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Manufacturing is doing great — but not for workers. Here’s what that means.

There's been a lot of triumphalism around manufacturing over the past few years. Publication after publication has written about the rise of "insourcing" and "re-shoring," or bringing back production that long ago had gone overseas. The Obama administration has made making things a centerpiece of its economic recovery message, and companies from Apple to Wal-Mart have trumpeted their commitment to buying local.  So is this thing really happening, in a way that would really matter to America?

Well, yes and no. It depends on what chart you're looking at.

If you're looking just at production, U.S. manufacturers seem to be doing pretty well indeed. Orders for durable goods -- stuff that's supposed to last a while, like cars and appliances -- bounced right back after the recession:

Profits have increased:

And output has come back nicely as well -- even better than the real estate and finance industries -- according to the Bureau of Economic Analysis (which only offers the data in chart form back to 2005):

But there's another story that's important to tell here.

[UPDATE] First of all, aggregate output hides the fact that a small basket of products -- computers and semiconductors, in particular -- account for a large chunk of that apparent growth in manufacturing. According to Susan Houseman of the Upjohn Institute, government statistics take into account the increasing computing power of those electronic goods, rather than an absolute increase in the number produced. Factoring out those products would yield a much lower growth curve, she calculates:

Graphic by Susan Upjohn for Full Employment, a project of the Center on Budget and Policy Priorities)
Graphic by Susan Upjohn for Full Employment, a project of the Center on Budget and Policy Priorities)

Second of all, industry still employs a lot fewer people than it used to, especially compared to the growth of other sectors like health care, education and government:

Of course, we know that workers have been getting much more productive, since machines do a lot of the heavy lifting now. At the same time, though, it appears factory workers are putting in more hours than those in other industries. Retail employees, for example, rarely work a 40-hour week:

They may be producing more and working harder -- and earning more overtime -- but that doesn't mean factory workers are getting paid better on a per-hour basis. In fact, while for decades manufacturing wages tracked close to or above the average, they sunk below average as the recession hit in 2007, and have been losing ground ever since:

So on the one hand, the owners of the means of production seem to be doing very well for themselves (and there are not very many of them: According to a 2013 paper from the Federal Reserve Bank of St. Louis, only 10 percent of firms control 90 percent of the country's manufacturing assets). At the same time, the industry isn't doing much for America's jobs problem, while the factory employees who remain work longer hours for less. In fact, the return of manufacturing output and the decline of manufacturing wages are directly related: According to the Boston Consulting Group, companies find the United States attractive because of its low labor costs relative to Europe and Japan.

But the authors of the Fed paper have reason to think better of manufacturing's jobless recovery. Just like agriculture remained very important to the American economy even as the number of people working on farms shrank to almost nothing, the wealth generated by manufacturing powers the growth of other sectors. "The income gains from manufacturing productivity growth boost demand for manufacturing output relatively less than the demand for services," they wrote. "As a result, manufacturing employment is displaced to produce services that are relatively more in demand as a result of manufacturing-led economic growth."

So yes, while the graphs of manufacturing jobs vanishing while service jobs proliferate are dramatic, it's not a completely terrible story. The jobs that are supposed to appear when a sector recovers might just be showing up somewhere else.

Lydia DePillis is a reporter focusing on labor, business, and housing. She previously worked at The New Republic and the Washington City Paper. She's from Seattle.



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