American Manufacturing is Not in Decline
I would like to see the numbers the President uses to back up some of his claims. This weekend he told the Toledo Blade and the Pittsburgh Post-Gazette that it is going to take decades to rebuild the United States’ declining manufacturing base. That’s misleading because President Obama doesn’t mean total manufacturing output, or output per worker. He means the number of people employed in the manufacturing sector.
It’s true that the number employed is declining. Right now 12 million people are in the manufacturing industry, down from almost 20 million in 1980. The last time that was below 12 million was 1940, when the U.S. population was less than half of what it is today. As a percent of the workforce, the number falls every year.
But President Obama is wrong when he says that the manufacturing base is in decline. Total output by the manufacturing industry continues to grow, as does productivity. In this way we manufacture more goods, but require fewer people to do it. It’s a good thing, as long as we can help those who lose their jobs to transition into better ones.
We have a lot to be proud of in American manufacturing. In 2007 we made $1.6 trillion worth of goods, and exported a huge chunk of them. Think about it this way: the amount of goods manufactured in the United States equals the total output of Russia’s economy, and the amount of goods exported equals the total output of India’s economy. We do that with less than a tenth of our labor force. That’s pretty incredible.
We lose manufacturing jobs because we learn how to do them more efficiently or because it's cheaper to do them elsewhere. President Obama wants these jobs back, but we can’t get them back. In fact, we don’t want them back. We want better, higher paying jobs to take their place. Most of the time, those jobs are in service or technology sectors of the economy. We've gone from manufacturing everyday items and simple electronics to figuring out how to make computer chips and airplanes. Instead of looking backward to the jobs Americans used to do, let’s focus on the jobs Americans do better than anyone else.