As the manufacturing sector goes, so goes America?

As Americans wrap their heads around the meaning of the growing “Occupy” movements in cities throughout the nation, trying to determine whether or not the 99 percent vs 1 percent breakdown of Americans constitutes “class warfare,” there are a great many irrefutable facts that need to inform such discussions. Many have been clearly articulated recently, (including this great collection by my EPI colleagues). In this blog post, I begin a renewed examination of how the decline of manufacturing employment has contributed to the erosion of the American middle class, and in the process, left many state economies in shambles.

Employment in the manufacturing sector has long provided a foundation for the American middle class. In 1999, former EPI economists noted key features of manufacturing employment:

Manufacturing provides middle-class jobs and a channel of upward mobility for non-college-educated workers (especially men). Compensation is higher and fringe benefits (such as health insurance and pension coverage) are more common than in other industries that, like manufacturing, employ non-college graduates. Blue-collar workers in manufacturing are also more likely to be union members, and thus they have more bargaining power than do comparable workers in services.

In 1999, there were troubling signs that all was not well in the American manufacturing sector, with the “Asian crisis” identified as a growing threat; a threat which my colleague Rob Scott has repeatedly shown to have continued to erode American employment (see, for example, Growing U.S. trade deficit with China cost 2.8 million jobs between 2001 and 2010). The alarming decline of the American manufacturing sector has of course only gotten worse over the intervening decade, leaving in its wake many state economies that have yet to recover. Since Jan. 2000, the American manufacturing sector has lost 5.5 million jobs, nearly a third (32.1 percent) of the Jan. 2000 total. Six states – Michigan, North Carolina, Rhode Island, Mississippi, New Jersey, and New York – have lost over 40 percent of their manufacturing workforce, while another five states have lost more than 37 percent of their manufacturing employment (collectively, the dark red states in the figure below). Indeed, only Alaska has seen growth in its manufacturing sector since 2000, though numbering less than 2,000 workers.

Click to enlarge

In future posts, I’ll examine the impact the erosion of manufacturing employment has had on wage trends in those states that have been hardest hit by the decimation of manufacturing employment. Lest readers despair, here are some concrete suggestions for what can be done to breathe new life into American manufacturing:

  • clarenceswinney

    No question had not multi nationals not sent 5m offshore unemployment is  6% 
    My city. Hosiery capital of America. My firm 3000 jobs in city of 35,000
    corp office 500 employees. GONE 100%. Heart breaking to ride and see so many large plants empty..High school drop out could get a job, buy a home, raise a family. Buy our products at Wal-Mart not half price but 80% of our price.Profits for Multis huge.

  • benleet

    Manufacturing labor in China costs $1.36 an hour, in the U.S. $34 an hour. That’s $3,000 a year vs. almost $70,000. (Monthly Labor Review, Dept. of Labor, March 2011) I read the goals statement on the attachment to Alliance for American Manufacturing and I don’t see anything about value-added taxes on imports made by US multinationals in the maquiladoras of the world, and nothing about higher tariffs. We ship $1.6 billion a day to foreign nations, some years it’s $2 billion a day. Jeff Faux, a co-founder of EPI, advocated a regional alliance with north American nations in trade. But you’ve chosen a great topic. I am expecting an interesting series of articles. Jon Rynn at New Deal 2.0 has put out many articles on this topic. 

  • marvinmcconoughey

    The sad fact is that our labor cost structure is unsustainably high.  Because the difference of us and our major competitors, no amount of finessing can overcome the need to reduce labor costs.  Put more bluntly, our standard of living will have to shrink.  This is not a platform than any political leader will want to run on.