In 1943, with World War II in full swing, industrial workers all across the United States were helping the war effort as factories shifted their focus to building tanks, airplanes, and numerous other wartime supplies.
In fact, by that point, nearly 40% of the US workforce was in manufacturing. That means two in five American workers were playing a role in the production process.
While the percentage of US employees working in manufacturing steadily declined in the decades that followed, total employment in manufacturing continued to grow to a peak of roughly 19.5 million workers in 1979. Since then, that number has fallen.
Today, the manufacturing sector employs just 12.6 million workers and the share of total employment in manufacturing is now less than 8%. These numbers are projected to continue declining over the next decade.
You might think that a three-year decline in employment would be reflected in production levels. But it’s quite the opposite. US total manufacturing output has not only grown over the past three years but outpaced growth in the overall economy.
That’s because American manufacturing has become more efficient and high-tech. In 1943, several workers would be needed to handle a heavy steel plate, for example. Now, robots can lift, flip, and hold dense components without breaking a sweat. Fewer employees can now produce more output, a trend that we suspect will continue in the years to come.
In this brief, we will explore how domestic manufacturing has changed, the implications of higher manufacturing productivity for the economy, and how these trends have impacted workers compensation results.
Key Themes and Takeaways
- Since 2023, US manufacturing employment has declined, but output has risen as productivity growth has soared
- US manufacturing output in recent years has shifted to relatively high-tech and high-productivity subsectors such as computer and electronic equipment, transportation equipment, and chemical manufacturing
- In the last two decades, increased manufacturing productivity has been strongly correlated with decreased work injury rates
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Quarterly Economics Briefing to learn more.
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