Economic Implications and Issues in Schwartz’s Article: “Manufacturing is a Bright Spot in a Subdued Job Report.’

Answer

Economic Implications and Issues in Schwartz’s Article: “Manufacturing is a Bright Spot in a Subdued Job Report.’

The economics of a country is determined by various factors among them demand and supply and their relationship. In the principles of micro economics, they are centered on aspects characterizing demand and supply as well as the role of consumers as the major shareholder. While it is important to understand the metrics involved in microeconomics, it is equally essential to evaluate the power of society and external forces such as the government in demand and supply. For instance, when evaluating aspects influencing demand, there are two main factors that come to play which include price and other conditional elements. Considering the issue of price, a high commodity cost will attract few buyers based on affordability issue. On the other hand, if individuals unable to afford a given commodity are added some few pounds in their wages or salary, they are able to buy the commodity which brings to fore other conditional aspects affecting demand such as income and prices of the substitutes (Gayialis et al., 2015). It is, therefore, important to understand some of the factors that play  part in the economics of a country which is the foundation of this paper. Accordingly, the discussion below is centered on the article by Nelson Schwartz titled “Manufacturing is a bright spot in a subdued job report.’

Article Summary

The article is centered on the dynamics in the number of jobs in the manufacturing industry and begins by providing an example of the sprawling Mack Trucks factory that has been laying off workers as a result of a slowdown in sales, although this has gone back on the line and the company is hiring new employees. Another example is the Lehigh Valley turnabout that reflects an increase in the number of workers according to the labor department (Schwartz, 2017). While hiring in other sectors has been muted, it is evident that the unemployment rate has slightly edged up to about 4.4% although the wages have barely grown. Since the recession when American factories lost more than two million jobs, industries have clawed back and have recovered close to one million positions since 2010. These advancements are further echoed by President Trump and other huge corporations such as Toyota and Foxconn on building more domestic factories. In these approaches, the greatest winners are the citizens based on the reduction of unemployment rates. According to Schwartz, since Trump’s victory in November, the factory’s activities have been noted at six year high.

According to Mack’s president, Dennis Slagle, the hiring process reflects an increase in the demand for big trucks. Dennis further suggests that this workforce increase is a significant rise. Also noted is the benefit of the truckers regardless of the shoppers doing their purchasing online. Essential to note is that employment rate has increased in the automotive industry including the truck makers such as Mack. Schwartz (2017) notes that the increase has been by 14,000 in August 2017. This is amid the stiff competition in the industry, high cost of raw materials and the increased regulations. This growth has also been noted in other companies such as Bethlehem Steel that once employed thousands to turn metal into steel. The demand created here is of products such as heavy vehicles and steel resulting in expansion of various factories and as a result creating more jobs. The ability of Mack to thrive in such a competitive market is centered on its creativity, innovation and how it has managed to diversify its services including making engines as components and track cubs. Some expansions have included 84 million dollars project that is aimed at modernizing and expanding the Macungie factory. Considering the issue of wages which is a huge deal in this article, employees have over the last few years been enjoying various benefits, packages, and retirement plans. Notably, the top pay rate is noted as higher than the national average hourly wage of 26.39 dollars that increased by 0.1% in August.

Article Analysis

As mentioned above, there are two main factors that affect demand for a product. These include price and other conditions such as inputs costs, production efficiency, technology, taxation of the seller or producer and future expectations. technology, it is based on the ability of the supplier to efficiently produce more products for sale at the same prices (Baumol & Blinder, 2015). On the aspect of future consideration, it is based on the fact that sellers may have a different opinion over the future of the product’s production and sale. As a result, they may opt to sell the current product at the same cost so as to clear the current inventory. Relating these concepts with the Schwartz article, it is apparent that a company such as Mack has made tremendous growth as a result of an increase in efficiency of its operations. Globally, the dynamism in the corporate sector is based on advanced technology that enhances efficiency of the production process.

Schwartz (2017) notes that adoption of technology advancements in industries is critical in achieving their primary goal of quality products and services. An example of technological advancement approaches is automation which has impacted other industries such as banks where tellers have been forced to move on and take whatever jobs they find. Robots, on the other hand, indicate technological advancements and have increased the efficiency of production. In Mack’s situation, this has increased the buying of the trucks since the prices have remained the same and the quality of production improved. The presence of substitutes for a given product has also been identified as a critical aspect affecting the demand for a product. Notably, if there is a substitute and the price and quality differ, the buyer evaluates the products before making their decision. On the other hand, it is important to understand the influence of wages of the citizens with respect to their ability to purchase a given commodity. As reflected in Mack’s situation, people have been able to afford and purchase most of the tracks based on the increase in salaries and reduction in poverty levels.

