According to a new report from Information Technology and Innovation Foundation (www.itif.org), in the 2000s, U.S. manufacturing suffered its worst performance in American history in terms of jobs. The report, titled Worse Than the Great Depression: What the Experts Are Missing About American Manufacturing Decline, explains that not only did America lose nearly six million manufacturing jobs in the last decade but the decline as a share of total manufacturing jobs (33 percent) exceeded the rate of loss in the Great Depression.
Here is an excerpt from the executive summary:
The alarm bells are largely silent for two reasons. First, most economists and pundits do not extend their analysis beyond one macro-level number—change in real manufacturing value-added relative to real GDP—which at first glance appears stable. But this number masks real decline in many industries. In 2010, 13 of the 19 U.S. manufacturing sectors (employing 55 percent of manufacturing workers) were producing less than in 2000.
Second, and more fundamentally, U.S. government statistics significantly overstate the change in U.S. manufacturing output, and by definition productivity, in part because of massive overestimation of output growth in the computer and electronics sector and because of problems with how manufacturing imports are measured. When measured properly, U.S. manufacturing output actually fell 11 percent over the last decade while GDP increased 17 percent, something that has not happened before, at least since WWII.
Moreover, manufacturing productivity grew by just 32 percent, not the reported healthy number of 72 percent indicated by Bureau of Economic Analysis data. If productivity growth was actually 72 percent, one would expect that U.S. manufacturers would have added plenty of machines and factories over the last decade to be more productive, as they have done every decade since WWII. In fact, total U.S. manufacturing capital stock increased just 2 percent, compared to historic rates of growth of between 20 and 50 percent per decade.
Learn more about the report, Worse Than the Great Depression: What the Experts Are Missing About American Manufacturing Decline