Layoffs May Be White-Collar Now, but Here Come the Blues

Today on TAP: Ford signals a near-term downturn, and a long-term deeper problem.

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The company that invented modern mass production announced yesterday that there’d be a little less of that for the immediate—and not-so-immediate—future.

On Monday, Ford Motors said that it was laying off 3,000 workers—2,000 of them white-collar employees and the remaining 1,000 white-collar contract workers. The move was reported to be part of Ford’s efforts to transition to making electric cars—a move that will eventually require a reduction in its internal-combustion workforce. What’s more distressing to the unions representing that workforce at Ford and elsewhere—most prominently the UAW in the United States and IG Metall in Germany—is that building electric cars will require fewer workers than building fuel-powered cars, as the number of parts in an electric car is 30 percent lower than the number in gas-guzzlers.

There are two distinct problems on the job-creation front in manufacturing. The immediate one is less evident at Ford than it is at a range of microchip manufacturers, who evidently fear that a reduction in consumer buying power (see personal ad: Federal Reserve Seeks Recession) will lessen the demand for their product, and are beginning to cut back on production. To be clear, the three pieces of landmark legislation that Joe Biden has signed into law—the Infrastructure Act, the Chips Act, and the Inflation Reduction Act (which is really a Green Energy Investment Act)—will all boost manufacturing in the long term. They signal a long-overdue embrace of industrial policy and onshoring, which together add up to a clear repudiation of the past four decades of federal policy favoring financialization over domestic production and domestic-production workers. The impact of these policy reversals may be muted for a while as companies fear a recession, but the more enduring impact will be distinctly positive.

There is, however, a troubling limit to these policies’ benefits that isn’t ephemeral. It’s that production, and not just of electric cars, requires a steadily diminishing number of workers. Compare any photo of the shop floor of a steel mill or an auto or aircraft assembly line taken in the mid-20th century to any such photo today, and what leaps out is the radically smaller number of workers in the latter photos. Machinery and technology now do much of the work that once required humans—a substitution most visible in manufacturing, but also present in construction, retail, and both the more rote and the more precision-requiring sectors of various professions.

At a company like Ford, the white-collar layoffs are the tip of the iceberg. Underneath, eventually, are the blues.

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