Price is also critical in evaluating aspects of demand and supply in microeconomics. Price, which is categorized into various elements such as price ceilings, price floors, and the black market, is related to other external factors such as government regulation on the equilibrium price (Nicholson & Snyder, 2014). For instance, price ceiling is described as the maximum price set by the government which can be charged on services and goods. Essential to note is that if price ceiling is below the equilibrium price, one of the occurrences is a shortage. The involvement of government to set commodity and services prices results in price ceiling and floors. Price floor, on the other hand, is described as a minimum price set by the government for the goods and services and are common than the price ceilings. These levels are aimed at preventing prices from reducing to extremely low levels. Important to also note is that these levels are set in consideration of other factors such as trade between different countries. For instance, if there are trade agreements between two states, then prices are regulated through addressing external influences such as taxes. In Mack’s situation, there are various trade agreements between countries that interact with the United States such as Canada and Mexico. One of these trades is the North America Free Trade Agreement (NAFTA).

In micro economics, the interaction between demand and supply is considered a primary factor. This relationship is, to a larger extent, the description of economics since they represent the scarcity issue where the unlimited demand chases limited supply (Ruttan & Thirtle, 2014). According to principles of economics, it is through the interaction of this demand and supply that the price of a commodity or service is determined as well as who gets it and how much they should pay. Those that do not pay the price are excluded in that they do not get it unless the government intervenes and makes the pricing more affordable. Although this applies to products and services that are critical to a nation such as healthcare, the government can also regulate other sectors such as public transportation, social services, and education (Schwartz, 2017). As mentioned above, an example of intervention by the government is on trade agreements where various countries that interact such as North America have developed structures to govern their operations.

As reflected in the article by Schwartz (2017), the supply of products including the tracks is dependent on the demand by buyers who in this case include both domestic and international customers. In addition, prices of the commodities are set according to other factors such as supplier’s costs on raw materials. If prices of raw materials and production increase, the cost of the products or services cost also increases (Gayialis et al., 2015). The vice versa is also true where if production cost reduces, the price of a commodity also reduces. On the other hand, it is important to consider the effect of policies and regulations by a country on the price of a commodity. An example is the issue of environmental regulations where various policies have been developed to regulate production of vehicles based on greenhouse gases emissions. These policies have a cost implication on the respective company which is recovered in increasing the price of the product.

The issues of demand and supply as well as jobs growth and wages are interrelated and have an impact on the economy of a country. As noted in the rest of the article, the issues of job growth in the manufacturing industry as well as an increase in wages, have an impact on other industries in a given country (Schwartz, 2017). In a country where there is massive increase in the number of jobs and wage rates, the effect is reflected in the demand and supply of products and services. Essentially, a country with low unemployment rates and high wage rates is characterized by growth, development and a decrease in poverty levels. This implies that most of the individuals can afford basic commodities and services. Considering the long term positive impacts of the economic dynamics in a country, they include having a healthy labor market. On the other hand, the effects of other aspects such as natural forces cannot be ignored. This is as reflected in the recent incidence of Hurricane Harvey in Texas that resulted in devastation leaving less money for consumers to spend on extra goods and services besides the basic ones. While there are those who may fear inflation as a result of an increase in the wages and high job growth, Schwartz (2017 offers a different conclusion that the economy is steady and as Wall Street notes, there lacks any sign of inflation.

Conclusively, the economy of a country is dependent on several factors among them demand and supply. These two whose interaction is to a broad extent referred to as economics have a strong influence on the survival of industries and other aspects such as employment and wage rates. As reflected in the above discussion, there are various factors that influence both demand and supply. For demand, these include price and other conditions such as substitutes and competition. The interrelationship between demand, supply, wage and employment rates is reflected by the analysis of the article by Nelson Schwartz titled “Manufacturing is a bright spot in a subdued jobs report.” According to this article by the New York Times, it is apparent that there has been an increase in the number of jobs particularly in the manufacturing sector as well as the wage rate in industries such as Mack. These increases are based on the high demand for the commodities resulting in expansion of the existing companies. As reflected in the above discussion, several other factors play a part in the demand and supply such as competition and government interference through trade agreements. It is important to note that despite fears that these approaches have a long term effect on a country’s economy, Wall Street is convinced that there is no risk of inflations.