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Source: Federal Reserve, Bureau of Labor Statistics
Danger is when something can be stated as fact, without facts backing it up, and still be accepted by most.
Take, for example, the rampant fear that our manufacturing muscle has eroded over the years.
We used to build things.
We don't anymore.
Manufacturing is dying.
That's what we've come to believe.
Problem is, it's not really true.
We're making more things today than almost ever before.
Even adjusted for inflation, manufacturing output is near an all-time high.
In real terms, we're making more than twice as much today as we were in the early 1970s.
Why such a disconnect between perception and reality?
When people bewail manufacturing's decline, what they really mean is manufacturing employment.
There's no arguing that manufacturing jobs have been tumbling for decades.
Not only are they falling, but they're falling at an increasing pace.
There were more than 19 million manufacturing jobs in 1980. Today, there are a little more than 11 million.
Those numbers looks far worse adjusted for population growth.
The decline in manufacturing employment is real.
It's bad. And it's getting worse.
So there's another disconnect.
Why is manufacturing output so strong while manufacturing employment so frail?
As a 2004 Congressional Budget Office report points out, "Since 1979, the productivity of manufacturing workers has grown at an average annual rate of 3.3 percent, significantly faster than the 2.0 percent growth of labor productivity in the nonfarm business sector overall."
It's even faster more recently.
Manufacturing productivity surged 4% annually during the 1990s.
Everything else averaged half that much.
Simply put, manufacturers have grown incredibly efficient over the past several decades.
They're able to build the same amount of stuff with far fewer people.
Driving the decline in jobs isn't just the oft-chanted devil of offshoring. It's productivity.
As tragic as the loss in manufacturing jobs has been for many, this is how the economy is supposed to work over time.
Technology improves, businesses find ways to do things with fewer people, and the world goes on -- changed, but better.
In 1900, 44% of all jobs were in agriculture.
Tremendous improvements in farm productivity pushed that number to 2.4% by 2000.
We could, as we do with manufacturing jobs, become nostalgic about the days when farm jobs were aplenty. Don't.
Those who would have once plowed fields now work in more productive endeavors -- programming computers, curing cancer, building roads, what have you.
We don't want those farm jobs back.
A perfect hell is going back to a world where half our labor is devoted to wielding a hoe.
Think of manufacturing jobs the same way.
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