Manufacturing Jobs and the Economic Recovery

Recently I had an online chat regarding the excruciately slow economic progress begin made during the current recovery.

One of my chat-mates made the assertion that the problem with the recovery is that we've lost most of our manufacturing jobs.

It's very true that we've lost a number of manufacuting jobs in the past 25 years, but the loss of manufacturing jobs has nothing to do with the slow recovery this tie around.

Here's how the conversation went.

We're having trouble recovering because we have lost most of our manufacturing jobs. All the rest is smoke and mirrors. During all previous recessions, we've had a healthy manufacturing economy that could pull us out of the recession, without having to mortgage our future further.

And here was myy response:
Well, this sounds good. However, for this to be true, we would have to demonstrate that this recovery is somehow different from past recoveries, that we are bleeding more manufacturing jobs this time versus the previous recoveries. So let’s take a look at the evidence to see if your assertion stands up to scrutiny.

So what we’re going to look at is: 1) the number manufacturing lobs lost during the previous two recessions, 2) the number manufacturing lobs lost or gained 1 year after the official end of the recession, 3) the number manufacturing lobs lost or gained 2 years after the official end of the recession.

What’s clear, based on the data, is that the post-recession “recovery” period this time around has been much more favorable. The negative job loss in manufacturing is much less negative. As far as being a drag on the recovery, the loss of manufacturing jobs is clearly not the answer.

Last three recessions according to the NBER:

Recession Period: July 1990 – March 1991
Recession Began: July 1990
Employees on Nonfarm Payroll Manufacturing, July 1990: 17,703,000
Recession End: March 1991
Employees on Nonfarm Payroll Manufacturing, March 1991: 17,141,000
Total Nonfarm Payroll Manufacturing Job Loss during recession: - 562,000
Number of Nonfarm Payroll Manufacturing Jobs 1 Yr after end of recession, March 1992: 16,805,000
Manufacturing Job Losses March 1991 (Recession End) to March 1992: -336,000
Number of Nonfarm Payroll Manufacturing Jobs 2 Yr after end of recession, March 1993: 16,795,000
Manufacturing Job Losses March 1991 (Recession End) to March 1993: -346,000

Recession Period: March 2001 – November 2001
Recession Began: March 2001
Employees on Nonfarm Payroll Manufacturing, March 2001: 16,939,000
Recession End: November 2001
Employees on Nonfarm Payroll Manufacturing, November 2001: 15,825,000
Total Nonfarm Payroll Manufacturing Job Loss during recession: 1,114,000
Number of Nonfarm Payroll Manufacturing Jobs 1 Yr after end of recession, November 2002: 14,992,000
Manufacturing Job Losses Nov. 2001 (Recession End) to Nov. 2002: -833,000
Number of Nonfarm Payroll Manufacturing Jobs 2 Yr after end of recession, November 2003: 14,315,000
Manufacturing Job Losses Nov. 2001 (Recession End) to Nov. 2003: -1,510,000


Recession Period: December 2007 – June 2009
Recession Began: December 2007
Employees on Nonfarm Payroll Manufacturing, December 2007: 13,726,000
Recession End: June 2009
Employees on Nonfarm Payroll Manufacturing, June 2009: 11,782,000
Total Nonfarm Payroll Manufacturing Job Loss during recession: 1,944,000
Number of Nonfarm Payroll Manufacturing Jobs 1 Yr after end of recession, June 2010: 11,672,000
Manufacturing Job Losses June 2009 (Recession End) to June 2010: -110,000
Number of Nonfarm Payroll Manufacturing Jobs November 2010: 11,648,000
Manufacturing Job Losses June 2009 (Recession End) to November 2010: -134,000

Sources:
• Recession Dating: NBER: http://www.nber.org/cycles/cyclesmain.html
• Employees on Nonfarm Payrolls: Manufacturing: Federal Reserve Bank, St. Louis, taken from U.S. Department of Labor, Bureau of Labor Statistics: http://research.stlouisfed.org/fred2/series/MANEMP/downloaddata?cid=11