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Innovation mercantilist practices by many of our global competitors were specifically designed to boost these countries’ domestic production at the expense of American manufacturers.
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The rapid decline of U.S. manufacturing employment demonstrate the severity of the challenges faced by America’s manufacturing industries. In July 2014, ITIF’s Stephen Ezell testified before the Senate Finance Committee regarding the importance of manufacturing to America’s economy and the role that U.S. trade and technology policy plays in supporting American manufacturing.
As part of his testimony, Ezell pointed out that since 2000 America’s manufacturing sector has been in a steep decline, with job losses outpacing those in many peer countries.
A counter report suggesting that there is not a clear cause for alarm regarding employment losses in the American manufacturing sector was produced by Marc Levinson, a Section Research Manager with the Congressional Research Service.
However, Levinson’s account does not fully present all of the facts and only succeeds in further muddying this important policy debate.
One critique Levinson makes is charging Ezell with bias in selecting base years, which can have a sizable impact on analytical results. Levinson presents data using the years 1991 to 2000 and then the years from 2001 to 2010. However, this assessment actually makes the same error he attributes to Ezell’s work by not including job movement data from 2000 to 2001, when the American manufacturing sector lost over 1.2 million jobs, one of the single worst years for U.S. manufacturing job loss over the past two decades. Levinson then presents data from 1991 to 2012, ignoring the fact that most job loss in this period occurred since 2000, in an attempt to smooth the data and mute the alarm bells.
But chief among the flaws in Levinson’s analysis is the failure to incorporate changing labor force size into calculations of labor decline. From 1997 to 2012, the U.S. population of working-age citizens increased from 203 million to 243 million. Even if total, full-time manufacturing jobs had remained constant over this period (instead of shedding close to 5 million jobs), manufacturing jobs would represent a smaller portion of the U.S. economy. In other words, America’s manufacturing job loss is even worse when the total growth of America’s workforce over this period is considered.
This trend is magnified when using data from the Bureau of Labor Statistics (BLS) that measures only full-time employment in manufacturing data—a dataset with a narrower, more focused, definition of manufacturing jobs in the United States. While BLS data is not as readily comparable with other nations as OECD data is, it does show that between 2001 and 2010, America’s economy shed 33% of its jobs (approximately 5.8 million), a 42% decline when controlling for workforce increases. In contrast, Germany lost just 11% of its manufacturing jobs, when controlling for increases in working-age population over this period, as Figure 1 shows.
Figure 1: Manufacturing Job Loss from 2000 to 2009, as a percentage of working-age population. Source: International Comparisons of Annual Labor Force Statistics, 1970-2012