Diary

The world lost 22 million manufacturing jobs between 1995 and 2002

In talking about free trade, the issue of job losses comes up.  There is no question that a smaller percentage people work in manufacturing in 2015 than they did in 1955.  However, the reasons for that change have little to do with trade.

As reported in Bloomberg, the world as a whole lost 22 million manufacturing jobs between 1995 and 2002.

Some 22 million manufacturing jobs were lost globally between 1995 and 2002 as industrial output soared 30 percent, Carson says. It seems that devilish productivity is wreaking havoc with jobs both at home and abroad.

Did those jobs end up of planet somewhere? The moon?  Mars? The idea that lost jobs moved somewhere else is clearly not always true.  In fact, it was not true 22 million times between 1995 and 2002.

During that time frame, China lost manufacturing jobs at a faster rate than most countries.

In fact, in the seven years ended 2002, the number of China’s manufacturing jobs fell at more than double the rate –15 percent versus 7 percent — of the other countries in the study. (Two of the top 20 economies, Mexico and Brazil, report manufacturing employment in index form, not as actual headcount, and weren’t incorporated into Carson’s analysis. The payroll changes in that time period weren’t large enough to alter the conclusions.)

Despite China’s addition of nearly 2 million factory jobs in 2002, “the level of factory jobs (last year) was below 1998’s and far below 1995’s,” Carson says.

Manufacturing is going the way of the farmer.  Forever increasing outputs created by fewer and fewer workers.

Going Way of Farmer

The angst over the fate of U.S. production workers, whose numbers peaked in 1979, is not unlike the epitaph for farm workers in the early 20th century, says Steve Wieting, senior economist at Citigroup Inc.

“Real manufacturing output has risen 77 percent even though the number of manufacturing workers has fallen 22 percent since the 1979 peak,” Wieting says.

Similarly, real farm output rose 96 percent since 1979 with 31 percent fewer agricultural workers.

Because output equals income, “something was earned with the gains in manufacturing and farm output during the last 25 years of falling employment in these industries,” Wieting says.

A rising supply of food and consumer goods caused prices to rise more slowly than per-capita income, giving consumers more income to spend on other things — on services that didn’t previously exist.

“While manufacturing and farm employment has fallen by 22 percent and 33 percent, respectively, since 1979, total U.S. employment still managed to grow 41 percent,” Wieting says.

Both the US and China continue to increase their manufacturing output while employing fewer and fewer people.  The US is however the global leader in “top-end manufacturing and smart technologies

Trade does impact different people in different ways.  There is no denying that some individuals are negatively impacted by trade, just as some individuals are negatively impacted by the weakening of unions or the deregulation of industries.  On balance, conservatives support those things just as conservatives have supported free trade.