Manufacturing Is Still Strong

See Today is Manufacturing Day, so let’s recognize America’s world-class manufacturing sector and factory workers by Mark Perry.

"1. US Manufacturing Output vs. Employment. The chart above shows annual measures of US manufacturing output (based on the BEA’s GDP by Industry data here) and US manufacturing employment (based on BLS data here) from 1947 to 2014. In inflation-adjusted constant 2014 dollars, US manufacturing output has increased more than five-fold over the last 67 years, from $410 billion in 1947 to a record-setting level of output last year of $2.09 trillion (see brown line in chart). Although we frequently hear claims that the US manufacturing sector is dying or in a state of decline, manufacturing output in the US, except during and following periods of economic contraction like the Great Recession, has continued to increase over time, and reached the highest level of output ever recorded in 2014.

 


What has been in a steady state of decline is the number of manufacturing workers needed to produce the increasing amount of manufacturing output as the blue line in the chart above shows. From a peak of nearly 19.5 million US factory workers in 1979, the number of manufacturing employees has steadily declined to a recent low in 2010 of 11.6 million workers before rebounding to slightly more than 12 million employees last year.

Comment: The ability of the US manufacturing sector to produce increasing amounts of output with fewer and fewer workers should be recognized as a sign of economic strength and vitality, not economic weakness. Thanks to advances in technology, the factory floor today is one with modern, advanced, state-of-the-art equipment that requires fewer employees, but with greater skills and training than in the past. The trend in US manufacturing over the last 30 years – more and more output with fewer and fewer workers – is exactly like the transformation that revolutionized US farming over the last 100 years or more. With fewer than 2% of America’s workers, we produce more agricultural output today in the US than when much greater numbers and much higher shares of the nation’s employees were working on farms. And yet when have you ever heard anybody say that “America just doesn’t grow anything anymore”? The fact that we frequently hear that “America just doesn’t manufacture or produce anything anymore” isn’t consistent with the reality that US factories produce more output today than at any time in US history.

 

2. Manufacturing Output per Worker. The chart above shows the dramatic increases over time in the amount of manufacturing output produced per US worker, which more than doubled in the 42 years between 1955 and 1997 from $40,000 to $85,000, and then more than doubled again in only 13 years between 1997 and 2010 to about $171,000 (all figures are expressed in constant 2014 dollars). Manufacturing output per employee last year of $171,538 established a new all-time record for the productivity of the American factory worker, measured in manufacturing output per factory worker."