Here’s an interesting data series we thought you might enlightening.

Note the peak in manufacturing jobs in June 1977,  which represented 22 percent of all nonfarm payrolls, to less than 9 percent of total employment today.   It’s too earlier to claim victory with the current recovery in the manufacturing sector, but it is the the first positive slope since mid-1990′s.

There are many reasons for the secular decline,  including:  1) the strengthening of the dollar during the 1980′s;  2) globalization;  3) entry of China and India into the global labor force; 4) the internet;  4) productivity;  5) technological innovation;  6) demographics and worker preferences; and 7)  all of the above.

We’ll leave it to the academics to debate it and the politicians to place blame or take credit.

Click on chart to and for better resolution.

Category: Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

12 Responses to “Manufacturing Employment in the U.S.”

  1. TLH says:

    What about our tax code? It encourages companies to leave this country to manufactor. Social security taxes. Health care costs-other countries have national health care. Highest corporate tax rate. Complicated tax code. You could lower the cost of labor in this country by over 40% by placing these taxes elsewhere. Our politicians are at fault for this debacle. Both parties have spent, spent, and spent over the last twelve years. Now what does that do for taxes?

  2. constantnormal says:

    … people can (and will) rant and roar all they like about this, but as we still manufacture as much as we ever have, I think this is incontrovertible evidence of the impact of technological progress, of automation and smarter machinery replacing (instead of augmenting) human employment.

    The Internet is currently carrying this progress forward in the cognitive employment fields.

    Progress has not been shown historically to be A Bad Thing … But we really need to overhaul our social/societal paradigms to get in line behind it, lest we be flattened by standing in front of it.

    No one opposes Progress and is victorious.

  3. rd says:

    Technological advances mean that more can be produced with fewer people. That was the case with agriculture and resource extraction and is a driver in inustrial production.

    However, the graph shows a clear inflection point around 2000 with a much steeper decline for 2000-2012 than 1980-2000. we need to understand where that inflection poiint came from considering that the recession starting around 2000 was not particularly deep.

    I suspect that changing tax codes and other government intervention that virtually forced manufacturing to go offshore for accounting reasons is a primary driver in that change of job loss velocity. It is pretty clear that we went from incremental efficiency improvements to wholesale restructuring.

  4. Jim67545 says:

    Ignoring all factors such as cheap labor, tax rates, etc. noted here, even if all of those were non-factors, domestic manufacturers, seeing the rapid advancement of countries like China and India would have to position some production nearer to those rapidly growing markets. We will and are seeing this in domestic car companies and once they are up and running in China we will see fewer units exported from domestic factories. Of course, the same is true in reverse for German, Korean and Japanese car manufacturers who have built factories here.

    This is not the only factor, I am just adding to the list. Awhile ago I posed the question as to just how much growth in GDP this country should expect. This was based on the observation that this country is comparatively “built out” compared to developing countries and therefore would attract much less investment.

    If you compare what is occurring now to the flight to the US south which occurred in the post WWII era, the alure of cheap labor, undersupplied markets, better transportation (interstates), right-to-work, and so forth caused industries to move from 19th century plants to modern, highly productive late 20th century facilities in the south. All other factors aside, a manufacturer choosing whether to expand production in a 19th century plant or a 20th century one made the logical choice. This is a transformation that was never reversed.

  5. willid3 says:

    not sure that the decline wasn’t just the computerization of manufacturing (its nothing like it was). not sure that taxes had much to do with it (any business that used that alone will be out of business real quick. they make money selling their goods. not being able to sell because you moved to a low tax country because you can’t get your product to market, is fatal). besides while being fixated on just taxes and ignoring how the counties regulatory and legal system operates can also be fatal. in many countries the regulations and rules are very opaque, to the point that companies don’t even know what they are from city to city, in the same country. in some countries the court systems aren’t independent, and are some what challenging (read corrupt). there was also the cheap transportation. but that is going away as oil prices climb. while the internet created threats to jobs that are use more intellect, such as lawyers, technology, and medical jobs. think not? there are lots of legal research jobs that have gone away because the same job can be down elsewhere. there are other examples. no the 64 million dollar question. if we don’t think this is some thing that we can’t change. just what jobs will there be in the US? since unless you have to be physically present, your job can go away.

    just what is that future job ?
    it can’t be technical, since they can and will be exported
    it can’ be legal, or medical jobs that don’t require physical presence.

    that leaves what?
    and can we have enough of them in a country with 300+ million people?
    can we keep our standard of living if we have fewer and fewer having much income?

  6. dougc says:

    When the agricultural economy adopted mechanical innovations the resultant excess labor went to manufacturing. The increased productivity reduced the need for manufacturing labor and labor moved to the service economy and government payrolls. Outsourcing and technological advances are reducing the need for additional employees and governments are reducing employment, so where do they move?

  7. DeDude says:

    @constantnormal;

    Agree, there should be an expectation of a natural decline in manufacturing employment as more an more can be manufactured (produced) for each hour of work in manufacturing. It would be important to also see a chart of the total value of manufactured products (in constant dollars). We would expect that to have a constant increase and any difference away from a slow constant increase would be more telling of a problem with manufacturing leaving US to other countries.

  8. rd says:

    BTW, on a political note:

    On this graph until the late 1990s, the Presidency was about evenly split between Democrats and Republicans while Congress generally had a Democratic majority in both houses.

    The big inflection point to a steep downslope coincides with a two-term Republican President with at least one house of Congress with Republican leadership most of the time.

    The Republicans like to bleat about job-killing Democrats. This graph does not show that line of reasoning to bear out in manufacturing.

  9. DeDude says:

    @dougc;

    “where do they move?”

    They move into shanty-towns or to prison. That is unless we decide to do a radical makeover of our society. We are quickly running out of jobs for people who do not have what it takes to go to college. At the same time we have a huge resistance to growing the government sector, which is the only place where we could make the political decision to give them a useful role.

  10. DeDude says:

    I have often wondered what our corporate masters plan to do with those people who for lack of intellect, money or guts (to take out huge irrevocable loans and then risk ending with a $13/hour job), don’t have what it takes to go to college. The current policies appear to be guided towards increasing the number of those people; what is the plan for them? I think the GOP plan is that we throw half of them in prison and let the other half be employed by hugely profitable private corrections corporations. Seems like an awful waste but I guess that is one way of keeping them all busy and “off the streets”.

  11. Dow says:

    An argument can be made that American companies were behind the curve on innovation and understanding what consumers were looking for (fuel efficiency in cars, electronics, etc) and that, as a result, the appeal of foreign products overtook American.

    Things seem to see saw – which implies local/domestic/unique products will soon be replacing imports. Case in point – isn’t everyone getting a bit tired of having the exact same mass market clothes, furniture, dishes, etc as everyone else?

  12. philipat says:

    The line got so low that the upward slope represents about 3 jobs, right?