What Happened to US Manufacturing?

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.

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6 Responses to What Happened to US Manufacturing?

  1. knriggins says:

    The article attached is a great resource for this topic! It did take me a while to look through it all, but I do find this topic interesting. I think your right that the loss of manufacturing jobs stems from a few different reasonings; offshoring of labor, shift of demand from production to service, the recession, and also increased mechanization of the production process. When I read this post I started thinking about the connection of increased mechanization to loss of manufacturing jobs. is it possible that there are just less jobs for people with lower levels of education to attain? It seems that as time goes on there is a machine to do what people once did. I think this goes a lot for the service industry too, not just manufacturing. I see more and more businesses installing machinery to replace service. Sheetz has self order machines, the airport has slef-check in, and grocery stores have self check out. How far will this go, eliminating people and replacing them with machines? And will this also have an impact on impact inequality?

  2. bucknell92 says:

    Something that I have wonder is that if education has caused part of this problem. Do people believe that because the have been educated they are no longer eligible for the manufacturing jobs? This would be an interesting point to investigate to see if education levels within the United States has increased as munufacturing jobs have decreased.

  3. mcrawford says:

    I think this is a great topic to research given the many cases we have read on outsourced manufacturing. I feel you should try to highlight the need for jobs in the United States and the costs outsourced manufacturing is having on our unemployment rates, thus affecting our economy.

  4. eeewald says:

    We briefly discussed this issue in my Human resource Management class recently and within the last year or so some manufacturing jobs have returned to the United States. Due to the rising standard of living in China, their labor costs have started to increase to the point that in some cases, it’s not worth it to outsource your manufacturing anymore. I can’t recall specifically which companies are bringing their manufacturing jobs back to the U.S. but we mentioned more than a few in class.

  5. KCasty says:

    While I see do think that your topic is very interesting, I suggest looking the subject a little further to the companies that have actually started moving production back into the United States due to rising costs in other countries that once had cheaper labor than they do now. I am not able to name any of these companies off the top of my head, but it is a topic that we discussed in one of my other classes.

    Also, while I agree with Kelly that machines are slowly but surely taking over jobs that humans once did, I think it will be quite some time before no human needs to be present to operate or explain the machine that is now doing the job. For example, the self check in at airports. Traveling through Europe throughout last semester, I was in more airports than I could count. Most of the time I used the self check in machines (anything to avoid having to speak another language!) and almost every time there was an airport employee standing there and helping people use the machine. However, maybe this is just the older generation that has trouble with technology from time to time, and in the future no one will need to be around to assist us since we will all know everything there is to know about machinery and their operation.

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