U.S. Manufacturing: More Output with Fewer Workers

Includes: DIA, SPY
by: Mark J. Perry

Don Boudreaux in the Pittsburgh Tribune-Review:

Many of you protectionists hyperventilate about America's alleged loss of manufacturing prowess. Are you aware that your worries on this front arise solely because you confuse manufacturing jobs with manufacturing output? Manufacturing jobs, as a percentage of all jobs in America, are indeed declining (see top chart above). And you hysterically interpret this fact as somehow proving that foreign producers are undermining America's economy.

But are you aware that America's manufacturing output today is near its all-time high (see middle chart above)? Are you aware also that America is by far the world's largest exporter of manufactured goods?

Are you aware that the reason manufacturing jobs are declining as a share of all jobs has far more to do with increased productivity of American industry -- that is, increased strength of American industry -- than it has to do with increased foreign trade (see bottom chart above)? Manufacturing jobs are being lost to technology and improved efficiencies. Do you think that this trend is undesirable?

The middle chart above shows U.S. Manufacturing Output (Gross Value) from The Federal Reserve, and U.S. Manufacturing Payroll Employment from the BLS (via Economagic), monthly from 1972 through March 2009. In the last 37 years, manufacturing output in real dollars has more than doubled, while manufacturing employment has dropped by about 35%, resulting in an almost tripling of the amount of manufacturing output per manufacturing worker in the U.S., from less than $80,000 in 1972 to almost $240,000 per worker today (bottom chart).