In terms of a share of the US economy as a whole, the manufacturing sector has been a relatively fixed percent of the total. It has had its ebbs and flows but fairly constant.
What has not been constant is the mix of final goods produced by that sector. We have moved from manufacturing consumer goods (appliances, electronics and other "gadgets") to capital goods and higher value inputs (chemicals, pharmaceuticals, software, etc). In other words we are producing less stuff people see and more stuff that is not as obvious. Or as I like to say, we make everything else except the stuff you see at Walmart.
The other thing that has been constant but not is a positive way is the decline in manufacturing jobs. This is not a new thing--the trend is long in the making.
Jobs in the manufacturing sector have declined from about 24% of all jobs to less than 10%.
Today it just simply takes fewer workers per manufacturing dollar relative to the past to make something.
In 1960 the ratio of share of workers to manufacturing as a share of GDP was (eyeball estimate) 24/12= 2(workers) to 1 in 1960. Today it is (eyeball estimate) 9/13 = .69 (of a worker) to 1.
Buggy Whip manufacturing (low skilled, routine production stuff) is not coming back to the US, but the technology, software and composite materials to make a new high tech buggy whip is likely to be produced here---if we foster it.
However, we seem to focus on the former and not enough on the latter.
What do you think???
|Source: The Conversable Economist|