The most notorious paradox of the economy during the last couple of decades is arguably the loss of manufacturing jobs, while the output of the manufactured material has simultaneously never been higher. With the world’s population growing, the output in food, items for everyday use, and especially technology is on an exponential rise.
These statistics are not surprising considering the age of automation and that the overall productivity of individual workers has risen to yet unseen heights since the 1980s. As the needs of the average consumer increase every year, one can only expect a much more intense rate of manufacturing output.
Unfortunately for those in need of a job, the reality tells a different story – there is a steady decline in the number of US manufacturing jobs.
The Main Reasons for American Manufacturing Job Losses (Editor’s Pick)
- The number of factories closed in the US since 2001 reaches up to 73,000.
- Farming within the manufacturing sector in the last 70 years fell from 30% to 8.5%.
- The period between 2000-2017 marked the largest downfall of the manufacturing employment, with some 5.5 million jobs being shed.
- The Chinese-American fair trade agreement resulted in quadrupling China’s imports to the US from 2001 to 2013.
- Roughly 57% of America’s current manufacturing jobs could be automated within the next two decades.
The Most Important Stats
1. The manufacturing part within the American GDP drops annually.
Governmental statistics provided by the Bureau of Labor Statistics show that roughly 11.6% of the American 2017 GDP comes from this sector. However, these manufacturing job loss statistics are not encouraging, since this digit keeps dropping. Its previous rate was 12.3% in 2011 and roughly 28.1% back in 1953. Furthermore, there is an even larger expectancy of job losses throughout the next decade or so.
As technological advancements continue to baffle us every day, most people forget what it means for the automation of the manufacturing process and the middle-class working people in need of a job who are without a bachelor or a master’s degree.
2. Americans are only partially aware of the manufacturing employment statistics.
About one in five adult Americans (some 19%) doesn’t know that the overall rate of these jobs has dropped, according to research including 4,135 adult participants. Some 35% knew that the output in manufacturing has increased, as opposed to the 47% who thought the output dropped and 17% who believed that it remained the same.
This gives us some interesting insights into the Americans’ awareness of the US manufacturing statistics. The same research shows that college grads were more aware of the statistics, as opposed to the participants without a bachelor degree.
As a large portion of college alums took part in the economy and public relations-related classes, it is easier for them to follow the current events regarding politics, economy, trade policies, and employment.
3. In December 2018, the same number of people were employed in this sector as 70 years ago.
Let’s take a look at the stats through another perspective. The statistics on the decline of American manufacturing are shown in historic retrospective as well. As of the beginning of 2019, America had some 12.88 million people working in this sector, which is about the same amount of people as of 1949, a year historically remembered for its harsh recession and crisis.
Given the all-time high number of the US population and their needs that grow daily, these numbers are not encouraging whatsoever.
4. The same year was the start of the farm manufacturing demise.
It is evident that, out of all branches of the manufacturing sector, the toughest loss of manufacturing jobs in America hit farm manufacturing. Back in 1949, some 30% of American manufacturers worked in this branch, as opposed to today’s mere 8.5%.
5. The fall in manufacturing employment was the highest during the period 2000-2017.
The Bureau of Labor Statistics (BLS) shows that during the period 1980-2019, the overall manufacturing job presence is no longer that high up in the hiring statistics since its all-time peak in 1979. So how many manufacturing jobs have been lost in the US?
Well, stats show that between 1980-2000, roughly two million jobs were lost in this sector. However, this data is heavily eclipsed by the fact that during the period 2000-2017, some 5.5 million people were released from this industry as well, making the estimated loss for less than 40 years some 7.5 million people of prime-age (21 to 55).
6. The absolute peak of American manufacturing was at the end of the 1970s, with continuous declining in decades to come.
According to education statistics, the rate of people getting higher education also led to the 1970s’ decline of American manufacturing. As 1979 was the peak for the American working class, with roughly 19,553,000 people working in manufacturing, people started getting college degrees, reaching higher levels of education, and eventually getting desired jobs.
In 2015, there were about 250,266,000 institutional and noninstitutional employees, with about 12,272,000 working in this sector. It is projected that this digit will halve throughout the next decade.
7. The distressing stats on automation jobs lost through the last four decades got even more serious.
The overall job statistics show that about 7,231,000 jobs were lost to automation since 1980, making the manufacturing employment rate go down circa 37%. A vigorous battle against this trend was created by the current POTUS, Donald Trump, which was one of the pillars of his successful campaign. He kept campaigning in favor of the middle-class working people.
His main argument was that, even though the automation does a great deal in cutting jobs, the main reason of the factories closing their doors is the Chinese WTO participation.
8. The number of factories closed in the United States since 2000 is alarming.
Donald Trump claims that, ever since China joined the World Trade Organization back in 2001, the United States has lost more than 60,000 factories. However, according to some studies, this claim is euphemized.
According to the Economic Policy Institute, the Chinese imports to the United States have quadrupled between 2001 and 2014, making the American manufacturing much less competitive, and closing roughly 74,000 factories up until that year only. This resulted in 2.4 million jobs lost throughout this period.
Why Are Manufacturing Jobs Declining?
There are several reasons for the overall downfall of manufacturing jobs in the US. The most notorious sides of this debate include trade, automation, a more expensive worker’s hour in the US as opposed to the one’s somewhere else, etc. All these issues result in American businesses moving their manufacturing elsewhere.
