Friday, April 08, 2016

Hey Trump and Sanders: Manufacturing's share of total employment peaked in 1943!!!

I got these data series from Fred, but I am too dumb to get Fred to graph the ratio so I put them into Excel, created the ratio, graphed it and exported to this blogpost. Lost the horizontal axis somewhere along the way but it runs from January 1939 to March 2016. The exact variables are listed below the graph.

People, Manufacturing share of Total non farm employment peaked in November of 1943 (the great war!!) and has by and large been falling ever since. 

It's hard for me, given the historical trend, to put too much blame for the relative shrinking of manufacturing employment on the rise of China, or NAFTA, because it was happening in the 1960s and 1970s well before either of these things happened.



7 comments:

Thomas W said...

Correct me if I'm wrong, but from what I've seen "manufacturing jobs" is something of a useless number because of the way people are classed.

If I am an accountant working for Acme Manufacturing, then I'm a manufacturing employee. If I start my own consulting firm and Acme contracts with me for accounting instead, I'm now a service sector employee. Exact same work being done but manufacturing lost a job.

Antony Davies said...

Manufacturing jobs have fallen by around 66%, but manufacturing output has doubled. IOW, today we are 6 times better at manufacturing than we were 70 years ago. We can produce twice as much using one third of the labor.

Antony Davies said...

Manufacturing jobs have fallen by around 66%, but manufacturing output has doubled. IOW, today we are 6 times better at manufacturing than we were 70 years ago. We can produce twice as much using one third of the labor.

Anonymous said...

Thomas W may be referring to "factoryless goods producers". http://www.nber.org/papers/w19396

Thomas W said...

I was thinking more of traditional manufacturers who contract for all non "core" company functions. Many companies contract out payroll, benefits, recruiting, IT, and even secretarial services. To the extent that jobs are classified as "manufacturing" vs "service" based solely on whether the employer is classed as a "manufacturer" vs "service", some of the loss of "manufacturing" jobs is actually a shift to contracting for support services rather than directly employing those people.

From the abstract of "factoryless goods producers" they are talking about something different. In the case of a "factoryless goods producer" the factory is outsourced (leaving design, engineering, sales, etc. in house), so a manufacturing company turns into a non-manufacturing company because they don't have a factory.

Yet both cases highlight the same underlying issue -- how to classify employment when companies won't cooperate and stay within traditional definitions.

Anonymous said...

You are right about 30 percent of manufacturing jobs are under temp agencies these days, so they are classified as Professional and Business instead of manufacturing. Read the want ads about 30 percent of factory work or accounting or clerical work for manufacturing companies is through temp agencies.

John Henry said...

Great chart, I've downloaded it and will carry it around in my wallet with my card showing manufacturing output since 1960.

As Antony noted, that has gone up pretty consistently for a long time, since before 1960. Not only has it gone up, it has gone up adjusted for inflation and has gone up on a per capita basis (Mfg $ per 1mm population)

The job losses are a red herring to a large degree.

And don't get me started on the trade deficit. If Trump buys steel from Japan to build a condo it counts against the deficit. If a Japanese takes the money they got for the steel to buy one the condo, it doesn't count against the deficit.

John Henry