Blog Post

AEIdeas

We hear all the time from Trump and others that the US has lost millions of manufacturing jobs because they’ve been outsourced overseas and “stolen” by countries like China. That’s partly true, but mostly false. The chart above shows that over the last 20 years, the real value of US manufacturing output has increased by 40% (and by $544 billion in 2009 dollars based on BEA data for GDP-by-Industry Data). During the same period, factory employment in the US decreased by 29% (and by 5.1 million jobs). US manufacturing output was near a record high last year at $1.91 trillion, just slightly below the 2007 level of $1.92 trillion, and will likely reach a new record high later this year.

So that’s the real story of US manufacturing and the loss of jobs: We’ll likely produce a record level of manufacturing output this year, with fewer than 12.5 million factory workers – the same manufacturing employment as in the early 1940s. The US will produce about four times more factory output this year than in the 1940s with about the same number of factory workers! And it’s that phenomenal increase in factory worker productivity, thanks to innovation and advances in technology, that explains most of the manufacturing job losses over time. So while it might be easy and politically popular to blame outsourcing for the loss of five million US factory jobs over the last 20 years, the chart above illustrates graphically that it’s more accurate to “blame” advances in technology and the rising productivity of US factory workers for the losses in manufacturing jobs.

As I reported earlier this year, the great majority of US manufacturing job losses (88% according to this study) are a direct result of the increased productivity of America’s factory workers, which is much greater than the number of “stolen” factory jobs that have moved overseas. And those factory jobs lost to increased productivity are never, ever coming back to America, unless of course, Team Trump can somehow negotiate deals with the powerful forces of technological progress to slow the steady march of advances in labor-saving manufacturing technologies and “Make America Less Productive Again.”

Update: From Nick Gillespie and Todd Krainin at Reason.com: