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March 21, 2012  Worse Than The Great Depression: What Experts    Are Missing About American Manufacturing         DeclineR...
The Information Technology and Innovation Foundation (ITIF) is a Washington, D.C.-based think tank at the cutting edge of ...
Dramatic Manufacturing Job Losses in the 2000s                                                 3
Greater Than in the Great Depression                                       4
All But One State Lost Manufacturing Jobs in the 2000s                                                         5
Most Metropolitan Areas Saw Manufacturing Job Losses                                                       6
The Conventional Wisdom: It’s the Agriculture Story                                                      7
The Conventional Wisdom: It’s the Agriculture Story“Manufacturing employment has fallen because ofproductivity growth, not...
The Conventional Wisdom: It’s the Agriculture Story If it’s the agriculture story then all that’s needed  are policies to...
In Fact, It’s the “Rust Nation” Story?                                         10
If Productivity is the Cause, Why Did the U.S. Lose Just 2.4% of ManufacturingJobs in the 1990s?                          ...
If Productivity is the Cause, Why Were 13 of 19 Manufacturing IndustriesProducing Less in 2010, Than in 2000?             ...
If Productivity Is the Cause Why Did Manufacturers’ Capital StockBarely Grow?                                             ...
If Productivity Is the Cause Why Did Manufacturers’ FixedInvestment Decline for 15 of 19 Industries from 2000 to 2010?    ...
If Productivity Is the Cause, Why Is Manufacturing’s Share of U.S.Profits Declining?                                      ...
In Fact, Real Output and Productivity Growth Were Much WorseThan Official Data Suggest                                    ...
Bad Measurement Problems Plague Federal Data• Problem #1: Understating the Value of Intermediate  Goods Imports           ...
Bad Measurement Problems Plague Federal Data• Problem #1: Understating the Value of Intermediate Goods Imports• Problem #2...
Did Computer & Electronic Products’ Value Added Really Quintuple?                                                         ...
Bad Measurement Problems Plague Federal Data• Problem #1: Understating the Value of Intermediate Goods Imports• Problem #2...
U.S. Refinery Production of Crude Oil and Petroleum Products Didn’t  Grow 70 PercentSource: Energy Information Agency     ...
When Measured Properly Real Manufacturing Value-Added is Down                                                           22
When Measured Properly, Productivity Growth is Much Lower                                                       23
When Measured Properly, Productivity Growth is Much Lower                                                        24
Real Manufacturing Value Added is Down as Share of GDP                                                         25
Millions of Jobs Saved if Manufacturing Equaled Other Private Business Growth                                             ...
Why Is Output Falling?• It is not because Americans are buying fewer  manufactured products It is because Americans are m...
U.S. Losing Share in Advanced Technology Products                                                28
The Higher Import Penetration the Greater Decline in Jobs                                                            29
But At Least We’re Doing Better than Most Other Nations? Wrong.                                                           30
U.S. Lags in Growth of Manufacturing Value Added                                                   31
But Isn’t Renewal, Reshoring and Recovery Happening?• Paul Krugman: manufacturing is “one of the bright  spots of a genera...
Share of Manufacturing Job Growth 30 Months After End ofRecession is Positive but Still Low                               ...
It’s Positive Because the Loss Was so Great                                              34
Net Job Loss/Creation, 1992-2011                                   35
Is International Wage Convergence Driving Reshoring?(United States = 100)                                                 ...
We Have a Long Way to Go vis-à-vis China(United States = 100)                                               37
Conclusion• Manufacturing matters because if we lose traded sector  output we don’t automatically get it back.            ...
Conclusion• Manufacturing matters because if we lose traded sector output we  don’t automatically get it back.• Hope is no...
Conclusion• Manufacturing matters because if we lose traded sector output we  don’t automatically get it back.• Hope is no...
Conclusion• Manufacturing matters because if we lose traded sector output we  don’t automatically get it back.• Hope is no...
Thankratkinson@itif.orgRobert Atkinson                You          Follow ITIF:    facebook.com/innovationpolicy    www.in...
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Worse Than the Great Depression: What the Experts Are Missing About American Manufacturing Decline

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Worse Than the Great Depression: What the Experts Are Missing About American Manufacturing Decline

