Before getting into the numbers from today's employment release (check back for the forthcoming blog post on them), I want to dig a little deeper into the underlying data and examine what has been happening to a critical sector of the U.S. economy—manufacturing. 

First, the manufacturing sector has become more competitive.  From the beginning of the recession through 2010, labor productivity in manufacturing increased a whopping 12.3 percent.  That means that we need one-eighth fewer worker hours to produce the same amount of output as compared to three years ago.  Second, the manufacturing sector has steadily been “up-skilling,” meaning it’s been building a labor force of higher-educated and higher-skilled workers.  Figure 1 below shows that the share of manufacturing employment accounted for by those with at least some college education has been increasing over time and exceeded half of the overall manufacturing labor force during the last few years.  The comparable crossover for private non-manufacturing employment occurred in 1991.

Also, as discussed below, more educated workers have fared much better during the recent economic downturn than their less-educated counterparts. Older manufacturing workers also fared better than their younger colleagues during the economic downturn.  Today’s manufacturing workforce is quite different than that of yesteryear.  Below is a bit more detail based on ESA’s own analysis. 

The overall picture for manufacturing employment has been somewhat grim of late.  The sector lost 17% or 2.4 million workers during the recession, according to the Bureau of Labor Statistics (BLS). But overall employment in manufacturing has been trending up slightly since the end of 2009.  (Figure 2)

A more detailed review of the data show that recession declines in overall employment were not distributed equally but rather were specific to education and age.  Figure 3, summarizing BLS data, shows that employment in both manufacturing and private non-manufacturing for those with graduate degrees increased between 2007 and 2010, and manufacturing jobs for those with a bachelor’s degree saw much smaller declines during the period relative to those with lower levels of education. 

Figure 4 below shows changes in employment between 2007 and 2010 by age. Employment in both manufacturing and private non-manufacturing for those age 65 years or older increased, although the private non-manufacturing sector saw larger increases than the manufacturing sector. At the other end of the age spectrum, younger workers saw the greatest job losses, with the largest drops among those under age 25.

These recent changes based on age are consistent with a longer-term trend of an increase in the average age of those employed in the manufacturing industry.  Those age 45 years or older now comprise almost half of manufacturing employment, up from about one-third in the mid-to-late 1990s.  (Figure 5)  In private non-manufacturing, the share of employment for those age 45 years or older has also risen over time, from about one-third in the mid-1990s to almost 44 percent in 2010. Perhaps next time I’ll delve into the extent to which the education and age factors interact with each other to determine the composition of the manufacturing sector’s labor force. 

~Mark Doms, Chief Economist, U.S. Department of Commerce

May 6, 2011