For workers in U.S., factory losses have become severe

A boom in service jobs is keeping unemployment low as factories close.
WASHINGTON (AP) -- Three weeks ago, Dawn Zimmer became a statistic.
Laid off from her job assembling trucks at Freightliner's plant in Portland, Ore., she and 800 of her colleagues joined a long line of U.S. manufacturing workers who have lost jobs in recent years. A total of 3.2 million -- one in six factory jobs -- have disappeared since the start of 2000.
Many people believe those jobs will never come back.
"They are building a multimillion-dollar plant in Mexico and they are going to build the Freightliners down there. They came in and videotaped us at work so they could train the Mexican workers," said Zimmer, 55, who had worked at Freightliner since 1994.
That's the issue for American workers. Many of their jobs are moving overseas, to Mexico and China and elsewhere.
Just ask Tom Riegel.
He worked for 27 years making Pennsylvania House furniture at a factory in Lewisburg, Pa., until the plant shut down in December 2004. The production was moved to a plant in China, which kept making the furniture under the Pennsylvania House label for shipment back to the United States.
Rigel, 48, who has had health problems, hasn't worked since he lost his job running a molding machine. He says his prospects aren't good given the number of other furniture plants in the area that have suffered layoffs.
"It started with just a few pieces of furniture made in China. Then it snowballed," he said. "Manufacturing was built on the back of the American worker and then boom -- one day your job is gone."
What's the reason?
Even though manufacturing jobs have been declining, the country is enjoying the lowest average unemployment rates of the past four decades. The reason: the growth in the service industries -- everything from hotel chambermaids to skilled heart surgeons.
Eighty-four percent of Americans in the labor force are employed in service jobs, up from 81 percent in 2000. The sector has added 8.78 million jobs since the beginning of 2000.
Although these workers have been largely sheltered from the global forces that have hit manufacturing, that could change as satellites and fiber optic cable drive down the cost of long-distance communication. Today it is call centers in India and the Philippines but tomorrow many more U.S. jobs could move off shore.
Some economists say the United States is experiencing a normal economic evolution from farms to factories and now to service jobs.
"Every advanced economy has seen its employment in agriculture and manufacturing decline relative to services and America is no exception," said Daniel Griswold, an economist at the Cato Institute, a Washington think tank.
But others note that the loss in manufacturing jobs has been accelerating in recent years as the trade deficit has grown and America imports more and more products that used to be made here.
Princeton economist Alan Blinder, who was vice chairman of the Federal Reserve during the Clinton administration, says the number of jobs at risk of being shipped out of the country could reach 40 million over the next 10 to 20 years. That would be one out of every three service sector jobs that could be at risk.
Globalization debate
Those lost manufacturing jobs are fueling an intense debate over globalization -- the increasing connection of the United States and other economies.
That debate will play out in Congress over the coming months as the Bush administration tries to muster the votes needed to pursue its free-trade policies.
Opponents will seek increased protections for American workers against unfair trade practices and push such proposals as wage insurance and better job training for the victims of globalization.
Democrats, who took control of both the House and Senate in last year's elections, believe up to one-third of those lost manufacturing jobs are the direct result of America's soaring trade deficits, which have hit new records for five straight years.
A Moody's analysis found 16 percent of the nation's 379 metropolitan areas are in recession, reflecting primarily the troubles in manufacturing. There have been heavy job losses in a variety of industries from textiles and apparel to paper and furniture.
Critics contend China uses a variety of unfair trade practices from widespread copyright piracy of American products to keeping its currency undervalued by as much as 40 percent to make Chinese goods cheaper in comparison with U.S. products.
Actions against China
On April 9, the Bush administration, responding to growing political pressure, announced the latest in a string of tough actions against China. It filed trade cases with the World Trade Organization accusing China of erecting unfair barriers to the sale of U.S.-made movies, music and books and rampant copyright piracy.
But Treasury Secretary Henry Paulson and other Bush administration officials argue that despite the yawning U.S.-China trade gap, President Bush's free trade policies are paying off in new markets that have helped U.S. exports boom.
While manufacturing jobs have declined, manufacturing output has been rising. The difference is increased productivity, which means it takes fewer workers to make more goods.
"We are evolving to a point that we are manufacturing things that are not easy to manufacture. That require skills. We believe that is our future. And those are the manufacturing jobs that pay the most," Commerce Secretary Carlos Gutierrez said in an interview.
High-tech edge
High-tech industries, where the U.S. is still seen as having the edge, include pharmaceuticals, medical devices and airplanes.
But even high-tech industries are facing pressure from imports. The U.S. Business and Industry Council, which represents small- and medium-sized manufacturing companies, found that between 1997 and 2005, 110 of the 114 U.S. industries it studied had lost ground to imports in the U.S. market.
Just the threat of moving high-paying white collar jobs such as computer programmers and graphic designers offshore will likely add to pressures on Congress to erect barriers to global competition, which many economists believe would do more damage than good.

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