  1. 1. March 21, 2012 Worse Than The Great Depression: What Experts Are Missing About American Manufacturing DeclineRob Atkinson, President, ITIF
  2. 2. The Information Technology and Innovation Foundation (ITIF) is a Washington, D.C.-based think tank at the cutting edge of designing innovation policies and exploring how innovation will create new opportunities to boost economic growth and improve quality of life. ITIF focuses on: Innovation “verticals”: energy, life sciences, telecom, manufacturing, and Internet and IT transformation Innovation “horizontals”: trade, tax, talent, and tech policy “Innovation economics” as an alternative to mainstream economics
  3. 3. Dramatic Manufacturing Job Losses in the 2000s 3
  4. 4. Greater Than in the Great Depression 4
  5. 5. All But One State Lost Manufacturing Jobs in the 2000s 5
  6. 6. Most Metropolitan Areas Saw Manufacturing Job Losses 6
  7. 7. The Conventional Wisdom: It’s the Agriculture Story 7
  8. 8. The Conventional Wisdom: It’s the Agriculture Story“Manufacturing employment has fallen because ofproductivity growth, not a decline in output.” “The majority of manufacturing jobCongressional Research Service losses are due to productivity increases.” Robert Reich, UC, Berkeley “Manufacturing remains robust, but only because it has … much more productive—by learning how to add more value with fewer workers.” Bill Agricultural jobs fell dramatically and Galston, Brookings “The same thing is now happening in manufacturing.” Dan Miklovic, Research Director, Gartner “Computers have made manufacturers more productive by automating many routine tasks. American manufacturers “Strong growth in productivity and a slower rate now employ fewer workers to produce of growth in the demand for manufactured more goods.” James Sherk, The goods have necessarily entailed a decline in Heritage Foundation manufacturing’s share of total employment.” Congressional Budget Office “The decline in US manufacturing employment is explained by rapid growth in manufacturing productivity.” Glen Hubbard, Columbia University 8
  9. 9. The Conventional Wisdom: It’s the Agriculture Story If it’s the agriculture story then all that’s needed are policies to help displaced workers and hard hit communities adjust to a fundamentally progressive force.  No need for a national manufacturing competitiveness strategy. 9
  10. 10. In Fact, It’s the “Rust Nation” Story? 10
  11. 11. If Productivity is the Cause, Why Did the U.S. Lose Just 2.4% of ManufacturingJobs in the 1990s? 11
  12. 12. If Productivity is the Cause, Why Were 13 of 19 Manufacturing IndustriesProducing Less in 2010, Than in 2000? 12
  13. 13. If Productivity Is the Cause Why Did Manufacturers’ Capital StockBarely Grow? 13
  14. 14. If Productivity Is the Cause Why Did Manufacturers’ FixedInvestment Decline for 15 of 19 Industries from 2000 to 2010? 14
  15. 15. If Productivity Is the Cause, Why Is Manufacturing’s Share of U.S.Profits Declining? 15
  16. 16. In Fact, Real Output and Productivity Growth Were Much WorseThan Official Data Suggest 16
  17. 17. Bad Measurement Problems Plague Federal Data• Problem #1: Understating the Value of Intermediate Goods Imports 17
  18. 18. Bad Measurement Problems Plague Federal Data• Problem #1: Understating the Value of Intermediate Goods Imports• Problem #2: Computers and Rapid Technological Change 18
  19. 19. Did Computer & Electronic Products’ Value Added Really Quintuple? 19
  20. 20. Bad Measurement Problems Plague Federal Data• Problem #1: Understating the Value of Intermediate Goods Imports• Problem #2: Computers and Rapid Technological Change• Problem #3: Overstating Output in the Petroleum and Coal Products Industry 20
  21. 21. U.S. Refinery Production of Crude Oil and Petroleum Products Didn’t Grow 70 PercentSource: Energy Information Agency 21
  22. 22. When Measured Properly Real Manufacturing Value-Added is Down 22
  23. 23. When Measured Properly, Productivity Growth is Much Lower 23
  24. 24. When Measured Properly, Productivity Growth is Much Lower 24
  25. 25. Real Manufacturing Value Added is Down as Share of GDP 25
  26. 26. Millions of Jobs Saved if Manufacturing Equaled Other Private Business Growth 26
  27. 27. Why Is Output Falling?• It is not because Americans are buying fewer manufactured products It is because Americans are making fewer manufactured products 27
  28. 28. U.S. Losing Share in Advanced Technology Products 28
  29. 29. The Higher Import Penetration the Greater Decline in Jobs 29
  30. 30. But At Least We’re Doing Better than Most Other Nations? Wrong. 30
  31. 31. U.S. Lags in Growth of Manufacturing Value Added 31
  32. 32. But Isn’t Renewal, Reshoring and Recovery Happening?• Paul Krugman: manufacturing is “one of the bright spots of a generally disappointing recovery.”• Floyd Norris of The New York Times: “When the Labor Department employment numbers on Friday, it is expected that manufacturing companies will have added jobs in two consecutive years. Until last year, there has not been a single year when manufacturing employment rose since 1997.” 32
  33. 33. Share of Manufacturing Job Growth 30 Months After End ofRecession is Positive but Still Low 33
  34. 34. It’s Positive Because the Loss Was so Great 34
  35. 35. Net Job Loss/Creation, 1992-2011 35
  36. 36. Is International Wage Convergence Driving Reshoring?(United States = 100) 36
  37. 37. We Have a Long Way to Go vis-à-vis China(United States = 100) 37
  38. 38. Conclusion• Manufacturing matters because if we lose traded sector output we don’t automatically get it back. 38
  39. 39. Conclusion• Manufacturing matters because if we lose traded sector output we don’t automatically get it back.• Hope is not a strategy 39
  40. 40. Conclusion• Manufacturing matters because if we lose traded sector output we don’t automatically get it back.• Hope is not a strategy• Blame is not a strategy 40
  41. 41. Conclusion• Manufacturing matters because if we lose traded sector output we don’t automatically get it back.• Hope is not a strategy• Blame is not a strategy• The U.S. can create millions of manufacturing jobs and eliminate the trade deficit in manufactured goods by 2020 but only with a real manufacturing strategy based on the “4T’s" (trade, tax, talent, and tech). 41
  42. 42. Thankratkinson@itif.orgRobert Atkinson You Follow ITIF: facebook.com/innovationpolicy www.innovationpolicy.org www.youtube.com/user/techpolicy www.itif.org Twitter: @robatkinsonitif

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