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Report On U.S. Manufacturing Employment Decline
Rebecca Woodings

The Information Technology and Innovation Foundation (“ITIF”) has released a study examining declines in U.S. manufacturing output and employment during 2000-2009. The report finds that manufacturing employment fell by one-third during the decade of the 2000s with 5.7 million jobs lost. Rob Atkinson, President of ITIF, spoke at The Conference on the Renaissance of American Manufacturing and moderated the panel on Manufacturing and the U.S. Jobs Base. He discussed this very important report.

The ITIF report challenges several theories associated with U.S. manufacturing employment declines. For example, ITIF disputes the magnitude of U.S. manufacturing productivity gains, which have often been cited as one rationale for lost manufacturing jobs. According to the report, 13 of 19 U.S. manufacturing sectors produced less in 2010 than they had in 2000. The largest losses were in the automotive, textile and apparel, metals and minerals, furniture, and paper sectors. Moreover, manufacturing employment declines were widespread; the majority of U.S. states experienced manufacturing job losses in excess of 30 percent during the 2000s. ITIF asserts that overall U.S. manufacturing output fell by 11 percent over the 2000s, even as the U.S. gross domestic product grew by 17 percent during the same period.

As the Report notes, “Manufacturing lost jobs because manufacturing lost output, and it lost output because its ability to compete in global markets--some manipulated by egregious foreign mercantilist policies, others supported by better national competiveness policies, like lower corporate tax rates--declined significantly.”

The report also disputes the view that manufacturing output is declining in many advanced industrialized countries. ITIF cites examples of stable or growing manufacturing output in countries including Germany and Korea to rebut the view that manufacturing declines are inevitable in a post-industrial economy.

Finally, ITIF points out that U.S. manufacturing is not part of an “old school” economy. Rather, U.S. manufacturers employ advanced technologies and moderate- to high-skilled workers to produce advanced, high-value products. Nevertheless, the shrinking manufacturing base resulted in U.S. manufacturing capital stock increasing by only 2 percent during the 2000s, far below historic growth rates of 20 to 50 percent per decade.

The report asserts that “poor data and shallow analysis” have served to gloss over the true magnitude and import of recent U.S. manufacturing declines. Also contributing to the declines, in ITIF’s view, have been “[failed] U.S. policies (for example, underinvestment in manufacturing technology support policies and a corporate tax rate that is increasingly uncompetitive)….”

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