Understanding Trends in Manufacturing Employment
Manufacturing was once considered the most important source of stable jobs for working-class families. But employment in the sector fell from 32 percent of the US workforce in 1960 to 11 percent in 2015, and politicians often point to the manufacturing decline as an indicator of increasing economic hardship among men without a bachelor’s degree. Many pundits blame foreign trade and the trade deficit for the steep drop in manufacturing employment.
But evidence shows that the trade deficit did not cause most of the decline in the manufacturing sector, and dwindling manufacturing employment did not account for most of the drop in the economic position of men without a four-year degree.
These three briefs present evidence on employment and productivity trends in the manufacturing sector, trade’s impact on manufacturing jobs, and the employment trajectories of men without a four-year degree. We focus on men without a bachelor’s degree because they have been most negatively affected by the “deindustrialization” of the last 50 years, and they are often cited as the people who have been left behind by foreign trade.
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Key take-aways from these briefs:
- The trade deficit accounted for about 10 percent of the decline in manufacturing employment, while the remaining 90 percent resulted from increased productivity and technological advances. Eliminating the trade deficit could add about 3 million manufacturing jobs in the US, but it would not restore the industry to 32 percent of the total workforce.
- US manufacturing output increased nearly 500 percent between 1960 and 2015, but the number of manufacturing workers in 2015 was nearly 3 million fewer than in 1960.
- Most men without a bachelor’s degree who left the manufacturing sector made a lateral move to nonmanufacturing production industries (e.g., construction, utilities, transportation, mining, and warehousing). Nonmanufacturing production jobs are now the biggest source of good-paying jobs for men without a bachelor degree.
- Across all industries, the share of “good jobs” (or jobs that allow workers to support their family at or above the 40th percentile of the population) for men without a bachelor’s degree has fallen substantially from 1960 to 2015. The overall manufacturing employment decline contributed to some of that dip, but even within the manufacturing sector, the share of good jobs fell from 56 percent in 1960 to 42 percent in 2015. Further, the share of good jobs for men with a bachelor’s degree fell in all major industry groups except for agriculture.
- Three-quarters of the decline in the share of good jobs available for men without a bachelor’s degree is because of lower relative pay within industries, and only one-quarter is because of the movement from being employed in manufacturing to being employed in low-paying service and retail jobs.
Because manufacturing is unlikely to generate enough new jobs to return the sector to its past prominence, policymakers and stakeholders should consider other strategies to help men without a four-year degree:
- Fund training and apprenticeship programs for industries that now provide most good jobs for men without a bachelor’s degree. The nonmanufacturing production industries of construction, transportation, utilities, warehousing, and wholesaling employ twice as many men without a bachelor’s degree in blue-collar jobs than the manufacturing industry.
- Form collaborations between community colleges and local employers to provide more targeted apprenticeships and vocational and technical training programs for workers who are unlikely to earn a four-year degree.
- Create higher-paying jobs in low-end services and retail industries. Other countries with effective high minimum wages have higher salaries for low-end service workers.