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The Reason 600,000 U.S. Manufacturing Jobs Vanished

This isn't your father's America.

Gone are the days you could graduate high school, get a job at a local factory, and have a job for life. The data suggests manufacturing jobs are in a permanent decline.

Even so, we're now manufacturing more and more stuff in the United States. It's not that manufacturing left the U.S. Instead, the manufacturing jobs did.

How 600,000 jobs vanished
It may be a tough environment for those seeking work in the manufacturing industry. But those who already have a manufacturing job have it better than ever. In fact, the average manufacturing worker is working more hours per week than at any time since World War II:

It's hard to see it in the chart -- the current manufacturing employee works 42.1 hours per week. That's higher than the "Made in the USA" heyday of the 1950s and 1960s.

Factories fear adding new workers
It's curious that at a time manufacturing workers are working more, fewer factories are hiring. Since the bottom in manufacturing employment in 2010, factories have only added 500,000 workers -- too few to keep work weeks at 40 hours.

There's an important takeaway from these two charts. First, factories are reluctant to hire new workers, choosing to pay their existing workers an average of 2.1 hours of overtime. Secondly, if the manufacturing industry hired enough workers to push down the average factory week to a normal level of 40 hours, the industry would create some 600,000 new American jobs.

There are plenty of reasons factories aren't hiring. For one, manufacturers recognize the cyclicality of the industry -- perhaps they're not ready to hire if another recession may be around the corner. Secondly, manufacturing workers bring big fixed costs like pensions and medical benefits. To put it simply, paying overtime wages is less costly than adding new workers.

So, while we're making more products in the United States, there's something we're not making: new manufacturing jobs. That trend is, unfortunately, probably here to stay.

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Read/Post Comments (13) | Recommend This Article (9)

Comments from our Foolish Readers

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  • Report this Comment On January 26, 2014, at 9:01 PM, ghelmz21 wrote:

    Probably because now that everyone is going on marijuana they forgot where they worked!

  • Report this Comment On January 26, 2014, at 10:53 PM, xwonder wrote:

    It all about profit and taking the money away from the American businesses and investing overseas, while Americans are losing their jobs, which in time they will turn around and the oversea companies will want the same type of BENEFITS as the American people have had for years, like pay raises, vacation, medical benefits, sick days, 401k and maybe even UNIONS and it could be happening right now...these are the few things the corporate world and the wealthy investors don't want and also not to pay taxes, but it will catch up to them real soon and it will be costly...So invest in America where are companies and businesses belong...

  • Report this Comment On January 26, 2014, at 11:00 PM, Vector wrote:

    I am impressed that they did not mention China once in this whole article.

  • Report this Comment On January 27, 2014, at 6:08 AM, blainedwards8 wrote:

    Having worked in manufacturing, I saw a first hand perspective of what is going on. We were hit hard by the economy and ended up shutting our doors because we couldn't turn a profit. It isn't about profit, making a profit, something that a lot of companies haven't been able to do in a while. It is against the principals of economics that a company can operate in the red for a sustended period of time. When the companies can't make a profit in the United States, they have to take their jobs overseas.

    The article mentions that most mills would rather pay overtime than higher more people. There are several reasons why this is so. Fist, an individual has a certain cost to them (insurance, benefits, etc) even before you start to pay them an hourly wage.

    Second, most people would leave if you cut the overtime. Money is good for the people that put in the time. If you want to see people jump ship like there is no tomorrow, cut hours.

    Third, Unions -- the crutch of every manufacturer. Unions keep the less productive working simply because of seniority. In the market we just went through, it was called temporary job security. You were the one that got laid off last.

  • Report this Comment On January 27, 2014, at 6:51 AM, rayrock1 wrote:

    Technology replaced many workers. Instead of hiring more they’ll increase investment in capital equipment to get the added productivity instead of hiring more workers.

  • Report this Comment On January 27, 2014, at 8:52 AM, Drewster99 wrote:

    The article also forgets to mention that globalization and robotics/automation are creeping in more and more. A typical robot can do the work of 2 employees and it doesnt need benefits. Its just a depreciation tax writeoff for the corp. Also the hourly cost to run a typical robot is about $4 an hour which is on par with the labor in China. Instead of saying manufacturing is in decline, they should of called it human labour manufacturing is in decline.

  • Report this Comment On January 27, 2014, at 9:45 AM, paintdoggy wrote:

    Here is a fools parade!

    Companies can't male a profit because there are no jobs.

    Robots don't buy anything and don't pay taxes.

    Austarity = Governments exploit the workers so they can take the money and blow it.

    The world needs new infrastructure for the future. The future of the world is held hostage by a few greedy crooks. The financial world is not for progress and governments allow them to steal.

    The corporate world sees our civil liberties as a liability and therefore is more than happy to do business with the worst communist country in the world because they see eye to eye with the communists values.

  • Report this Comment On January 27, 2014, at 9:58 AM, paintdoggy wrote:

    For every 2 workers robots replace 2 consumers are eliminated. Remember Henry Ford understood this. More production and less consumption is not a good business model. Welcome to the new world order of big brother and the global plantation.

  • Report this Comment On January 27, 2014, at 12:03 PM, Jefffirzlaff wrote:

    Not every job can be done by a robot. Look at the trim and final lines of any auto assembly plant. It's shoulder to shoulder people all the way down the line. Some jobs are better done by robots and machines and to delay progress is to go out of business. Eventually these developing economies overseas will see their labor force demand better working conditions and that will start raising their costs as another poster above stated.

  • Report this Comment On January 27, 2014, at 1:17 PM, paintdoggy wrote:

    Again I see the propaganda has worked...maybe in about 20 years so called developing countries will improve. This is a joke. These countries will never develop. Any government or economy that does not have a middle class with guaranteed rights will never rise to the level stated. The progress in these countries is totally unsustainable. If the workers in China push for better working conditions the government will strike them down. The corporations will not do business there anymore. Again the attraction is an enviroment in which the labor and the lives of individuals can be exploited. Also this theory is just a theory and our leaders have sold us out to a gamble at best.

  • Report this Comment On January 27, 2014, at 1:29 PM, rocketman262 wrote:

    I have been working in manufacturing the last 40 years. Using automation, lean manufacturing, and technology improvements most plants can make more product than they did 40 years ago with half the people.

  • Report this Comment On January 28, 2014, at 11:04 AM, cityperson wrote:

    The more government regualtions other pressures from various partys of our government. The moire companies seek technology and other ways to stay in busniess. Some people do not understand the work factor, you are hird if needed, not a right for a job as many think. With all the pressure from local, states and government place on the companies jobs and hours are cut and the company will move or close. Also not considered are the NIMBY types in some ares for building or expanding the work places or bringing in a new company. Most of the time we cut our on throats.

  • Report this Comment On January 28, 2014, at 2:24 PM, paintdoggy wrote:

    Oh...its the regulation? You mean clean air, safety regulations, pollution standards. Yes I understand business wants to pollute, and don't care about individual safety. Just look at China, the ideal world for business. Its really great there. You work 16 hour days for seven days a week and no healthcare.

    The pollution is nuclear. Never in history has a land been more polluted. They can't live this way for long.

    Yes if you want to experience the paradise the big business loves....go to china. Sorry this is not China.

    I'm thankful for all our regulations...the results speak louder than words.

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