The Political Economy of Job Loss in the United States, 1970-1980

Abstract

Many analysts have asserted that recent interregional shifts in investment and jobs in manufacturing are the product of variations in the socioeconomic characteristics of geographic regions. Conventional industrial location theorists tend to point to the market potential, physical characteristics, and human capital endowments of geographic regions. In contrast, neoMarxist and business climate theorists typically cite political-economic explanations related to the strength and cost of labor, the level of taxation, and the extent of social welfare provisions. Using state level data, I evaluate the relative empirical utility of these various explanations in predicting changes in employment in manufacturing between 1970 and 1980. The results provide partial support for the political-economic explanation and no support for conventional industrial location theories. In particular, the empirical evidence points to the importance of labor organization in promoting the relocation of manufacturing employment. Few transformations in the American economy over the past 15 years have received greater attention than the interregional migration of industries and jobs from the traditional industrial belt to new locations within the United States. Though many analysts assert that this rapid movement of capital and jobs is the product of variations in the socioeconomic characteristics of geographic regions (Bluestone and Harrison, 1982; Weinstein and Firestine, 1978), there is little agreement over which characteristics are the most important for investment or disinvestment decisions. Conventional industrial location theorists tend to point to the human capital, physical, and market-size endowments of geographic areas as the leading determinants of plant location (Miller, 1977). Neo-Marxist and business climate theorists tend to emphasize political-economic factors associated with the presence of labor unions and wage costs (Peet, 1983; Storper and Walker, 1983), the level of state taxation (Kieschnick, 1981), and the extent of social welfare benefits (Bluestone and Harrison, 1982; Piven and Cloward, 1982). In this paper I use state-level data to evaluate the relative utility of these explanations as they relate to