Where Did the Manufacturing Jobs Go?

Manufacturing used to provide 25% of all U.S. jobs in the 1960’s.  Since then its declined to less than 10%.  screen-shot-2016-12-04-at-2-17-39-pm

This steep drop happened as even as manufactured goods as a percent of U.S. Gross Domestic Product (GDP) stayed relatively the same.  This indicates that automation, not trade, caused the decrease in manufacturing jobs.

But wait, what about the U.S. trade deficit in manufactured goods?  What if everything consumed by Americans were made here?  The answer is of course but not as much as you’d think.

screen-shot-2016-12-04-at-2-20-45-pm Paul Krugman, noted liberal economist, argues it would mean an increase in manufacturing jobs of 2% or about 160,000 jobs.   That’s not insignificant especially if you live in an area dependent on manufacturing.   To put it into context, over the last 8 years, roughly 140,000 jobs per month have been created.

In a nutshell, almost 12 million American manufacturing jobs or almost 99% of the jobs lost  would have been lost regardless of trade deals like NAFTA or trade with China.  Automation is the culprit.  It simply takes less people to produce the same amount of goods.

People who would have been employed in manufacturing simply have to find other industries for employment.   Politicians have a role to play and it can’t be limited to “saving” 800 jobs from being sent to Mexico occasionally.  That might be a good story for a politician to tell but it’s not going to replace 12 million manufacturing jobs lost to automation.

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