American manufacturing is not in decline: Column

While visiting a steel plant in Indiana last month, President Obama described the recent gains in American manufacturing employment as a reversal from previous decades when "everybody said American manufacturing is going downhill." But has manufacturing really been going downhill? Not exactly.

News outlets including CNN, NPR and The Washington Post have also lamented the decline of U.S. manufacturing. But what do they mean by a "decline" in manufacturing?

The U.S. manufacturing sector produces more stuff almost every year than it did the year before. Prior to the 2008 recession, we manufactured more stuff in the United States than had ever been manufactured by any country, ever, in the history of the world. Is that decline?

After a slight dip from the recent recession, the United States is once again at an all-time high. We are on pace to manufacture more stuff in 2014 than we have in any year in all of U.S. history. Is that decline?

Most Americans, including the president, have a misperception of decline because manufacturing employment has fallen in recent decades. Although it is true that the number of jobs in manufacturing has gone down, there are two reasons this change should not be thought of as "decline."

First, while the number of U.S. manufacturing jobs has fallen by almost 7.5 million jobs since its peak in 1979, this loss is modest compared to the jobs created over that time. The U.S. economy creates and loses almost 5 million jobs every month. The number of non-manufacturing jobs created in the last few months alone is more than the number of U.S. manufacturing jobs lost in the past 35 years.

Second, American workers have moved out of manufacturing and into industries where they are most needed. Yet despite having fewer workers, the manufacturing sector still keeps producing more stuff every year. Producing more stuff with less work is not decline.

Think about it: If "decline" means working less and making more, then I want to be in decline. We should all want to be in decline. We should want every industry to be in decline!

Another reason for the talk of "decline" is that in the last few years, China (which has four times the population of the United States) has finally started manufacturing more stuff than we do. But despite being the second largest manufacturer in the world rather than number one, we still produce more stuff today than we ever have before. That is hardly decline.

Many Americans worry that foreigners are "stealing our jobs." As the president said, they're "looking to bring jobs back from China." But the jobs lost to China are mostly low-skilled, low-paying jobs. We should be glad those jobs are moving overseas as long as we keep creating higher-paying jobs here at home. That's not decline.

Plus, as China gets richer, its people buy more stuff from the United States. Much of the equipment used by China's manufacturing sector is made in the U.S.A. Making good high-quality products in the United States while the cheap stuff is made abroad is not a sign of decline.

No, Mr. President, American manufacturing is not in decline.

Thomas L. Hogan is assistant professor of finance in the Johnson Center for Political Economy at Troy University and a member of theFinancial Markets Working Group in theMercatus Center at George Mason University.

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