Manufacturing employment: Nothing to see here, move along…

Dylan Matthews at Wonkblog posts a graph from Robert Lawrence and Lawrence Edwards that purports to show manufacturing employment declines are simply a capitalist inevitability. It’s essentially this graph:

image001

So, if manufacturing employment is always shrinking as a share of overall employment, the implicit argument is that nothing– say very large trade deficits that characterized the past decade and a half in the American economy – can really affect this trend one way or the other.

This is one of those few times, however, that one should actually go shallower, not deeper, to see if there’s really a story here. This graph shows manufacturing employment not as a share of the total, but simply in levels.

image002

For 35 years manufacturing employment levels were actually very stable – running between 16.5 million and 19.5 million (depending simply on the business cycle), and, never falling beneath this 16.5 million floor. Then, manufacturing employment fell through this floor (literally and figuratively) and never recovered.

So are we really sure that manufacturing’s woes are a constant trend that has been going on for decades, and that employment declines in this sector have nothing to do within anything like trade flows? I’m actually pretty sure this is wrong (see here and here for why). Hopefully I’ll have time to follow up on this soon.


  • http://twitter.com/worstall Tim Worstall

    Given that manufacturing employment has been falling globally (yes, really) over the decades I would think that it’s not actually about trade flows.