Why we have more manufacturing jobs

One of the few bright spots in today's economy has been the growth in manufacturing jobs, up 4.3% over the last two years.  Today's WSJ reports a key reason for the growth: wage growth in the U.S. has been flat since 2000 (adjusting for inflation), whereas wages have been rising rapidly in China and moderately in Mexico.  With unemployment running high, it seems like a safe bet for manufacturing wages to continue to be flat for at least the next year or two.

Many people continue to cling to the belief that the U.S. needs more manufacturing jobs to compete globally; that we need to make "stuff" to survive.  Some governments are actually subsidizing manufacturing companies in an effort to keep good jobs (see this NYT piece for examples in case you think the auto bailout was an isolated case).

This was not a totally crazy idea 50 years ago when manufacturing wages were relatively high compared to the rest of the economy.  But how good are those jobs in today's knowledge-based economy? Why would anyone would want to subsidize a sector where the mean hourly wage is $18.94 (private sector average is $19.47)?  Pay is significantly higher in mining, construction and most parts of the service sector.