Over the past 60 years, the type of work Americans do has undergone a dramatic shift. Back in the 1950s and 1960s, nearly a third of people worked in manufacturing — building the cars, airplanes, washing machines, and televisions that their neighbors used and that defined America. Nowadays, more than 80% of Americans work in a service industry, from finance and nursing to restaurants and baggage handling. Less than 10% are in manufacturing.
For some economists and policymakers, this shift was inevitable; as better technology made factories more efficient, companies could move production to countries where workers’ pay was lower. They argue that the shift was as natural as the US moving from farming to manufacturing over a century ago and that efforts to revitalize manufacturing in the US are a lost cause.
But this shift from a more balanced economy to one disproportionately dependent on services used by wealthy elites has had other effects — namely the shrinking of the middle class and the explosion of economic inequality. Research indicates that the flight of factory jobs from urban cores has contributed to chronic poverty among Black families. And the MIT economist David Autor has found that job losses associated with expanded trade with China didn’t just result in manufacturing job losses — but also led to lower incomes and greater welfare dependency for the entire surrounding communities, especially smaller cities and towns in the Midwest.
Efforts to close these gaps have focused on the need to improve the quality of jobs in the service sector, such as caregiving and retail, where mostly women and people of color work. But what if we’re resigning the US to a service-only economy too soon? What if we can create good-paying jobs producing the stuff we need? There are clear signs that manufacturing can make a historic comeback — helping rebalance the economy and give opportunities to the individuals and communities who were most hurt by the decline of the American factory in the first place.
Why it’s important to have a manufacturing comeback
If a fairer economy is the goal, rebuilding the manufacturing sector is worth the effort. In 2020, manufacturing jobs paid, on average, $73,000 a year, far more than jobs in some of the largest service industries, such as retail ($36,759), leisure and hospitality ($25,874), and education and health services ($55,355). For workers with similar education and experience, manufacturing jobs paid about 10% more than other occupations in the 2010s.
Still, the overall compensation advantage (including benefits) of manufacturing jobs has declined from roughly 17% in the 1980s to 13% in the past decade as the percentage of manufacturing jobs covered by a union has fallen by about half, to 8.5% in 2021 from 15.5% in 2001. Moreover, manufacturers have turned to temporary-help agencies and other outsourcing strategies to retain frontline workers instead of paying those workers more, which in turn has lowered pay at the bottom rungs of the sector.
Manufacturing jobs are particularly important to rural communities. In small towns in Ohio, Pennsylvania, Indiana, Michigan, Illinois, Wisconsin, and Minnesota in 2017, one in every four private-sector jobs was a manufacturing job — a much higher percentage than in cities in those states. A strong manufacturing sector can level the playing field between cities and small towns that have seen their jobs shipped overseas and factories fallen into decay. By making jobs more available throughout the country, in suburban and rural areas alike, we can ease some of the migration rush to cities and lower the excruciating cost of living in large metros.
A strong manufacturing sector benefits all of us. Manufacturing towns that have retained more factory jobs are more likely to see higher employment gains in the service sector since factory workers need school and hospital employees in their communities. America’s technological edge is strengthened with a robust manufacturing sector providing well-paying jobs. Boosting US manufacturing would also reduce the trade deficit with China and other nations, growing national income and raising the standard of living for Americans.
Now is the time for the great American manufacturing comeback
Some people will say: Sure, having more manufacturing jobs would be great, but if the industry has been slipping for decades, why is now the time for a comeback?
For one thing, the American people increasingly want it. The COVID-19 pandemic — and our continuing struggles to contain supply-chain-driven inflation — has made Americans more attuned to the importance of manufacturing to our economy and clearly demonstrated what happens when we rely too heavily on foreign production. Without sufficient capacity at home to quickly manufacture personal protective equipment, we had to obtain it from overseas — but inspectors discovered that 60% of imported masks did not meet US standards. For months, car production stalled because of a global shortage of semiconductors, which led to massive price hikes, especially for used cars. That might not have been a major problem for us 20 years ago, when 37% of semiconductors were produced in the US — but today, only 12% are.
A recent survey by Deloitte suggests Americans increasingly have a positive view of manufacturing, with roughly three in four respondents saying the sector was critical during the pandemic. That is translating to growing bipartisan support for ideas such as investing in US computer-chip manufacturing and a greater willingness among talented young people to entertain manufacturing careers.
