Selected Publications

Decline of Manufacturing Employment since 1980

Abstract

This essay examines the dimensions and causes of the decline of the U.S. manufacturing sector since 1980, with a primary but not exclusive focus on employment.  Manufacturing’s share of nonfarm employment declined fairly steadily from the end of the Second World War (about 32 percent) until 2010, after which it leveled off, although still declining slowly within the 8 percent range.  The level of manufacturing employment trended upward between 1948 and 1980, subject to strong cyclical fluctuations.  Employment stopped growing over the next two decades, followed by a decline of one third in the first decade of the twenty-first century, from which there has been only modest recovery.  The paper considers the role of productivity advance in affecting employment, looks at the macroeconomic (twin deficits) explanation of the short-lived employment decline during Reagan’s first term, explains why the twin deficit narrative rapidly lost appeal, and compares the China shock vs. global saving glut account of the staggering job losses of the 2000s.  The paper includes discussion of some of the cases made for policy intervention to arrest decline.