China stays on top of the manufacturing game of today, with its enormous, elaborate system of factories, an incredible amount of people working in this sector, and overall cheap workforce. According to the Financial Times, most US manufacturing jobs are lost to technology, not trade. President Trump’s official website points out that, since NAFTA (North American Free Trade Agreement) agreement established back in 1994, nearly one-third of manufacturing jobs were lost in the US, based on the studies provided by the Economic Policy Institute back in 2007.
Ever since China first started taking part in the World Trade Organization, roughly 60,000 American factories closed their doors for good. This is the primary reason why a large portion of them moved their manufacturing to Asia. However, a much larger part of jobs lost are indeed jobs lost to automation.
Let’s talk numbers.
9. By 2035, the expected costs of robots and overall automation in manufacturing will drop by 65%.
Today’s prices of industrial robots are still very high for most up-and-coming manufacturing businesses. These machines can eliminate a large workforce and automate the routine manual labor needed for general production. What does this mean? For one, it is harder for the company to keep the low-skilled and/or lower-educated workforce, creating an even larger amount of manufacturing jobs lost to automation.
The trend of MTS jobs (manufacturing, transportation, and storage) automation is nowhere near the end. The trend is expected to rise by up to 35-50% by 2035.
10. MIT suggests that up to 57% of current jobs could be fully automated over the next 20 to 25 years.
To keep up with the current trend of the US population growth, it is imperative to create more than a million jobs each year, which means between 100,000-120,000 manufacturing jobs per year.
According to previously cited stats about the decline of manufacturing jobs in the US, this is a trend that seems less possible each year. As the Massachusetts Institute of Technology suggests, the jobs in this sector being lost each year implies the following fact. Every year, a much larger percentage of people would need to get a higher education in order to prevent themselves from the unemployment in the manual labor sector, which will suffer from vast automation within the next two decades.
Even though automation creates new jobs as well, it is still uncertain how many jobs will be lost to automation.
11. The China issue
It is a fact that China is the synonym for the world’s manufacturing force. However, another fact is that China exploits extremely cheap and oftentimes illegal labor, unfair trade, and differing environmental standards, eventually limiting the growth of what the US used to export to other countries.
The 50 states, of which the most emphasized are Oregon, Minnesota, California, Massachusetts, and Wisconsin, suffered a 2.57 to 3.55% of total state manufacturing jobs lost to China.
Overall, throughout the trade war, roughly 2.4 million jobs in several manufacturing industries were lost just to China on the American soil, not to mention other places across the world, according to Reliable Plant.
China’s currency manipulation and cheap labor do irreversible damage to the world’s economy, making everyone else incompetent for manufacture. Since 2008, America’s yearly deficit from trading with China is about $26 billion per year.
12. The US is giving a lot of its jobs to the Chinese manufacturers.
The manufacturing job loss statistics show that those who supported China’s inclusion into the World Trade Organization back in 2001, focused attention on eventual job creations and larger exports of the US products to China. However, the outsourcing of Chinese labor outside the US, especially with international companies, started creating an annual trade deficit of $18.3 million, overall about $375.2 billion up until mid-2017.
The previously mentioned way of China’s unfair trade, poor environmental care, and both cheap and child labor eventually lead to American corporate conglomerates turning themselves to Chinese workforce, with millions of manufacturing jobs leaving the US.
13. The American manufacturing of computers and electronics is at the greatest risk, with almost all large conglomerates moving to Asian countries.
Two major economists, Tim Bartik of the Upjohn Institute and Tim Sturgeon of the Massachusetts Institute of Technology (MIT), published a paper back in 2016 pointing out that large dents created by trade inequalities with China and the rest of Asian countries probably made a most severe problem for the American computer technology industry. The cheap workforce overseas cannot be beaten, which leads to an even larger loss of manufacturing jobs.
14. This year was very rough for American manufacturers, especially during the first trimester.
The CNS News provides some seriously grim information regarding the losses within this industry. Namely, just in March, more than 6,000 manufacturing jobs were cut, with thousands more getting cut each month. However, during Donald Trump’s presidency, there has been a net growth of some 466,000 jobs of this sort, massively decreasing the overall loss of manufacturing jobs in the US.
With everything stated so far, two things are for sure – manufacturing is as strong as it has ever been, and the automation isn’t going anywhere. The human needs grow with time, especially in the digital era of today; not to mention an ever-growing population of the world that needs to be fed.
Unfortunately, this also brings the human manufacturing labor to its demise. As the robots and machines get cheaper every day, this leads to a greater loss of the US manufacturing jobs by year.
It is very important to mention that competing with China when it comes to manufacturing is a tough deal, especially considering the unfair background of China’s way of trading, cheap labor, and treating the environment. The Chinese partaking in the World Trade Organization brought some serious issues upon the US manufacturing sector, with jobs being moved to ever-growing Chinese factories.
However, so far, the biggest threat to the middle-class working Joe appears to be the automation, as shown through our jobs lost to automation statistics.
Also, as we previously mentioned, the world’s most prominent school for technologies – the MIT – predicts a collapse of the human workforce within the manufacturing branches. More than half of the US population currently working in these industries are projected to lose their jobs within the next 20 years.
The trends have shown large transfers of manufacture workers to other branches. Coming from a source as credible as this, the loss of manufacturing jobs statistics are very alarming for people who might not be able to fulfill their retirement quota due to a potential job loss.
Overall, it is crucial to constantly scrutinize and follow the statistics regarding these job losses. The lack of information could seriously damage the US economy and trade to the point of no return. It is also utterly important to take action and plan towards trade and manufacturing success, to stay on top of the world’s economy.
What are your thoughts on the loss of manufacturing jobs? We are always open for discussion – tell us in the comments below.