Research says technology explains drop in manufacturing jobs

Source: The Heritage Foundation

Nov 03, 2010

Technology Explains Drop in Manufacturing Jobs, a new report written by James Sherk and published by The Heritage Foundation, explores the ups and downs of manufacturing employment. According to the research:

"Manufacturing employment has fallen by one-third over the past decade. Some Members of Congress contend that foreign trade has allowed American employers to offshore these jobs. In fact, technology has driven down manufacturing employment. Computers have made manufacturers more productive by automating many routine tasks. American manufacturers now employ fewer workers to produce more goods. This means less expensive manufactured goods, more manufacturing jobs for highly skilled workers, and the elimination of millions of low-skill assembly line positions. These same forces have reduced manufacturing employment around the world. Increased productivity led Chinese employers to eliminate millions of manufacturing jobs in the late 1990s.

Congress should not restrict trade in the mistaken belief that such a policy would bring back American manufacturing jobs. Instead, Congress should create a better business climate for all employers.

The number of Americans employed in manufacturing has dropped significantly over the past decade. Manufacturing employment dropped 20 percent between the peak in 2000 and the end of the most recent expansion in 2007. Since the recession started, manufacturing employment has fallen by an additional 15 percent. Over the past decade manufacturers have shed a net 5.6 million jobs.

Many Members of Congress blame foreign competition for these job reductions. They contend that a flood of inexpensive imports from low-wage nations, especially from China, have put domestic manufacturers out of business. They also believe that reducing imports would restore U.S. manufacturing jobs. This mistaken belief led the House of Representatives to pass the End the Trade Deficit Act (H.R. 1875) in July 2010 and the Currency Reform for Fair Trade Act (H.R. 2378) in September 2010."

Read the complete report.