No, the U.S. Industrial Base Is Not Collapsing
If you believe the political rhetoric, you probably think America’s industrial base has been hollowed out, gutted, or “shipped overseas.” Across the ideological spectrum, people say U.S. manufacturing is in decline. They argue mostly about who’s to blame and how many tariffs we need to fix the problem.
This widely told tale is wrong.
For one thing, for all the talk of job losses and economic decline, it’s worth remembering that the unemployment rate is a very low 4.1 percent, and real wages (those adjusted for inflation) have been growing. If anything, manufacturing is suffering a labor shortage, with more than 600,000 open jobs in the sector.
It’s also worth noting that U.S. manufacturing output, even adjusted for inflation, is near all-time highs. While about 5 percent below its December 2007 peak, it’s up 177 percent compared with 1975, the year America last ran an annual trade surplus. Industrial production—manufacturing, mining, and utilities combined—is higher than ever. That’s hardly a collapse.
A principal source of confusion is the difference between jobs and output. Yes, the number of workers in manufacturing has declined dramatically—from around 19 million in 1980 to about 13 million today. But that didn’t happen because America stopped making things. It happened because we got incredibly good at making things.
Productivity in manufacturing has surged thanks to automation, technology, and global supply chains. J
Article from Reason.com
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