cause contractions in manufacturing employment, from a lack of demand. Manufacturing jobs helped build out the U.S. middle class following
World War II, as the U.S. established pro-labor policies and faced limited global competition. Between 1980 and 1985, and then again 2001 to 2009, there were precipitous declines in US manufacturing jobs; it is estimated that 1/3 of U.S. manufacturing jobs vanished in the eight years between 2001 and 2009, and few have returned, the worst period for U.S. manufacturing since the
Great Depression. Since 1979, the number of U.S. manufacturing employment has been declining, especially the sharp decline in 2001 and 2007. The way in which employment in the U.S. manufacturing industry has fallen provides a series of potential policy responses including insights into how the industry is changing, and unemployment. There are several possible explanations for the decline. Bill Lazonick argues that legalization of companies buying their own shares of stock in 1982 has led to sustained stock market bubbles that distorted investment away from physical plant. Others point to automation or developments outside the United States, such as the rise of China, globalized free trade, and supply chain innovation. These have arguably resulted in the off-shoring of thousands of U.S. manufacturing facilities and millions of manufacturing jobs to lower-wage countries. Meanwhile, technological innovation has increased productivity significantly, meaning that manufacturing output in the United States has increased by 80% since the 1980s, despite large job losses in the manufacturing sector during that same period. The
Bureau of Labor Statistics (BLS) forecast in October 2017 that manufacturing employment would fall from 12.3 million in 2016 to 11.6 million in 2026, a decline of 736,000 employees over a decade. As a share of employment, manufacturing was estimated to fall from 7.9% of the total U.S. economy in 2016 to 6.9% of it in 2026, continuing a long-term downward trend. The share of persons employed in manufacturing relative to total employment has steadily declined since the 1960s. Employment growth in industries such as
construction,
finance,
insurance and
real estate, and
services industries played a significant role in reducing
manufacturing's overall share of U.S. employment. In 1990, services surpassed manufacturing as the largest contributor to overall private industry production, and then the finance, insurance and real estate sector surpassed manufacturing in 1991. Since the entry of China into the
World Trade Organization in December 2001, the decline in manufacturing jobs has accelerated. However it is possible that the import of goods from China is a result rather than a cause. The US stock market also ended a sustained fourteen year bubble in 2001, and the ensuing job loss pushed a significant portion of US population below the poverty line.
The Economist reported in January 2017 that manufacturing historically created good paying jobs for workers without a college education, particularly for men. The jobs paid well enough so that women did not have to work when they had young children. Unions were strong and owners did not want to risk strikes in their factories due to large capital investments and significant on the job training. Such jobs are much less available in the post-2001 era in the U.S. though they remain available in Germany, Switzerland and Japan, leading to calls to bring those jobs back from overseas, establish protectionism, and reduce immigration. Making it illegal for companies to purchase shares of their own stock has not yet gained traction as a remedy for the diversion of operating profits away from reinvestment in equipment and people. Manufacturing continues to evolve, due to factors such as information technology, supply chain innovations such as
containerization, companies un-bundling tasks that used to be in one location or business, reduced barriers to trade, and competition from low-cost developing countries such as China and Mexico. Competition from high wage nations such as Germany is also increasing.
History Between 1980 and 1985, U.S. manufacturing was impacted negatively as Japanese productivity rose at a rapid rate, leading to a fall of 12% in Japanese products, and the increase in U.S. interest rates that led to the appreciation of the U.S. dollar. This was the opposite policy from that which a rise in Japanese productivity would have dictated, and the US policy action made Japanese products 30% cheaper than American until 1986. The US machine tool sector never recovered from this body blow. Between 1983 and 2005, U.S. exports grew by 340%, with exports of manufactured goods increasing by 407% over this period. In 1983, the primary export commodities of the U.S. was transportation equipment, computer and electronic products, agricultural products, machinery (except electrical), chemicals, and food and kindred products. Together these commodities totaled 69 percent of total U.S. exports. By 2005, the primary export commodities were largely the same: computer and electronic products, transportation equipment, chemicals, machinery (except electrical), miscellaneous manufactured commodities, and agricultural products. Together these commodities accounted for 69 percent of total U.S. merchandise exports. Between 1983 and 2005, exports of computer and electronic products grew by 493%, overtaking transportation as the leading export commodity, which grew by 410%. Though agricultural products exports grew by 26% during this period, its share of overall merchandise exports fell from 12% in 1983 to 4% in 2005. In 1983, the top trading partners for U.S. exports were
