Manufacturing Sector: Key to Economic Recovery

May 13, 2013

The Great Recession hit the American manufacturing sector particularly hard but the recovery since has been exciting. The speed and pace with which the sector has added jobs is complemented by the fact that there are thousands of unfilled openings for high-skilled workers that could drive job growth in the coming years, says Thomas Hemphill, an associate professor, and Mark Perry, a professor, at the University of Michigan's Flint campus.

  • The U.S. manufacturing sector, which on its own would be the 10th largest economy in the world, reached a jobless rate of 13 percent while the national unemployment rate was at 10 percent at the height of the Great Recession in 2009.
  • Starting in 2010, the sector began to make a comeback, so much so that to date more than 500,000 jobs have been added to factory payrolls.
  • Since 2011, the manufacturing jobless rate has stayed below the national rate -- in April, the jobless rate was 6.4 percent, a full 1 percent lower than the national average.

Factory output is up as well, with 9.1 percent growth in durable goods, which outpaced the 2.2 percent pace of the economy as a whole. The expansion of manufacturing capabilities coincides with growth for machinery, motor vehicles, steel and industrial equipment makers, including those in the struggling Rust Belt of the Midwest.

  • Growth in the manufacturing sector could be even greater if there were enough skilled workers to fill all of the open positions.
  • In 2011, a survey of manufacturers revealed that 82 percent of respondents felt there was a moderate to severe shortage of high-skilled workers -- estimated at roughly 600,000 jobs.
  • Filling those 600,000 jobs would create an estimate 4,000 jobs in other industries and lower the jobless rate by half a percentage point.

Other estimates place the gap much smaller -- around 100,000 jobs -- but regardless of the size, these are empty jobs in the middle of a slow economic recovery. The gap between the skills workers possess and the skills needed is only expected to increase.

Expanding on-the-job training and apprenticeship programs will address the short-term needs of manufacturers. In the long-term, more youth need to be funneled into high-skilled training and the word needs to be spread that there are good jobs sitting empty. The free market will take care of the rest.

Source: Thomas Hemphill and Mark Parry, "Want Jobs? Try Advanced Manufacturing," The American, May 8, 2013.

 

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