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% Employed in Mfg; negative trend continues.

% Employed in Mfg; negative trend continues.

7/12/11 – DECADES LONG DOWNWARD TREND CONTINUES The gradual decline in the ratio of manufacturing labor to total non-farm labor has been going on for more than half a century. It is easy to be alarmed at the precipitous decline of manufacturing labor beginning about 2000 (second graph below) and to be led to believe that it has something to do with federal policies. We don’t think that is the case; and here’s why.

First, manufacturing labor declined after 2000 at just the right rate to keep its long term fractional rate of decline at the sixty year rate. This is illustrated below by the linear decline of this ratio. The interpretation is that the economy as a whole is what drove manufacturing labor down so precipitously when it abruptly changed its job production rate in 2000 (see our last post). Second, the rate of decline has been especially constant since about 1985 through many changes in administration and trade policy. When something doesn’t change much over decades, it hardly seems reasonable to relate it to political events during the period.

It appears that manufacturing is experiencing the epochal type of productivity transformation that we saw with agriculture beginning with the industrial revolution and is not particularly influenced by this or that political policy. Calls for repatriating jobs rings about as true as sending urban dwellers back to the farms in the late 19th or early 20th century.

We have lots more on this topic coming so check back soon.


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