U.S. Manufacturing Picking Up Steam, But not Employment

A generation ago, the United States had the largest manufacturing sector of any country in the world. Now, China is the world's leading manufacturer. The recent recession, along with innovations in computers, robotics and other technology, caused U.S. manufacturing employment to drop. In 2014, manufacturing production is once again picking up steam, but employment is not following.

The most obvious reason why employment rates are not catching up to recent U.S. manufacturing gains is technology. Thanks to advances in computerized equipment and robotics, it now takes fewer people to manufacture products than it did during the heyday of U.S. manufacturing. This is why factory and manufacturing jobs are no longer a path to stable employment; the demand for workers is just no longer there.

There is also a skills gap between available workers and available jobs. Many of the jobs that manufacturing companies need to fill require specialized skills; however, those same companies no longer offer on-the-job training. Instead, they expect job candidates to have the required skills when hired, making it difficult for many individuals to get manufacturing jobs or to move up from entry-level factory work to more specialized positions.

Manufacturing companies are also establishing "just in time" hiring practices, in which they hire and fire a temporary workforce at will to meet production-line demands. This means that, except during certain high-demand periods, fewer people are employed in manufacturing jobs at any given time. It also means that manufacturing jobs are now less stable, since companies are likely to reduce payroll during times when demand is low.

Even though China has now surpassed the United States in terms of manufacturing, U.S. manufacturing is thought to be less expensive than Chinese manufacturing due to labor costs. According to Trade Only Today, manufacturing in China in 2004 cost 14 percent less than manufacturing in the United States. A decade later, Chinese labor costs are increasing and narrowing the gap between China's manufacturing costs and those of the United States. U.S. labor costs are still low, but at the expense of full employment.

As technology continues to improve, U.S. manufacturing may once again surpass Chinese manufacturing. However, it is unlikely that U.S. manufacturing companies will ever hire as many workers as they did even a generation ago.

U.S. manufacturing employment rates have dropped considerably in the past two decades, and even though manufacturing production is once again rising, manufacturing employment is not. Today's manufacturing workers need to possess highly specialized skills and be willing to navigate temporary positions in order to make their way in a manufacturing career. U.S. manufacturing may change again in the future but is unlikely to ever reach employment levels as high as those of previous generations.

(Photo courtesy of Gualberto107 / freedigitalphotos.net)