Are Manufacturing Jobs Dead?
The American Manufacturing Myth
If you have paid any attention to the news lately, or in the past decade, you would think that the American manufacturing industry is dead. You’ve probably heard that China is the only manufacturer of goods, there are no more American factories, and America has lost all of its economic power and luster.
While some of these things have a bit of truth to them, the real truth is America is still a manufacturing powerhouse. While many American manufacturing jobs have been lost over the past several decades, the actual production of goods has risen. Even politicians have used manufacturing in their stump speeches. Then-candidate Donald Trump spoke vehemently during Presidential campaign about how manufacturing was extinct in America. That could not be further from the truth.
The white lie that the media and politicians feed us is just that. One needs to look a little closer at the actual numbers to gain a good feel for the truth about American manufacturing.
The Actual Numbers
There is some truth in what you may have heard in the media and around the water cooler. From the year 2000 to 2015, the American manufacturing industry has lost around 5 million jobs. The 12.3 million manufacturing jobs in 2015 accounted for about 8.7% of all jobs in America. That pales in comparison to factory jobs accounting for approximately 33% of all jobs during the Second World War. Sectors such as healthcare, retail, and hospitality now dominate the job market. These jobs are generally lower paying than manufacturing jobs with the exception of health care.
The problem with broad statements like “America doesn’t make anything”, is that it simply is not true. Sure, the number of manufacturing jobs are down but that does not mean production is down. The simple truth is that products and goods simply do not take as many people to make as they did 50 years ago. Advances in technology and machinery have reduced the need for employees. Here are some truths about American manufacturing.
Manufacturing Remains Number One
While the number of workers has made manufacturing seem like a bygone, the United States is still the second leading manufacturing company in the world. China overtook America as the largest manufacturer in 2010 but we still produce over $2 trillion in manufactured goods each year.
This production is greater than the 3rd, 4th, and 5th countries combined. This means that the United States still holds a very strong position in manufacturing. The fact that we do this is a testament to the role that technology plays in the 21st century and should not be seen as a sign of economic weakness. In short, most of the world’s manufacturing capability still pales in comparison to the U.S.
IN 2015, manufacturing still made up 36% of American GDP at a whopping $6.2 trillion. Does that sound like a dying market to you? That number is about twice the amount of any other sector. American manufacturers are also not standing pat when it comes to research and development of new products. 77% of the money spent on R & D by the American economy is spent by manufacturers. What this means is that manufacturers are creating new products at twice the rate they are making them. That does not sound like a dying industry to me.
America Has Never Produced More
That’s right, American manufacturers are producing far more product than they ever have. While that may not make for a great stump speech for a politician or a news story, it is the truth. The fact is that technology has made making more products with fewer employees a fact of life. In fact, twice as much product can be produced today with just two-thirds of the number of employees than it did just 30 years ago.
The recession of 2008 created a huge drop in manufacturing production but by 2015 the industry had already recovered and is projected to be at an all-time high in 2017. This means that production is at its highest point ever. The Trump administration has been good for manufacturing and while the numbers are not out yet, there has been a marked increase in U.S. manufacturing since he was elected.
For durable goods, U.S. manufacturers created three times as many durable goods than they did when Ronald Reagan first took office. Near a record high are goods like cars, machines, and electronics while nondurable goods are down about 7% from their peak in 2007. Service and food industries are down since the recession but are still trending upward.
The industry that has been reduced more than any other is the textile industry. Clothing manufacturing is down 80% from its peak 30 years ago and textile factories have been reduced by half since the turn of the centuries. These reductions have made manufacturing take a hit but the overall numbers are up in spite of this.
America is an Oil Leader
America may not be close to being the world’s top exporter of oil but when it comes to making things from oil it stands out. The oil that is imported to America each year is unrefined and otherwise useless. It is the refining of that oil into products like gasoline that American manufacturers shine. In fact, these refined oil products are the most manufactured product by American manufacturers.
Refinery gases, gasoline, jet fuel, and fuel oil are just some of the products that are manufactured right here in the United States. These oil products account for $700-plus billion in GDP for American manufacturers. That is not a small number by any means. Cars, planes, steel, plastics and pharmaceutical drugs are other major U.S.-manufactured goods.
America is a Top Gasoline Producer
This might come as a surprise to some but in 2014 America exported $62 billion in refined oil, including gasoline. While that number has dipped in the past couple of years because of the drop in the price of crude oil, it is still a major export.
In 2015, Americans manufactured $1.3 trillion of exported goods. In 2016, American aircraft manufacturers exported $63 billion in airplanes. Auto parts manufacturers were not far behind, exporting about $58 billion in products. Refined oil product dipped to about $46 billion. Other exports that were sold in large number include communications equipment, plastics, and medical equipment.
So, What Does This All Mean?
All of this means that manufacturing in the United States is stronger than ever. Sure, there are fewer jobs needed to produce those goods and that isn’t a pleasant thing. However, as technology advances, there are other avenues to create jobs. This is why the U.S. government is stressing that children and college students study more of the STEM sciences going forward. We need to adapt to the ever-changing economical world that we live in, not complain about the past. Fewer factory workers do not have to mean fewer well-paying jobs.
All of that being said, the next time you hear someone complaining about how America doesn’t make anything anymore politely educate them on the facts. While it can be hard to admit that fewer jobs can produce more product, it can be seen as a positive.