Hiding in plain sight

Loss of manufacturing jobs contributed to our housing crisis

I recently attended an economic development breakfast with representatives from our state government and local businesses on the panel. The star topic, the one that got the most attention, was our severe housing shortage.

It’s very difficult, in many cases impossible, for people without really deep pockets to buy a house or even a condo. Rents are very high as well if you can even find an apartment. Many employers can’t hire because their new employees can’t find an affordable place to live.

The panel highlighted many of the causes: “We’ve become victims of our own success. New Hampshire is such a great place to live, everybody wants to live here. The demand is much greater than the supply driving up prices.” “Current interest rates put mortgages out of reach for many people.” “Local zoning ordinances limit homes and apartments for low-income people.” “Building luxury homes is far more profitable than building low-income housing,” etc., etc., etc.

From what I could see, everything everybody said was true, but there was one glaring cause nobody mentioned.

Back in the ’80s, Digital Equipment Corp. was the largest employer in New Hampshire and Massachusetts. They had manufacturing plants and office buildings everywhere. Today, the largest employer in both states is Walmart. In fact, they’re the largest private employer in the world.

What we’ve effectively done is send our high-paying manufacturing jobs to Mexico and the Far East, replacing them with retail and fast-food jobs. Unless you’re a store manager, it’s very difficult, if not impossible, to buy a house.

Yes, there’s no question that inflation and the factors mentioned above increased housing prices dramatically. Simultaneously, the purchasing power of middle-class Americans fell precipitously.

Back in the ‘70s and ‘80s, many of the technicians at Digital bought houses. It wasn’t even considered unusual. In fact, it’s like there was something wrong with you if you didn’t buy a house.

And it wasn’t just Digital jobs that disappeared. Lucent Technologies in North Andover, Mass., employed a lot of New Hampshire people. There used to be 12,500 people working in that location. Today, many of those jobs found their way to the Far East. Many of the high-tech companies along Route 128 in Massachusetts also followed suit.

This link, https://fred.stlouisfed.org/series/BOPGSTB, leads to a graph which shows our Balance of Trade in Goods and Services since the early ‘90s. You can see we’ve been on a continuous losing streak exporting our jobs and our money since then. If you wanted to look at a graph of just Goods, you’d see we’ve been losing since the mid ‘70s.

This is what’s killed the American Dream for so many people. Can you imagine how different things would look if we hadn’t exported our jobs and hundreds of billions of our dollars, if we had maintained a positive trade balance or at least a fairly equal one? We might still have a housing shortage, but it wouldn’t be so severe.

I recently heard a political leader celebrating the fact that we were getting rid of manufacturing jobs and moving to a service economy. Over a hundred years ago, Mark Twain said, “We’ll never get rich doing each other’s laundry.” He was right. Visit any third-world country and you’ll see the standard of living in a service economy.

Manufacturing is what created the American Dream. When we do it right, the sum of the whole is much greater than the sum of the parts, and the difference is what enabled us to pay living wages, enabling workers to buy or rent decent housing.

If we had kept more of our manufacturing here, our local school systems would have been forced to continue to teach kids how to add, subtract, multiply and divide in their heads. Regardless of where it’s located, manufacturing has become more and more automated. There aren’t that many muscle jobs anymore. Rather, they need people who can set up, adjust and program machines. People who can’t make change from a dollar aren’t qualified for such jobs.

Our current administration is using unpopular tariffs to try to effectively bring some manufacturing back and reduce our trade deficit. Unfortunately, our education deficit is making that even more of a challenge. Hopefully, we can rise to the occasion. Otherwise, our national debt, already at $38.4 trillion, will continue to rise, and this is simply not sustainable.

Ronald J. Bourque, a consultant and speaker from Salem, has had engagements throughout the United States, Europe and Asia. He can be reached at 603-898-1871 or RonBourque3@gmail.com.