Economic Research and Data

Economic Trends

Filling you in on the current state of the economy

02.15.07

Economic Activity

Is Manufacturing Going the Way of Agriculture?

On average, employment increased by 186,917 workers each month in 2006. The vast majority of this employment growth came from the service sector; manufacturing registered a small monthly decline, while the remainder of the goods-producing sector experienced a small increase. The total employment numbers for 2006 seem to dwarf the average monthly job growth seen since the start of this century. The average numbers for the 2000-2006 period are “small” owing to the March 2001-November 2001 recession and the so-called jobless recovery which followed, where employment growth actually remained negative for nine of the first ten months after the recession's official end. Since the beginning of 2000, the loss in manufacturing jobs has been significant, averaging 37,524 per month.

The sluggish growth in manufacturing employment, however, is not a recent phenomenon.  The level of employment in manufacturing today is about the same as it was in 1947, while the U.S. population has more than doubled over the same period. Employment in manufacturing did experience growth during the 1960s; after that, employment growth was essentially zero until 2000, after which it became negative.

Because the population and, hence, the labor force has grown, the share of manufacturing employment (to total employment) has been steadily falling since the Korean War. Approximately one in every three workers was employed in manufacturing after the Second World War; today, that number is about one in ten. Although the share of manufacturing employment has steadily fallen over time, the share of manufacturing output (to total output) has been remarkably stable over the same period. Labor productivity growth in manufacturing over this period can explain the falling employment share and the constant output share.

Changes in manufacturing employment during that last half of the twentieth century are remarkably similar to those in agriculture during the first half of the twentieth century. About a third of U.S. workers were employed in agriculture at the beginning of the century, but by 1950 that number was only a tenth. As with manufacturing, agriculture's share of employment consistently fell from 1947 into the 1980s, at which point it leveled off, but its share of output remained relatively constant. 

Economic Trends is published by the Research Department of the Federal Reserve Bank of Cleveland. Views stated in Economic Trends are those of individuals in the Research Department and not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System.




Economic Trends is published by the Research Department of the Federal Reserve Bank of Cleveland.

Views stated in Economic Trends are those of individuals in the Research Department and not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System. Materials may be reprinted provided that the source is credited.

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