The purpose of my showing this graph is to expand on a point I made in comments. The graph tells us a lot. It tells us that a decline in manufacturing jobs was frequently a leading indicator of recessions. The number of manufacturing jobs peaked in the 1970s after they had increased sharply in the 1960s. Prior to the 1980s following economic contractions manufacturing jobs had generally returned to pre-recession levels. That pattern ended completely in the 1990s. There was a sharp decline in manufacturing jobs in the early 1990s and a precipitous drop in manufacturing jobs around 2000. Manufactuing jobs are recovering slowly now for the first time in more than 20 years.
Any number of different stories could be told to explain that graph. Here’s mine. The increase in manufacturing jobs in the 1960s is a story of global recovery. Not just here in the United States but all over the world economies were finally recovering from World War II. People had the money and wanted to buy more. American businesses wanted to sell more.
In the late 1970s globalization hit the U. S. economy like a ton of bricks. Japan began to encroach on what we had come to think of as “U. S. manufacturing jobs”, followed by South Korea. In the early 1990s China pegged the yuan to the dollar and that hurt us as well.
In the late 1990s granting China Most Favored Nation trading status and China’s admission to the the WTO did major damage to our manufacturing sector and there was no policy response as there might have been in earlier period. That was abetted by the conviction on the part of policy-makers, most of whom had college degrees or beyond, that a college education was the key to a bright economic future.
What happened in January 2010? I’m open to suggestions on whether Chinese or U. S. policies or both led to our increase in manufacturing jobs since then. The previous twelve years is strong evidence that the recovery in manufacturing jobs was not inevitable.
I don’t believe we will ever return to the number of manufacturing jobs we had in the late 1970s or their importance to our economy or that we should. I do think that we need a diverse economy that includes more primary production and more manufacturing.
When we pass the 14 million we had in 2007 then I will think that something substantial has changed. Until then it will look mostly like we are recapturing what we lost with the Great Recession. We have multiple instances of adding roughly a million jobs back after a recession. What is most interesting to me is how quickly jobs dropped starting in October 2000 through December 2003. I dont recall it even being talked about very much. Not even an issue in the 2004 election.
Steve
Look at the graph again. That didn’t happen before. The last time we had this great an increase was in the 1970s.
I certainly whined about the Bush Administration’s nonchalance. A bigger question is why Democrats didn’t make an issue of it.
I wonder how much of the recovery was due to the shale boom? That really took off in a noticeable way starting in 2010.
The history of energy and manufacturing is always intertwined. Coal and the industrial revolution, etc.
I think that’s a reasonable hypothesis. However, declines in the price of crude oil didn’t take place until 2014.
I believe that natural gas prices declined due to increased production a couple of years before that.
This graph from 2014 shows the increased production from 2010.
Energy cannot explain it all since major manufacturers Japan, South Korea and Germany have minimal natural energy resources.
https://www.instituteforenergyresearch.org/wp-content/uploads/2014/09/Screen-Shot-2014-09-19-at-10.46.40-AM.png
Manufacturing employment is getting more productive.
https://fred.stlouisfed.org/graph/?id=OUTMS,PRS30006013,OPHMFG,
(Looking at manufacturing real output per hour, it looks like workers were more productive each year, flat-lining a bit around 2011, when maybe energy costs began pulling the freight)
Choosing 14million and 2007 is just cherry picking.
“What is most interesting to me is how quickly jobs dropped starting in October 2000 through December 2003. I don’t remember it even being talked about much.â€
Wow. For those of us in the business it dominated discussions. We were fundraising during that time and almost all meetings with potential LPs began there. Media and political neglect, and dot com fever, do not reflect reality.
I’d be careful attempting to read the tea leaves too closely. I’d note that the recession ended in earnest in 2010 and the costs of China outsourcing or trade I mentioned in a previous thread had become painfully obvious. Costs, like selling prices are much more complicated than the nameplate number.
I have no idea how far we will recover. If Trump loses in 2020 we no doubt return to poor policies and thwart the rebound. If he wins I think we could see 14-16mm, but that’s intuitive. Prediction is hard, especially about the future.
Looks a lot like rebound from the great recession:
https://amp.businessinsider.com/images/54da25b26bb3f7882deef89c-960-720.jpg
And federal stimulus spending:
https://beyondthecusp.files.wordpress.com/2018/01/united-states-national-debt-1940-to-2007.jpg
Coinciding with a surge in low wage workers:
http://www.willisms.com/archives/immigrationtousa.gif
I don’t believe we will ever return to the number of manufacturing jobs we had in the late 1970s …
Those products and manufacturing techniques do not exist. Therefore, those jobs are lost, but the replacement products should still be produced domestically, with fewer workers.
Millions of agricultural jobs have been lost over the past 100 years, but the amount of agriculture products have increased. As soon as farmers can no longer depend upon underpaid workers, somebody will create mechanical and automated solutions.
The restrictions on the creation of intellectual property is a big problem. For inventors and innovators to create the new products and techniques, the patent laws need to be modernized for the 21st century.