leadership role in convening the Collaborative and providing direction and support.

Several elements of this initiative are noteworthy.  The Collaborative addresses two issues identified as critical by the studies by Northeastern and the New England Council – networks and perceptions that government is not interested in manufacturing.  The existence of networks is an important competitive advantage, particularly in a higher cost area.  It is an element of the industrial commons described by Pisano and Shih.  Once lost, it is difficult – perhaps impossible – to re-create. The Collaborative provides a vehicle for strengthening networks by building greater awareness of potential suppliers and customers and also for identifying threats from the loss of key network components. It is commendable that the Roadmap recognizes the importance of a New England perspective, since networks extend beyond state boundaries.

The Collaborative also provides a mechanism for surfacing manufacturers concerns about their relationship with state government. As the Roadmap notes, manufacturers are affected by state policy in many areas.  While the Collaborative will try to develop proposals to enhance manufacturing competitiveness, the very existence of the Collaborative provides advanced manufacturers with a voice in the halls of government and should help allay concerns that government is disinterested or hostile to manufacturing. The opportunity to be heard is important.

Future of Manufacturing in New England

Revised and expanded January 9, 2013:
In 2008 and 2009, two reports were produced taking optimistic views of the future of manufacturing in New England:
Center for Urban and Regional Policy (CURP), School of Social Science, Urban Affairs and Public Policy, Northeastern University, Staying Power: The Future of Manufacturing in Massachusetts, 

The New England Council and Deloitte Consulting, Reexamining advanced manufacturing in a networked world: Prospects for a resurgence in New England,

Both reports asserted that recruiting workers is a challenge for New England manufacturers.  Both advocated campaigns to improve the image of manufacturing, both to help recruitment and to address concerns of manufacturing CEOs that political leaders no longer cared about manufacturing. The New England Council report also stressed the importance of strengthening manufacturing networks.

In September 2012, the Kitty and Michael Dukakis Center for Urban and Regional Policy produced a follow up to its report. Staying Power II: A Report Card on Manufacturing in Massachusetts in 2012  looks at whether the message of the original report, which was based on data and interviews before the 2007-2009 recession, is still valid.  Manufacturing in Massachusetts, as well as the nation, suffered much sharper employment losses in the recession than were foreseen in the report.

However, Staying Power II generally reaffirms the conclusions of the earlier report.  Despite severe employment losses in the recession, manufacturing will remain an industry of considerable importance in Massachusetts. Manufacturing executives are generally optimistic about their future prospects and a majority expects their firms' employment to increase.  Moreover, because the manufacturing workforce is older, retirements will boost the number of job openings.  Staying Power II projects almost 100,000 job openings in manufacturing over the ten years 2012-2022. Many of these jobs will require only a high school degree, yet will pay relatively high wages.

Staying Power II does find that recruiting problems have eased since the earlier report, which was developed when the Massachusetts unemployment rate was very low.  Manufacturing executives no long find recruiting difficult, with the exception of skilled craftsmen.  More surprisingly, Staying Power II also reports that capital availability is not a widespread problem.

Staying Power II includes a summary of a number of 
initiatives that the Commonwealth of Massachusetts has undertaken to address the concerns of manufacturers.

How New England has Changed over the Past 40 Years

In the 2010 annual report of the Federal Reserve Bank of Boston, Lynn Browne writes about the transformation of New England over the past 40 years.  Although I am concerned about the loss of manufacturing jobs in the region, New England is certainly more prosperous –both absolutely and relative to the nation - today than it was back in 1970.  In describing the emergence of high technology industries in the region, I stress the interplay between federally funded research at the region’s leading universities and the supply of more highly educated young workers arising from the baby boom.

Energy and Manufacturing

PWC, in cooperation with the National Association of Manufacturers, has prepared a brief report on the positive effects of new shale gas extraction technologies on the manufacturing sector. While manufacturing generally will benefit from lower energy costs, PWC cites several instances of chemical companies planning investments in the very near term because of the lower cost of feedstock from shale gas.  Suppliers of drilling and related products are also benefiting today.

Robert Bryce of the Manhattan Institute argues in a opinion column in the Wall Street Journal on June 13, 2011 that increased availability of low-cost natural gas from hydraulic fracturing has the potential to provide a major boost to the U.S. steel and petrochemical industries, as well as provide jobs in mining. Bryce claims this extraction technology could lead to an "industrial renaissance."

Restoring American Competitiveness

Added February 2, 2012:
The Harvard Business School (HBS) has begun a multi-year project on U.S. competitiveness. An early output of the project is a survey of HBS alumni on this topic conducted by Michael Porter and Jan Rivkin. About one-third of those responding live outside the United States.  HBS alumni are quite pessimistic about future U.S. competitiveness.  Although the United States currently compares fairly well with other advanced countries along many dimensions, the alumni see the United States losing ground in the coming years.  The areas of greatest competitive weakness today are the complexity of the tax code, the effectiveness of our political system, and the k-12 educational system.  Moreover, respondents expect further deterioration in these areas relative to the situations in other countries. The United States is also expected to lose ground with respect to its logistics infrastructure, regulation and the availability of skilled labor.  The sources of greatest competitive strength today are the high quality of U.S. universities, the entrepreneurial environment, the innovation culture and capital markets. In these areas, the United States' relative advantage is expected to improve.  Survey respondents were asked to make one recommendation to improve U.S. competitiveness.  The responses were concentrated in tax-related suggestions, recommendations related to securing "talent,"  and regulation-related suggestions. In terms of more specific recommendations, simplifying the tax code and reforming immigration policy were suggested most frequently.

