Economic populists tend to confuse manufacturing jobs with manufacturing capacity.

As Dominic detailed this morning, the story of manufacturing jobs in the United States shows that the big declines in manufacturing work that began in the 1950s have largely leveled off:

Manufacturing employment as a percentage of total employment in the U.S. has been declining pretty steadily since the mid-’50s. It peaked at around 32 percent in 1953. It halved to 16 percent in 1990. In the 20 years from 1990 to 2010, it nearly halved again, from 16 percent to 9 percent. But that steady drop basically stopped in 2010. In the 15 years since 2010, manufacturing’s share of total employment has only dropped by one percentage point, from 9 percent to 8 percent. That’s because the number of U.S. manufacturing jobs, with the exception of the Covid years, increased from 2010 to 2022. That’s right, the supposedly hollowed-out industry that only loses jobs actually gained jobs for most of the past 15 years.

A lot has gone on: the unique lack of competition the United States faced in the immediate aftermath of the Second World War, when aerial bombardment and ground combat had laid waste to much of Europe and Asia, leaving us all but untouched; the end of the Cold War; the rise of China; the regional shifts in manufacturing out of the Midwest that didn’t actually go abroad but migrated to the South; the rise of international supply chains, which allow Americans to build products partly assembled abroad and to supply parts to companies finishing other products abroad; and the great improvements in automation, which mean that the same factories can produce more today with fewer workers.

There’s a tendency to romanticize manufacturing work, just as prior generations who hated factory jobs romanticized farming. We can recognize the real human cost of shuttered factories and still notice that not every manufacturing job is equally desirable in comparison with the alternatives: lots of blue-collar men would probably rather drive an Amazon delivery truck or work on a construction site than work in a textile mill. Also, economic populists tend to confuse manufacturing jobs with manufacturing capacity. It’s dangerous to our national security, they tell us, if we can’t build things anymore.

But we do still build things here; we just build them with fewer workers, a process that’s gone hand in hand with technological advancements ever since Luddite British weavers in the 1810s went on the warpath against textile manufacturing for stealing their jobs and replacing independent tradesmen with factories full of steam-powered looms. Consider this graph from the St. Louis Fed:

That’s right: the value of U.S. manufacturing output has risen steadily for two decades, interrupted only by the 2008 financial crisis and Covid, and has been rising rapidly since the end of the pandemic. Of course, the recent spike is partly a factor of inflation, but even if you adjust to constant dollars, you see the upward trend — though it took us until the first Trump presidency to get back to where we had been before 2008:

While the arguments may overlap, the cases of manufacturing output and manufacturing employment are different. The former benefits the country as a whole; the latter benefits individuals and needs to be understood in the context of what the available alternatives are. And both need to be evaluated, when setting policy, with some realism about what government management of the economy can accomplish and what it would cost in other ways to other Americans and other American interests.