Manufacturing myths: Is productivity really increasing?

By Justin Fox for Bloomberg View

Oct 27, 2016

The U.S. manufacturing sector is far from the basket case it is sometimes made out to be on the campaign trail. But it's important to realize that it isn't exactly going gangbusters, either.

The everything's-OK line about U.S. manufacturing goes something like this: Yes, lots of manufacturing jobs (7.3 million, to be precise-ish) have been lost since employment in the sector peaked in 1978, but real manufacturing output is at an all-time high. So the manufacturing sector is doing fine -- it's just that thanks to automation and other technological advances it has gotten much more productive and thus doesn't need as many workers.

I wrote last week about doubts over whether manufacturing output really is at an all-time high -- the numbers are skewed by huge gains in real output in computer and electronics manufacturing that mainly reflect quality adjustments made by government statisticians, not increases in real-world sales. It turns out there are also problems with the claim that U.S. manufacturers have gotten all that much more productive.

To learn more, read "Manufacturing's Productivity Myth" from Bloomberg View.