Originally posted on our Management Blog.
Manufacturing Productivity and the Shifting US, China, and Global Job Scenes-1990 to 2005 (working paper – July 2005) by William Ward, Clemson University:
…
I find that 100% of the (3.0 million) manufacturing jobs lost since 2000 were lost to manufacturing productivity growth and that 100% of the (1.8 million) jobs that should have been added back by GDP growth in the US after 2000 were shifted to other sectors of the US economy than manufacturing.
In this paper he is examines the factors leading to a reduction in manufacturing job worldwide. He concludes that job losses are mainly due to increased manufacturing productivity (worldwide, manufacturing productivity is increasing and jobs are decreasing – including China).
Manufacturing output is also increasing worldwide, most notably in China, but also in the USA (which many seem to neglect when they talk about things like the “eroding manufacturing base in the USA”).
So 10-20% of manufacturing jobs disappeared worldwide from 1995 to 2002. China lost between 17% and 34%; the US lost 11.4%.
I have to be careful because I believe productivity gains are the main reason for decreasing number of manufacturing jobs (that is just what seems right to me) so I am very ready to accept claims that the data shows that this is true. Nevertheless, William Ward makes the case well.
Manufacturing as Percent of Total Civilian Employment, 1990 and 2004 (2003 for UK and France) as well as Productivity Growth and Employment Changes.
| Country | 1990 | 2004 | 1992-2003 productivity growth | 1992-2003 change in manufacturing jobs |
|---|---|---|---|---|
| United States | 18.0% | 11.8% | 57%* | -13.6 |
| Japan | 24.3% | 18.3% | 54.3% | -25.7% |
| China (estimates – see paper) | 60.0% | -18.0% | ||
| Germany | 31.6% | 22.7% | 35.1% | -21% |
| United Kingdom | 22.3% | 14.9% | 35.9% | -18.1% |
| France | 21.0% | 16.3% | 58.0% | -10.9% |
* US productively gains estimated based on 1990-2003 figures in the paper
Based on charts in the paper (based on Comparative Civilian Labor Force Statistics, 10 Countries, 1960-2004 and Output per hour in manufacturing, 15 countries or areas, 1950-2004
As an epilogue to his paper, he states: “I end this paper with an appeal for the multilateral organizations to commit themselves to the task of providing researchers and policy analysts with datasets capable of reflecting the full extent of global economic relations.” I agree. It is difficult to find good data to get a clear picture of global manufacturing especially since these shifts are taking place with ever greater speed.
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