New Perspectives on the Decline of US Manufacturing Jobs

US manufacturing since World War II exhibits three notable trends, illustrated in the two panels of Figure 1. First, manufacturing employment has diverged from non-manufacturing employment, as shown on different axes in Figure 1A. While both series moved upward until the late 1970s, manufacturing employment then begins to decline, even as other non-farm employment continues a steady rise. As a result, there is a continual decline in manufacturing employment's
share of total US non-farm employment, from 32 percent in 1948 to 8 percent in 2017. Second, while US manufacturing employment fell just 12 percent over the 21 years between the post-war peak in 1979 and 2000, it then dropped by more than twice as much—25 percent—from 2000 to 2012. Third, despite the relative flatness and subsequent sharp decline in US manufacturing employment, the bottom panel of Figure 1 shows a steady rise in manufacturing real value added at more or less the same rate as non-manufacturing GDP over the same period, at least between the late 1970s and the Great Recession. The combination of relatively steady and then declining employment, and rising output, indicates that, over the long term, labor productivity has risen faster in the manufacturing sector than in the broader economy.