Manufacturing in the United States has been on the decline since the early 1980s, shedding more than 5 1/2 million jobs over the past three decades. The 13.9 million workers employed in manufacturing today are just a shadow of the peak of the 19.5 million employed in the sector back in 1979. Manufacturing employment also seems not to be recovering after recessions. It used to follow the same pattern as nonmanufacturing employment over the business cycle, contracting during recessions and rebounding and growing during recoveries. During the last two recoveries, however, manufacturing gains appear to have softened or disappeared altogether.
During the most recent recession in 2001, overall nonfarm employment growth stalled but eventually resumed its upward trend. Manufacturing employment, on the other hand, never recovered from its fall. An index of employment since the 2001 pre-recession peak shows that manufacturing employment is now only 85 percent of what it was at the peak. Nonfarm employment excluding manufacturing, in the meantime, has increased 8 percent.
Manufacturing and nonmanufacturing employment both took a big dive during the 2001 recession. Although the pace of expansion for both had started to soften in advance of the recession's onset, the nonmanufacturing sector continued to add jobs up until it started. In contrast, manufacturing started losing jobs during the summer of 2000, well before the recession began. Nonmanufacturing payrolls experienced a rebound afterward and worked back into expanding territory. The monthly decline in manufacturing payroll numbers, by comparison, has merely become less pronounced.
Economic indicators have received increased attention in recent months, as economists try to determine the extent to which housing troubles may have spilled over into the broader economy. Employment reports indicate a definite softening in the labor market. Nonmanufacturing jobs are still being added, but at a slowing pace. December's recent employment report, for example, showed a small gain of 18,000 nonfarm payrolls with a loss of 31,000 in manufacturing. Manufacturing numbers have been on a long-term decline and have not experienced even a modest gain since June 2006. While the manufacturing sector is losing employees, it is not losing them at such a dramatic rate as was observed before or during the 2001 recession. However, direct comparisons between 2001 and recent months requires caution because employment figures are subject to monthly and annual revisions.
The pie chart above includes some of the largest manufacturing sectors. Transportation equipment, fabricated metal products, and food manufacturing account for about a third of manufacturing employment. Of all the subsectors within manufacturing, not a single one has added payrolls over the past decade. However, some sectors have borne a larger brunt of the industry's decline than others. While fabricated metal products and the food manufacturing sectors have held onto employees relatively well, losing just 7.5 percent and 3.9 percent of their payrolls since 1997, most areas did not fare so well. Computer and electronic products lost nearly 30 percent of their employees, and the printing and related activities sector lost nearly 25 percent. Apparel manufacturing took the worst hit of all categories and now has only 31 percent of the employees it had a decade ago. However, this sector is smaller than the others mentioned and accounted for only 4 percent of all manufacturing payrolls even before the drop.