March Manufacturing Massacre

U.S. loses 29,000 manufacturing jobs, steepest decline since 2009

Buried in an otherwise positive monthly jobs report Friday was this troubling sign for the economy’s industrial base: America shed 29,000 manufacturing jobs in March, the steepest decline since December 2009.

Overall, total non-farm jobs rose by 215,000, producing an unemployment rate of 5 percent — in the range of what economists generally consider full employment. But in addition to the 29,000-worker decline in manufacturing, the mining sector took a hit of 12,000 employees.

American manufacturing advocates blamed U.S. trade policy and China’s mercantile policies.

“March’s bleak jobs report shows why so many voters are angry about trade and the economy,” Alliance for American Manufacturing President Scott Paul said in a prepared statement. “When you look at the major economic problems facing Americans today — widening inequality, a hollowed out middle class, and people living paycheck to paycheck — it is clear why voters are asking for trade solutions.”

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The Washington-based industry group noted the economy has added a net of 331,000 manufacturing jobs during the Obama presidency. To meet his goal of creating a million jobs in the sector by the time he leaves office, the economy would have to produce an average of more than 74,000 additional jobs every month for the rest of his term.

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Kevin Kearns, president of the U.S. Business and Industry Council, said American manufacturing has been battered by a combination of bad trade policy and weak economies in many foreign countries.

“Exports aren’t what they used to be, given the slowdown in the world economy, and there’s a lot of targeting of the United States by our trading partners subsidizing goods,” he said. “Trade in general has decimated our manufacturing base in a number of ways … We’ve got real problems in the manufacturing sector.”

[lz_table title=”Manufacturing Decline” source=”Bureau of Labor Statistics”]All private sector jobs
Lost in recession,8.801 million
Gained since 2010,14.435 million
Percent recovered,164%
|Manufacturing jobs
Lost in recession,2.293 million
Gained since 2010,838K
Percent recovered,37%

Alan Tonelson, an economic policy analyst and founder of the of the policy blog RealityChek, said the manufacturing losses are particularly troubling since the economy added jobs overall. He noted the March figures come on top of a distressingly weak stretch for U.S. manufacturing. The sector has lost jobs over the past 16 months, the longest period since the economic collapse in 2008. Manufacturing also experienced its first year-over-year employment decline since September 2010.

Manufacturing now makes up 8.55 percent of total non-farm employment. That is the lowest share since the government began keeping records. Traditionally, a free fall in manufacturing jobs has been a signal of a possible recession. But Tonelson said that may be changing.

“It’s getting difficult to tell whether manufacturing is a leading indicator anymore … because it’s footprint has, in fact, shrunk,” he said.

There are reasons to worry about declining manufacturing beyond employment

Still, Tonelson said, there are reasons to worry about declining manufacturing beyond employment. He noted that manufacturing historically has led all sectors in productivity growth, which paves the way for sustainable increases in standards of living. It also has been a leader in innovation. He pointed to statistics showing that about 75 percent of science and technology workers are employed in manufacturing.

Manufacturing also has been a source of high-paying jobs. Although wage growth has been poor in manufacturing in recent years compared to the rest of the economy, Tonelson noted that wages are still higher than the private sector average.

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Aside from manufacturing, Tonelson said March economy did not perform as well as it appears at first blush. He said the overall increase of 215,000 jobs is a solid number. But he added that it does not tell the whole story.

“In part, these overall numbers are the result of an overall increase in government jobs,” he said. “It’s hard to argue that relying on a growing number of government jobs in the long run is going to make the U.S. economy fundamentally strong … You can’t have jobs in the government be the leader of a truly healthy economy.”

Government job growth numbered about 20,000. Tonelson said another 51,000 came from what he calls the “government-subsidized economy.” Those are jobs in fields like health care services and education that depend on heavy government spending. Without that government support, those sectors could not sustain their current employment levels, he said.

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