NCPA - National Center for Policy Analysis

Demise of the Manufacturing Economy

December 13, 2002

The decline of the nation's manufacturing sector has been visible for decades. But the trend has accelerated swiftly in just the past several years, economists report.

  • Since the beginning of 2000, more than 1.9 million factory jobs have been lost -- about 10 percent of the sector's work force.
  • Fifty years ago, one-third of U.S. workers toiled in factories -- but little more than one-tenth of them do so today, while four-fifths are employed in the service sector.
  • Manufacturing jobs are increasingly being moved abroad as companies take advantage of lower labor costs and position themselves to sell products to a growing market abroad.
  • The consulting firm estimates that 1.3 million manufacturing jobs have been moved abroad -- primarily to Mexico and East Asia -- since the beginning of 1992.

Many economists agree that the trend is healthy for manufacturing and the overall economy in the long run.

"It's good for us to displace low-wage, manual kinds of labor with higher-skill, higher-tech, higher-education-content labor," says Federal Reserve Bank of St. Louis president William Poole, who compares what's happening with the decline in agricultural employment in the early 20th Century.

Source: Barbara Hagenbaugh, "U.S. Manufacturing Jobs Fading Away Fast," USA Today, December 13, 2002.

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