Manufacturing Employment Share
Manufacturing workers as percentage of total nonfarm employment
“America lost its manufacturing base after 1971 when the dollar's devaluation made imports cheaper.”
Manufacturing employment as a share of total jobs fell from ~30% in 1953 to ~8% in 2023. The decline was steady from the 1950s onward, well before 1971. It accelerated after 2001 (China's WTO entry), losing 5 million jobs in a decade. Automation eliminated more manufacturing jobs than trade did.
Perspectives
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Automation, trade, and economic evolution drove manufacturing decline
Manufacturing employment decline reflects automation, globalization (especially the China shock), and the natural transition of wealthy economies toward services.
The decline was gradual from 1953-2000, then accelerated sharply with China's WTO entry. Monetary policy played a role through exchange rates, but the fundamental forces were technological change and comparative advantage. Notably, US manufacturing output has increased even as employment fell.
Causal Factors
Automation & productivity gains
30%US manufacturing output reached record highs even as employment fell. Robots and automation replaced workers: each industrial robot displaces ~3.3 workers.
Globalization & trade competition
25%China's WTO accession alone cost 2-2.4 million US jobs from 2000-2015. NAFTA shifted ~800,000 jobs to Mexico. Lower-wage countries had an inherent cost advantage.
Service economy transition
20%The US economy naturally transitioned from manufacturing to services as incomes rose — a pattern seen in every developed nation regardless of monetary system.
Currency & trade policy
15%A strong dollar made imports cheap and exports expensive. China's currency manipulation kept the yuan undervalued by an estimated 25-40% for two decades.
Corporate tax & regulatory burden
10%High corporate tax rates (before 2017 TCJA), environmental regulations, and compliance costs incentivized offshoring production.
Data Source
Key Events
Post-war peak
Manufacturing employment peaks at 31.8% of nonfarm jobs
Nixon Shock
Gold standard ends, but manufacturing decline was already well underway
NAFTA
North American Free Trade Agreement shifts some production to Mexico
China joins WTO
The 'China Shock' accelerates manufacturing job losses dramatically
Bottom & stabilization
Manufacturing share stabilizes around 8-9% after the Great Recession