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Posts tagged with: "MANEMP"

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Is the decline in manufacturing economically “normal”?

Deciphering the phases of economic development

The FRED graph above tracks the proportions of employees working in three industries—construction, mining and logging, and manufacturing—since 1939. Construction (the blue line) has remained roughly horizontal. Mining and logging (the green line) has steadily declined. And manufacturing (the red line) has noticeably declined as well. This trend may look like weakness for the U.S. economy, but is it something to worry about?

Let’s take a step back: Historically, economic development has led to a declining share of workers in goods-producing sectors. The first sector to decline is agriculture,* whose workers moved to manufacturing and mining during the Industrial Revolution (which pre-dates our graph by a century or so). In the 19th century and beyond, the U.S. economy grew further and progressed to the next phases of development, with mining and manufacturing losing relative importance.

So if the U.S. economy is growing, where is it growing? The graph below shows the service sector has taken up the slack. At the start of the graph, in 1939, this sector had already made up 50% of non-farm employees, and it has continued to grow. The remaining sector, government, has remained relatively flat over the 80 years of this data series. Clearly, the U.S. economy is now much less focused on “making things.” Rather, the emphasis is now on education, health, leisure, retail, information, and finance.

How these graphs were created: Search the Current Employment Statistics release table and choose Table B-1 (seasonally adjusted); select the series you want and click “Add to Graph.” From the “Edit Graph” panel, for each line add series “All employees, non-farm” and apply formula a/b*100.

*Why don’t we show agricultural employment here? For one thing, it’s really hard to count: Many are part-time/seasonal workers and relatives that work on family farms.

Suggested by Christian Zimmermann.

View on FRED, series used in this post: CES0800000001, MANEMP, PAYEMS, USCONS, USGOVT, USMINE

Manufacturing is growing, even when manufacturing jobs are not

The role of manufacturing in the U.S. economy is often discussed. As shown in the FRED graph above, as a year-over-year percent change, the level of manufacturing has generally grown. (One striking exception is during the recent recession.) The number of employees working in manufacturing is a different story, however. It has sometimes grown, but it has nearly always grown less than the growth in manufacturing. This suggests that growth in manufacturing does not equal growth in manufacturing jobs. What’s the explanation? A prime candidate is productivity growth. Another is that the sectoral mix has shifted toward industries with higher value added, such as computers and electronics. (See this previous FRED Blog post for more on this subject.)

How this graph was created: Search for “Industrial Production: Manufacturing” and “Manufacturing Employees” and add the series to the graph. Then convert both series to “Percent change from a year ago.” Finally, restrict the sample to a time period when both series are available.

Suggested by Katrina Stierholz

View on FRED, series used in this post: IPMAN, MANEMP

The decline of manufacturing

Many have complained about the decline of the manufacturing sector in the United States. As this graph shows, how recently this decline started depends on what you look at. If you look at the number of people employed in that sector, the decline started only a decade ago. If you look at the share of manufacturing in total employment, the steady decline has been ongoing for decades. For a nice overview of the evolution of employment in the manufacturing sector, see this article in the Journal of Economic Perspectives.

How this graph was created: Choose the MANEMP series to graph the line and add the MANEMP series again to create a ratio with the PAYEMS series. (Use the “create your own data transformation” feature to enter the formula.) The units for both series are very different, so be sure to use the left y axis for one set of units and the right axis for the other.

Suggested by Christian Zimmermann

View on FRED, series used in this post: MANEMP, PAYEMS


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