Canada (21% of total merchandise exports),
Japan (11%),
United Kingdom (5%),
Mexico (4%),
Germany (4%), the
Netherlands (4%),
Saudi Arabia (3%),
France (3%),
South Korea (3%), and
Belgium and
Luxembourg (2%). In 2005, the top markets for U.S. exports were Canada (24%), Mexico (13%), Japan (6%),
China (5%), United Kingdom (4%), Germany (4%), South Korea (3%), the Netherlands (3%), France (2%), and Taiwan (2%). Between 1983 and 2005, exports to Mexico increased by 1,228%, allowing it to replace Japan as the second-largest market for U.S. exports. In the first quarter of 2010, overall U.S. merchandise exports increased by 20 percent compared to the first quarter of 2009, with manufactured goods exports increasing by 20 percent. As in 2009, the highest export commodities were transportation equipment, computer and electronic products, chemicals, machinery (except electrical), agricultural products, and miscellaneous manufactured commodities. In the first quarter of 2010, the primary markets for U.S. merchandise exports were Canada, Mexico, China, Japan, the United Kingdom, Germany, South Korea,
Brazil, the Netherlands, and
Singapore. With the exception of the Netherlands, exports to all of these countries increased in the first quarter of 2010, compared to the same quarter in 2009. Notably, exports to Canada increased by 22 percent, Mexico by 28 percent, and China by 47 percent over this period. Exports to the two
NAFTA partners accounted for nearly one-third (32%) of U.S. merchandise trade in the first quarter of 2010. The panel chart in this section includes four diagrams describing manufacturing labor, output, and productivity historical trends through 2016: • Figure 1-Job measures: The blue line (left axis) is the ratio of manufacturing jobs to the total number of non-farm payroll jobs. It has declined since the 1960s as manufacturing jobs fell and services expanded. The red line (right axis) is the number of manufacturing jobs (000s), which had fallen by nearly one-third since the late 1990s. • Figure 2-Output measures: Real (inflation adjusted) GDP (blue line) and nominal GDP (red line) from the manufacturing sector. While both rose from the trough due to the Great Recession, the real GDP had yet to regain its pre-crisis (2007) level as of 2016. • Figure 3-Job measures, indexed: The red line shows the percent change in manufacturing jobs, measured relative to the 1999 as the starting point. The blue line shows construction jobs. Both were below pre-crisis levels in 2016. • Figure 4-Productivity measures, indexed: Measured from the end of the recession (June 2009), employment (green line) is up about 5%, but real output is up over 30%, indicating a significant gain in productivity (i.e., output per labor hour).
Forecast in
Bethlehem, Pennsylvania was one of the world's leading steel manufacturers for most of the 20th century. But in 1982, it discontinued most of its operations, declared bankruptcy in 2001, and was dissolved in 2003. The
Bureau of Labor Statistics projected in October 2017 that: • 10.5 of the 11.5 million net jobs created (90%) over the 2016–2026 period would be in services. The service jobs growth rate would be about 0.8%. However, the goods producing sector, which includes manufacturing, would only add 219,000 jobs over that period, growing at a rate of 0.1%. • Manufacturing employment would fall from 12.3 million in 2016 to 11.6 million in 2026, a decline of 736,000. As a share of employment, manufacturing would fall from 7.9% in 2016 to 6.9% in 2026. • Employment in production occupations (a subset of manufacturing) was expected to fall from 9.4 million in 2016 to 9.0 million in 2026 (a 4% decline), falling from 6.0% of employment to 5.4%. • According to the Semiconductor Industries Association, by the end of 2022, the chip industry has committed almost $200 billion to build and expand 40 plants in 16 states, creating 40,000 future jobs. According to the Natural Resources Defense Council, a similar amount has been promised to US factories making electric cars and batteries.
Trade policy U.S. manufacturing employment has declined steadily as a share of total employment, from around 28% in 1960 to 8% in March 2017. Manufacturing employment has fallen from 17.2 million persons in December 2000 to 12.4 million in March 2017, a decline of about 5.7 million or about one-third even as the U.S.population ballooned from 220 million to 330 million in the same time frame. An estimated 1–2 million of the job losses in manufacturing 1999–2011 were due to competition with China (the
China shock), which entered the
World Trade Organization in December 2001. The
Economic Policy Institute estimated that the trade deficit with China cost about 2.7 million jobs between 2001 and 2011, including manufacturing and other industries. While U.S. manufacturing employment is down, output was near a record level in 2017 in real GDP terms, indicating productivity (output per worker) has also improved significantly. This is likely due to
automation, global supply chains, process improvements, and other technology changes. The Biden administration's 2023 Trade Policy Agenda focused on strengthening domestic industries and minimizing reliance on foreign supply chains. The
CHIPS and Science Act allocated nearly $53 billion to support semiconductor manufacturing in the U.S. The U.S. Department of Commerce proposed for 16 new semiconductor manufacturing facilities, which would shift the U.S. into a position of resiliency against foreign manufacturers. ==Modern overview==