Added January 11, 2012:
Gary Pisano and Willy Shih, both professors in the Harvard Business School, wrote a disturbing article in the July-August 2009 Harvard Business Review asserting that outsourcing has undermined the United States’ capacity for innovation to the point that our country can no longer develop or produce many of the products that will be important to our future.  While others, myself included, have called attention to this danger, Pisano and Shih cite a number of examples of where this has actually occurred, including LCDs for monitors, TVs and mobile phones; batteries for consumer electronics and hybrid vehicles; and certain advanced materials. The article, "Restoring American Competitiveness," is short and readable; it can be obtained through www.hbr.org.

Pisano and Shih argue for the existence of “industrial commons” – collections of research, engineering and production capabilities – that support the development of new products and new industries in varied fields.  These industrial commons are typically geographically based.  Thus, they are akin to the clusters emphasized by Michael Porter, although Pisano and Shih seem to place somewhat greater emphasis on the different layers of capability – research through production. Also, in choosing the term “commons,” Pisano and Shih emphasize the public good aspect of these collective capabilities and the ability of individual firms pursuing their individual goals not only to benefit from other firms’ activities but also to damage the resource for everyone.  In particular, individual firms’ efforts to cut costs through outsourcing have destroyed the U.S. ability to produce many products, and with loss of production capacity has come a decline in the ability to innovate.

Pisano and Shih reject the idea that the United States can focus on research and development while production takes place in other countries.  Even in information technology, where this structure is often presented as the model, with Apple as the leading example of its success, they argue that Apple is the exception, not the rule. And outside of IT, the interplay between product and process innovation and between process innovation and production, including production in other industries, is critical. 

Pisano and Shih’s recommendations are less compelling than their statement of the problem.  On the government side, they call for more funding of both basic and applied research and for mobilizing more organizations to tackle really big problems.  However, the latter seems somewhat inconsistent with their observation that the U.S. government has often been most successful in spurring innovation when it has been a customer with a “concrete, compelling need.”  They also argue that the government should worry less about companies that are headquartered in the United States and worry more about companies that produce in the United States.  The latter still contribute to the industrial commons.  For business, they advocate more attention to innovation capacity, more focus on the long run, more collaboration and more tech-savvy boards of directors.

The same themes are repeated in David Rotman’s feature article “Can We Build Tomorrow’s Breakthroughs?” in the January/February 2012  Technology Review. However, Rotman cites several examples of efforts to address the problems identified by Shih -  in particular, advanced battery manufacturing in Michigan, which is heavily supported by the federal government, and a partnership between Sematech, the consortium of semiconductor companies, and the College of Nanoscale Science and Engineering at the University of Albany – SUNY to increase the efficiency and drive down costs of solar energy.  A critical element of this partnership is the availability of world class manufacturing facilities in which new technologies can be tested. A companion article in the same issue of Technology Review discusses the reasons for the success of “The Chinese Solar Machine.”  According to author Kevin Bullis, the Chinese have been able to build state-of-the-art factories quickly and inexpensively.  New equipment and economies of scale helped lower the costs of making solar panels, but Chinese companies also made their own improvements to panel design and the manufacturing process.  They are now investing in improving solar cells.

A provocative article in the same vein is the commentary by Andy Grove, former CEO of Intel, on "How America Can Create Jobs" in the July 1, 2010 issue of BusinessWeek. As the title indicates, Grove's focus is jobs more than innovation, but he describes the same phenomenon.

Added January 23, 2012:
The New York Times had an interesting article on why Apple's i-phone is not made in the United States. My primary take-away is the importance of a critical mass of diversified manufacturing capacity. The flexibility and responsiveness of Chinese manufacturers are also striking. A number of the comments are worth reading.  


Added March 25, 2013.
Steven Husted and Shuichiro Nishioka wrote an interesting article on the growth in China's share of world exports - "China's Fair Share? China's Growing Share of Global Exports." The United States and other advanced countries have lost share, while developing countries have generally not.  Some key findings are summarized in the observations section of this web s

Optimistic Perspectives

Added April 9, 2012
Tyler Cowen shares an optimistic perspective on the future of U.S. exports in “What Export-Oriented America Means” in the American Interest Magazine.  Cowen expects U.S. exports – and manufacturing production - to grow strongly because of rising productivity and U.S. expertise in the smart machines that enable these productivity gains. Cowen also sees important benefits from “fracking” technologies allowing greatly increased oil and natural gas production from shale.  Finally, Cowen expects rising incomes in developing nations, especially China, to boost demand for U.S. products.  Cowen is less optimistic about the prospects for more jobs in manufacturing, as intense competitive pressures and rising productivity will hold down payrolls even as production increases. An increasing proportion of jobs will be in what Cowen calls protected services, which serve a domestic market and productivity growth is relatively slow.  Cowen thinks that the implications of a two-sector economy - one-outwardly oriented and dynamic and one domestically focused and relatively static – have not received enough attention. 

