Is U.S. Manufacturing Dead?

February 28, 2011

You might think American manufacturing is dead reading most of the nation's editorial pages or watching the endless laments in the news that "nothing is made in America anymore," and that our manufacturing jobs have vanished to China, Mexico and South Korea, says Mark J. Perry, a professor of economics at the University of Michigan, Flint, and a visiting scholar at the American Enterprise Institute.

Yet the empirical evidence tells a different story -- of a thriving and growing U.S. manufacturing sector, and a country that remains by far the world's largest manufacturer.

International data compiled by the United Nations on global output from 1970-2009 show this success story.

  • Excluding recession-related decreases in 2001 and 2008-2009, America's manufacturing output has continued to increase since 1970.
  • In every year since 2004, manufacturing output has exceeded $2 trillion (in constant 2005 dollars), twice the output produced in America's factories in the early 1970s.
  • Taken on its own, U.S. manufacturing would rank today as the sixth largest economy in the world, just behind France and ahead of the United Kingdom, Italy and Brazil.

The truth is that America still makes a lot of stuff, and we're making more of it than ever before.  We're merely able to do it with a fraction of the workers needed in the past, says Perry.

Critics view the production of more with less as a net negative -- fewer auto plant jobs mean fewer paychecks, they reason.  Yet technological improvement is one of the main ingredients of economic growth.  It means increasing wages and a higher standard of living for workers and consumers.  Displaced workers learn new skill sets, and a new generation of workers finds its skills are put to more productive use.

Source: Mark J. Perry, "The Truth about U.S. Manufacturing," Wall Street Journal, February 25, 2011.

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