Why Did Manufacturing Decline?

In bowling alleys, from the beginning of the 20th century to the 1940s, a pin girl or a pin boy would have been stationed near the gutters waiting to pick up and reset the pins after they were knocked down. Until the 1940s, many of us needed an iceman to deliver the 25 to 100 pound chunks of ice that chilled our refrigerators. And, in England, before alarm clocks, we had knocker uppers with bamboo poles or pea shooters that tapped on windows to wake people up.

In this 1952 image, the operators are seated inches from each other. One woman told how she said seven or eight phrases over and over again: “Operator, how may I help you,” or “You have a collect call; will you accept the charges?” or “What number do you want?”

Now, we can ask what will happen to manufacturing.

Manufacturing Jobs

For manufacturing jobs, it’s been downhill since 1979. From a peak of 19.5 million manufacturing jobs 45 or so years ago, the number slid down to approximately 13 million in 2023 where it remains. Asking why, we have a debate. We know that China’s export surge after it joined the WTO (World Trade Organization) in 2001 played a role. But also, the recipe for the decline included technology, the elevated skills of U.S workers, and the economy’s transition to services. The debate involves which ingredient had the greatest impact.

You can see that the decline starts before 2001:

And, it hit most industries:

Our Bottom Line: Structural Change

Like the knocker uppers, a slew of jobs no longer exists.

As economists, we would call it structural change. Requiring new factors of production, structural change transforms our labor and our capital. Because structural change brings new skills and new technology, it is a painful process for the job losers. However, the tradeoff is economic growth and new job markets.

It leaves us knowing that any U.S. return to manufacturing will reflect a structural change that is very different from the past.

My sources and more: Looking back, the Visual Capitalist had the facts while econlife had the stories. From there, the National Association of Manufacturers and Marketplace had the recent data. But Cato had the best analysis of the China Shock debate.

Please note also that several of today’s sentences were in a previous econlife post.