Workforce Resources

Manufacturing Certifications

Added March 12, 2012:
The website for the National Association of Manufacturers' endorsed Skills Certification System is
The "Executive Brief" gives a succinct description of the goals of the program. However, I did not find the website very informative about how the program actually works.  Some of the websites run by states that are adopting the certification system are clearer about the system's virtues and workings.  In this regard, I found useful the report by Washington State's Workforce Training and Education Coordinating Board. It is Washington-specific but it provides a sense of how the system would be implemented.  The link is http://www.wtb.wa.gov/Documents/WashingtonNAMFinalReport.pdf.

For a general overview of the role of industry credentials, see the paper commissioned by Achieve Inc.  This paper emphasizes the large number of certifications currently available and the lack of information on use and effectiveness. It does not endorse any specific set of credentials and emphasizes the importance of academic rigor - and expresses concern that interest in credentials might crowd out attention to academics. While the paper seems somewhat ambivalent about industry certifications, it provides a useful overview and, in my judgment, highlights the importance of common standards.

Vocational or Career and Technical Education

Added March 16, 2012:
The National Center for Education Statistics produces as report on career and technical education about every five years.  The latest report, Career and Technical Education in the United States: 1990 to 2005 provides information about changes in participation in CTE. It also provides information on academic credits of CTE graduates compared to other students. It also tracks graduates over time and compares success in obtaining college degrees and other credentials, as well as employment outcomes.  The report includes chapters on post secondary CTE education and on adult learning, as well as on high school programs.

Added March 12, 2012:
Pathways to Prosperity:Meeting the Challenge of Preparing Young Americans for the 21st Century, a report by the Harvard Graduate School of Education, calls for more varied "pathways" to economic success.  It argues that the U.S. educational system stresses attending college as the sole route to prosperity and that many young people would be better served by alternatives that link learning more closely to work.

A white paper for the Pioneer Institute, Vocational-Technical Education in Massachusetts, shows that students attending vocational schools in Massachusetts compare favorably with students in general and college preparatory programs according to a number of performance measures. The high stakes MCAS tests forced vocational schools to increase attention to academics, with positive results. 

Added March 16, 2012:
Robert Lerman has written several papers and reports on apprenticeships.  In Training Tomorrow's Workforce:Community College and Apprenticeship as Collaborative Routes to Rewarding Careers, he calls for increasing the number of apprenticeships and for greater collaboration with community colleges. The Benefits and Challenges of Registered Apprenticeship:The Sponsors' Perspective is a survey of employer sponsors by Lerman and co-authors. 

General Workforce

April 11, 2012:
I found David Autor's 2010 paper on "U.S. Labor Market Challenges over the Long Term," to be a concise and persuasive statement of these challenges.  Autor highlights the polarization of the labor market into high and low skill jobs, the stagnation of men's educational attainment, and some of the social implications of these developments.

Harry Holzer takes issue with some of Autor's job classifications and argues that polarization is not as pronounced as shown in the Autor data.  Holzer shares many of Autor's concerns, but he finds that demand is strong for a number of middle skill jobs; these jobs often require some post-secondary training leading to a credential. 


 Low-income Populations

July 14, 2011 - Caroline Ellis, Editor of  the Boston Fed's Communities and Banking magazine suggests that visitors to this site who are particularly interested in low-income populations may wish to subscribe to C&B, which presents successful programs serving low-income populations and communities in short, readable essays. C&B is available in hard cover or online at http://www.bostonfed.org/comdev/c&b/index.htm. 
The Boston Fed discussion papers on revitalizing the city of Springfield, Massachusetts also have interesting insights on the challenges facing low-income populations and communities.  These may be found at http://www.bostonfed.org/comdev/springfield/index.htm.

 Manufacturing Workforce 

June 22, 2011 - Yolanda Kodrzycki, Director of the New England Public Policy Center at the Boston Fed, calls our attention to this article about the manufacturing workforce by researchers at the Chicago Fed.  It highlights an issue raised by the studies of manufacturing in New England: despite widespread job losses, skilled manufacturing workers are hard to find.

This Chicago Fed study of shortages of skilled manufacturing workers   finds that manufacturing is employing more highly educated workers than in the past.  But the manufacturing wage premium is not increasing in response to worker shortages. 

Manufacturing Output vs. Employment

The graph referenced below, contrasting the performance of manufacturing output and manufacturing employment, was provided by Michael Goodman, Chair of the Department of Public Policy at UMass Dartmouth.  Output has held up much better than employment. (An aside - the Federal Reserve Bank of St. Louis' FRED data base is a very valuable resource.)

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