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The United States, Grabow notes, “ranks number one in real manufacturing value-added per worker by a large margin.” The 2019 value added per U.S. worker of $141,000 topped second-ranked South Korea’s by more than $44,000 and China’s by more than $120,000 per worker. This is one reason foreign direct investment in the manufacturing sector stood at over $2.1 trillion in 2021. That same year, manufacturing attracted an infusion of $121.3 billion in foreign investment, more than any other U.S. economic sector.
Manufacturing’s “decline” relative to other sectors also is, Grabow notes, a result of “shifting consumer preferences,” which influence the misperception that the United States “doesn’t make anything anymore.” As in other affluent societies, consumers have shifted somewhat from stuff to services.
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Furthermore, Grabow writes, “Factories producing consumer staples such as textiles and furniture have made way for facilities that produce products less often found in retail stores, such as chemicals and machinery.”
U.S. retail purchasers often see and buy manufactured imports (e.g., T-shirts, running shoes, appliances); they less often encounter advanced U.S. manufactured goods (e.g., medical instruments, gas turbines, aircraft parts).
The decline of factory work in some U.S. states often results, Grabow says, from the relocation of jobs not to other countries but to other, more hospitable states. And, says Grabow, “if reasons exist for U.S. policymakers to actively promote domestic manufacturing, jobs aren’t one of them.” The idea that manufacturing wages are generally superior to those in the service sector is mistaken: “Nonsupervisory workers in manufacturing earned an average hourly wage of $21.29 in 2017, compared with $26.73 for nonsupervisory construction workers and $36.21 for nonsupervisory workers in the electric utility industry.”
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This helps explain manufacturers’ difficulties with labor shortages. “Through most of 2021 and 2022, for example,” Grabow reports, “the number of unfilled U.S. manufacturing jobs never dropped below 800,000, and it remains historically elevated in 2023.”
This would not have surprised Dartmouth economics professor Douglas A. Irwin, who knows everything about trade (see the 693 pages of his 2017 book “Clashing Over Commerce: A History of U.S. Trade Policy”). In the fourth edition of his book “Free Trade Under Fire,” published in 2015, he wrote:
“The perception that imports destroy good, high-wage jobs in manufacturing is almost completely erroneous. It is closer to the truth to say that imports destroy bad, low-wage jobs in manufacturing. This is because wages in industries that compete against imports are well below average, whereas wages in exporting industries are well above average.”
Grabow’s data confirms this: “Approximately 20 percent of all U.S. manufactured goods exports in 2021 — totaling more than $169 billion — were ‘high technology’ products,” e.g., computers, pharmaceuticals, scientific instruments, electrical machinery.
As another subtraction from national understanding — a presidential campaign — begins, we soon will hear promises (threats?) to “do something” about the U.S. manufacturing “crisis.” These will come from both candidates if, heaven forfend, they are Joe Biden and Donald Trump. Manufacturing probably is, however, robust enough to survive their help.
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If your constant objective is to expand government’s permeation of society — to enlarge its role in the allocation of capital and opportunity — you have a permanent incentive to invent or misdescribe social problems. So, if you are a progressive, you will embrace the myth of a U.S. “manufacturing crisis.”
This is a perennial excuse for protectionism and other manifestations of “economic planning” by a supposedly clairvoyant government. Which is socialism, under the anodyne title of “industrial policy.”
You also might favor government going beyond mere control of imports. You might want it to deport the Cato Institute’s Colin Grabow. His report “The Reality of American ‘Deindustrialization’” overflows with inconvenient (for progressives) truths, such as: The United States has the world’s second-largest manufacturing economy, which produces a larger share of global manufacturing output than Germany, South Korea, India and Japan combined. (Remember the 1980s panic, loudly encouraged by a publicity-mad New York real estate blowhard, about Japan eclipsing U.S. manufacturing?) The manufacturing sector of the U.S. economy, which supposedly has withered as the service sector has grown, would, standing alone, be the world’s eighth-largest economy.
Granted, in America, as in most other developed nations, manufacturing employment has fallen: Since 1980, the percentage of U.S. workers employed in manufacturing has been more than halved, as has manufacturing’s share of gross domestic product. The job losses are, however, largely — according to one study, 88 percent — the result of improved worker productivity (robots, computers, process improvements), which is an unalloyed good. For example, the steel industry’s output increased between 1980 and 2017 while its workforce shrank from 399,000 to 83,000.
The United States, Grabow notes, “ranks number one in real manufacturing value-added per worker by a large margin.” The 2019 value added per U.S. worker of $141,000 topped second-ranked South Korea’s by more than $44,000 and China’s by more than $120,000 per worker. This is one reason foreign direct investment in the manufacturing sector stood at over $2.1 trillion in 2021. That same year, manufacturing attracted an infusion of $121.3 billion in foreign investment, more than any other U.S. economic sector.
Manufacturing’s “decline” relative to other sectors also is, Grabow notes, a result of “shifting consumer preferences,” which influence the misperception that the United States “doesn’t make anything anymore.” As in other affluent societies, consumers have shifted somewhat from stuff to services.
Furthermore, Grabow writes, “Factories producing consumer staples such as textiles and furniture have made way for facilities that produce products less often found in retail stores, such as chemicals and machinery.”
U.S. retail purchasers often see and buy manufactured imports (e.g., T-shirts, running shoes, appliances); they less often encounter advanced U.S. manufactured goods (e.g., medical instruments, gas turbines, aircraft parts).
The decline of factory work in some U.S. states often results, Grabow says, from the relocation of jobs not to other countries but to other, more hospitable states. And, says Grabow, “if reasons exist for U.S. policymakers to actively promote domestic manufacturing, jobs aren’t one of them.” The idea that manufacturing wages are generally superior to those in the service sector is mistaken: “Nonsupervisory workers in manufacturing earned an average hourly wage of $21.29 in 2017, compared with $26.73 for nonsupervisory construction workers and $36.21 for nonsupervisory workers in the electric utility industry.”
This helps explain manufacturers’ difficulties with labor shortages. “Through most of 2021 and 2022, for example,” Grabow reports, “the number of unfilled U.S. manufacturing jobs never dropped below 800,000, and it remains historically elevated in 2023.”
This would not have surprised Dartmouth economics professor Douglas A. Irwin, who knows everything about trade (see the 693 pages of his 2017 book “Clashing Over Commerce: A History of U.S. Trade Policy”). In the fourth edition of his book “Free Trade Under Fire,” published in 2015, he wrote:
Grabow’s data confirms this: “Approximately 20 percent of all U.S. manufactured goods exports in 2021 — totaling more than $169 billion — were ‘high technology’ products,” e.g., computers, pharmaceuticals, scientific instruments, electrical machinery.
As another subtraction from national understanding — a presidential campaign — begins, we soon will hear promises (threats?) to “do something” about the U.S. manufacturing “crisis.” These will come from both candidates if, heaven forfend, they are Joe Biden and Donald Trump. Manufacturing probably is, however, robust enough to survive their help.
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