While researching income inequality in the United States I came across an article written in 2004 that tries to explain the loss of manufacturing jobs in the United States. I believe that this article is very interesting, as many people have deep-seated feelings about the loss of our manufacturing sector. Peak employment in the manufacturing sector was in 1979, when the sector employed 19.5 million people. Since this time employment in the manufacturing industry has steadily declined. The article states that from July 2000 to January 2004 the US lost 3 million manufacturing jobs, making the total number 14.3 million jobs in the sector in January 2004. This is explained in a multifaceted and thorough manner. First of all, the recession of 2001 is partially blamed for the loss of jobs in this period. This is because the recession blunted demand for manufactured goods. The article goes further to state that after the recession manufacturing sector employment is unlikely to rebound to prerecession levels. This is due to the fact that productivity in the manufacturing sector has historically outpaced demand for manufactured goods in the United States. The demand has also shifted away from manufacturing, and towards services. This leaves a natural impetus for a loss of manufacturing jobs. The article also explains that some of the job losses are statistically irrelevant since “recently manufacturers have used more contract and temporary labor. In the past, these jobs would have been counted as manufacturing jobs, but are not counted as such.
Besides internal forces the article explains the external forces that have led to a loss of US manufacturing jobs. First among these forces is the fact that the United States faces steep competition from countries with lower labor costs. This makes outsourcing low skilled labor an attractive option for many companies. The article also explains that while we have increased trade with China, this trade has come at the expense of other Pacific Rim countries, and not domestic manufacturing. This is because the United States specializes in highly skilled labor, and these jobs are difficult to outsource. We would have carried on a natural course of outsourcing low skilled labor whether or not we traded with China. I believe that this article does an excellent job at taking an objective look at the structure of the manufacturing sector, as the issue is very easily politicized.