The 2020 Mid-Year Economic Update_long

Automation, not Outsourcing, Biggest Drain on Manufacturing Employment

Manufacturers capable of producing more with significantly fewer people.

The biggest challenge to U.S. manufacturing employment isn't outsourcing, according to Barry Lawrence, director of the Global Supply Chain Laboratory at Texas A&M University. "The argument that they're taking American jobs is a bit overblown," Lawrence says. "In China's case, it's only a little bit fair" because they have such a large available workforce.


"The biggest job drain to manufacturing is actually automation," he says. Simply put, with production advancements and process improvements, manufacturers are now capable of producing more product with fewer people. 

According to figures presented in a recent article from the Wall Street Journal, manufacturing productivity has increased 103 percent since the late 1980s. We're still making things; we just need fewer bodies to actually do it.

An analysis by Paul Weener, managing partner at IntelliQ Research in State College, PA, that ran in the Centre Daily Times compares the shift occurring now to the shift that has already occurred in agriculture:

"In 1900, 44 percent of all jobs were in agriculture; today 2.4 percent of jobs are in agriculture, but we produce a lot more food now than we did in 1900. Likewise, we are producing a lot more manufactured goods than we did 40 years ago with fewer employees."

Weener goes on to ask: "Should we try to restore those millions of agriculture jobs that have been lost? Should we try to restore those 350,000 switchboard operator jobs lost since 1970?"

In other words, manufacturing may not be the solution to the unemployment problem we have in the U.S. But that doesn’t mean manufacturing isn’t strong: We just might have to reconsider how we measure its strength.

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