What’s more, the sector is positioned for a resurgence, if only it could get a bit of help. Increased demand for goods in the pandemic has led manufacturing to rebound faster than the economy as a whole, recovering 96% of the jobs lost at the onset of the pandemic. The Reshoring Initiative estimated in 2021 that about 220,000 manufacturing jobs would return to the US, describing it as by far the highest annual number it had recorded. Manufacturing jobs have grown in 92 of the past 120 months; in the decade prior, the sector shrank in 85 of 120 months. After dropping off precipitously in 2020, real US manufacturing output soared to $2.8 trillion in the first quarter of 2022 as the economy roared back.
What’s holding manufacturing back and what can unleash it
Manufacturing’s revitalization has been stymied by two main factors: a lack of a new workforce and a lack of investment. Both issues can be solved, but only if the industry and lawmakers work to reverse some of the conditions that crushed America’s producers to begin with.
For one, manufacturing’s homogenous workforce is dying off (or at least retiring. The sector had a record 943,000 open jobs last July, and the number had ticked down to only 809,000 in May. That was more than double the number of unfilled positions from before the pandemic, while the economy overall had about 60% more openings. And the job crisis is expected to get worse. A study from 2015 projected that over the next decade, nearly 2 million desperately needed manufacturing jobs would go unfilled. In field research for the Century Foundation, I’ve visited factory floors in which the entire production and skilled-trades workforce was over 60. The need for workers is too large for manufacturers to rely on their usual “FBI” method of recruitment, sourcing new employees from the friends, brothers, and in-laws of their current workforce.
Manufacturing has always been an overwhelmingly white and male occupation, but if anything the lack of diversity has worsened in recent decades. The number of Black workers in the sector dropped by 30% from 1998 to 2020, a loss of 604,500 lost jobs. Women have also consistently lagged in their representation in the manufacturing sector. And in a 2016 report, the Institute for Women’s Policy Research found that women held only 7% of good-paying manufacturing jobs that require a high school diploma but no college degree. Among so-called middle-skill jobs like these, only the construction sector has a lower percentage of women workers. It’s not uncommon to visit a factory that doesn’t even have a women’s bathroom, to say nothing of the rampant sexual harassment that women in manufacturing jobs experience. And even when women and Black and Hispanic workers do enter the workforce, their upward mobility is limited. White manufacturing workers are three times as likely to be in management positions as workers of color. Diversifying the manufacturing workforce will be key to the sector’s success.
A generation ago, 80% of manufacturing workers had only a high-school diploma or less; in 2016, a greater share of workers had a postsecondary credential, such as a two-year degree, industry certification, or apprenticeship. Many companies have begun to realize this, launching partnerships with labor unions and educational institutions — especially community colleges and high schools — to establish apprenticeships and shorter-term programs to provide the skills people need to thrive in a manufacturing career. But to be effective, such programs should prioritize connecting new recruits to women and people of color in the industry who can mentor them.
The other big challenge facing manufacturing is turning American-made innovations into American-made products. Whether it’s automation or biotechnology, the future of manufacturing is high-tech. But while Silicon Valley and our universities remain global leaders in technological research, too often the production of the resulting products occurs overseas. In the US, only a sliver of venture-capital investments go to hard technologies like manufacturing.
States like Missouri, Indiana, and Ohio have established state-supported venture-capital development funds to invest more in manufacturing startups in the heartland. The federal government should match these efforts and make sure products from lithium batteries to biopharmaceuticals are produced here at home.
The tech investment we do have does not reach all parts of the country equally. To address this, Congress has proposed — and should enact — a program that would establish so-called regional technology hubs to direct federal investment in advanced manufacturing technologies to communities that have not had such investment.
Manufacturing can help rebuild the middle class
Manufacturing was once the engine of America’s economic might. As our economy rebuilds from a pandemic that laid bare just how important the sector is to our collective health and well-being, manufacturing can once again provide much-needed, high-quality, good-paying jobs to those who need them most. In fact, the signs of a manufacturing renaissance are already here.
Andrew Stettner is Director of Workforce Policy and Senior Fellow at The Century Foundation, a progressive think tank, and a leading expert on US manufacturing.