Manufacturing Employment. A short history.

There was a time – actually, spanning many decades – when manufacturing led the growth of the world’s largest economy. Back in 1920 approximately 40% of the jobs in the United States were in manufacturing and other blue-collar fields. Today, that figure is only about…wait for it…20%. Quite a fall.

Equally astounding is the fact that manufacturing as a share of the nation’s Gross Domestic Product (GDP) has dwindled from 27% to 12%. It’s no wonder there have been so many layoffs in manufacturing.

What goes up must go down.

Manufacturing employment reached its zenith in June 1979 with 19.6 million jobs. But by June 2019 that had dropped to only 12.8 million – 35% from the peak hit 40 years ago.

Why were there so many job losses?

The reality is that the United States was slowly moving to service-related industries.    Under those circumstances corporations found it more appealing to ship the manufacturing overseas where it was cheaper. Think what impact there was on manufacturing jobs in America when Chinese imports quadrupled from 2001 and 2004.

Also, manufacturing as an industry found they could keep their production up as they became more and more automated. Of course, this meant fewer workers were needed.

40 years of job losses.

Let’s take a deeper dive into the 40-year period from 1979 to 2019 when job losses were steady and as dramatic as the job gains were in the prior 40 years. In 1979 manufacturing captured 22% of the nation’s job market. By 2019 that percentage dropped to only 9 percent. (Yikes!)

During the period 1979 to 2019 manufacturing lost 13% of the total nonfarm job market. Fortunately, those in the job market had adjusted their skills along with the job market (not surprising) and the job gains in the service-providing industries filled the void left by manufacturing.

Manufacturing jobs during the pandemic.

So, how did the pandemic affect manufacturing? Not bad. In comparing February/March 2020 to 2022 employment dropped from only a smidgen from  12,717,000 to 12,657,000. Unemployment fell dramatically from 4.1% to 3.1%. but Job Openings more than doubled at 389,000 to 802,000.

What are the predictions for the future?

Bureau of Labor Statistics is predicting mild employment growth in the manufacturing sector. Only about a 5% increase in manufacturing employment in the decade stretching from 2020 to 2030.

It will be interesting to see how accurate that prediction will be. Of course, in the same table, the BLS is showing a small drop in employment in the Federal government. I’ll believe that when I see it. So, we’ll see how the predication for manufacturing plays out.