Friday, March 15, 2013

Update on Manufacturing to Employment Ratio. Production has recoverd with 1.5 million fewer workers. This defines the New Economy in a nutshell. See important graphs here.

Mark Perry at AEI has this first graph touting the recovery of manufacturing output to pre-recession levels.  He graphs the recovery in Durable Good Manufacturing (things designed to last 3 years and up) in RED and motor vehicles and parts in BLUE.

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I wanted to see how this good new translated into employment in manufacturing.  Using the graph maker from the St Louis Federal Reserve, I duplicated only the Industrial Production: Durable Manufacturing line from the graph above (RED) and I added employment in that sector (both since 1992) in GREEN.

There is definitely a change in the output-to-employment ratio in US manufacturing, post-2000.  Output trends upward, as you can see going back to 1992, but employment trends DOWN dramatically after 2000 and never recovers fully even to post 2007 "Great Recession". 

So, output has recovered with about 1.5 million FEWER workers (eyeballing the tip of the GREEN line is about 7.5 million.  Pre-recession about 9 million were employed)

FRED Graph
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