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Daniel Hartley |

Research Economist

Daniel Hartley

Daniel Hartley is a research economist in the Research Department of the Federal Reserve Bank of Cleveland. He is primarily interested in urban/regional economics and labor economics. His current work focuses on crime, public housing, and neighborhood housing market dynamics.

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12.10.12

Economic Trends

A Decade of Hard Times in Places that Rely on Manufacturing Employment

Daniel Hartley

While the fraction of people employed in the manufacturing sector has declined greatly in the United States over time, manufacturing still makes up a large fraction of employment in some parts of the country. One way to see this is by looking at how the share of manufacturing employment is distributed across counties. The right tail of the distribution shows a set of counties where manufacturing makes up a much higher share of employment than the average for the country (which is 11 percent).

The top 25 percent of counties in terms of their share of manufacturing employment derive about 18 percent or more of their employment from manufacturing. While these counties contain about one-fourth of the manufacturing employment in the United States, they contain only one-eighth of the U.S. population.

These high-manufacturing-share counties tend to be located in the eastern half of the country and are concentrated near the Great Lakes, and also in the South and Southeast.

Since 2000, this set of high-manufacturing-share counties has usually experienced lower employment growth than the rest of the counties in the United States. This was particularly true during the recent recession, when employment losses reached almost 6 percent per year in these counties compared to a peak employment loss of only 3.7 percent per year in the rest of the country. For a few quarters toward the beginning of the recovery, employment gains in these counties outpaced those in the rest of the country, but in the last year or two employment growth has been roughly the same in the high-manufacturing-share counties as it has been in the rest of the country.

The cumulative effect of lower employment growth in the high-manufacturing-share counties relative to the rest of the country can be seen by comparing employment in each group of counties to its year-2000 level. These comparisons show that employment in the set of high-manufacturing-counties has fallen by about 5 percent since 2000, while employment in the rest of the country has risen by about 5 percent, revealing a stark divergence.

The mean unemployment rate of the high-manufacturing-share counties has also diverged from that of the rest of the country. From 1995 to 2000, it was the same, but since 2000 it has been consistently above that of the rest of the country. This difference reached its peak in 2009 when the average county unemployment rate of the high-manufacturing-counties reached 11 percent, while the average for the rest of the country was 8.4 percent. Since then, the two mean unemployment rates have both dropped, and they are now within about a percentage point of one another.

The employment numbers show that 2000–2010 was a hard decade for counties where employment is concentrated in manufacturing. Employment in these places took a big hit during the most recent recession. Only now are they experiencing employment growth commensurate with the rest of the country, but that is far less than needed to undo the cumulative effects of the employment losses sustained in the last decade.