The narrative around American manufacturing is often filled with doom and gloom. Many believe that the country’s industrial base is crumbling, with jobs disappearing and factories shutting down. However, a closer look reveals a different story. Veronique de Rugy, a senior research fellow at the Mercatus Center, argues that the reality of American manufacturing is far from the prevailing narrative of decline.
In her recent article, de Rugy points out that the unemployment rate stands at a low 4.1 percent, and real wages have been on the rise. Contrary to the belief that manufacturing is failing, there are over 600,000 job openings in this sector. U.S. manufacturing output is near record levels, having increased by 177 percent since 1975, even if it is slightly below its peak in December 2007.
One major point of confusion in the discussion about manufacturing is the difference between jobs and output. While it is true that the number of manufacturing jobs has decreased from around 19 million in 1980 to approximately 13 million today, this decline is not due to a lack of production. Rather, it reflects significant advancements in productivity driven by automation and technology. Just as fewer farmers now produce more food, fewer manufacturing workers can produce more goods.
De Rugy also highlights that the perception of manufacturing decline is often fueled by regional hardships, particularly in areas like Detroit and Youngstown, Ohio, where factory closures have caused significant economic pain. However, she emphasizes that manufacturing hasn’t disappeared; it has shifted and evolved, with high-tech manufacturing booming in other regions. This shift has created new, higher-paying jobs in industries such as aerospace, semiconductors, and pharmaceuticals.
The article challenges the idea that America should return to its past manufacturing glory, where many workers toiled in lower-paying jobs in sectors like apparel and textiles. Instead, de Rugy suggests that the focus should be on helping communities adapt to changes and seize opportunities in growing industries.
Furthermore, she addresses the notion that a service-heavy economy is weak. In reality, services now account for about 79 percent of the U.S. gross domestic product. As the economy grows, so does the demand for services, which often leads to better-paying jobs.
The call for protectionism to safeguard domestic industries for national security reasons is also critiqued. De Rugy argues that such measures could lead to job losses in other sectors, undermining the very goal of protecting jobs.
In conclusion, the narrative that America no longer makes anything is misleading. The country produces a wide range of high-value goods, from aircraft to advanced electronics. While the manufacturing landscape is changing, it is not collapsing. De Rugy urges a shift in conversation towards how to best support communities in adapting to these changes, rather than longing for a past that is unlikely to return.