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 Richmans' Trade and Taxes Blog

The Myth of a Global Manufacturing Employment Decline
Jesse Richman, 1/21/2017

One of the favorite recent lines by those who think that the decline in US manufacturing employment, US share of global manufacturing, US share of global exports, and so forth is not a problem, is a good thing probably, is that the declines are global and driven by improvements in productivity.  Articles of this type sometimes feature glossy photos of workers operating highly automated factories and make claims about how even Chinese factories are becoming highly automated.  But the global facts don't comport well with this cozy tale of inevitable innovation driven declines in manufacturing employment.  The facts don't fit the effort to make those concerned about manufacturing declines out to be latter day Luddites.

If declines in manufacturing employment were driven by a trend toward automation, then we should see global manufacturing employment declining.  If on the other hand the culprit is a disastrous forty years of US trade policy, then the declines in US employment should be offset elsewhere.  For instance, in the last decade, if it is the outsourcing of the US industrial plant to China and Mexico that have undermined the competitiveness of the US manufacturing sector in all but a few areas, then we should see shifts in manufacturing employment rather than global declines. 

The graph below shows manufacturing employment from 2003 through 2013 in the US, China, Mexico, and various other countries grouped as the "Rest of the West" (Australia, Canada, France, Germany, Italy, Japan, South Korea, Netherlands, New Zealand, Spain, Sweden, and United Kingdom.)

The graph rather speaks for itself.  It is immediately obvious that total manufacturing employment including the USA, the Rest of the West, and China has been on the increase rather than the decline.  

Comment by B Jenkins, 1/28/2017:

Nafta was signed in 1994 .

What was this graph like starting in 1980 ?

thank you , B Jenkins