Puzzles and Surprises in Employment and Productivity in U.S. Manufacturing After the Great Recession

Abstract

Though U.S. manufacturing output recovered more slowly from the Great Recession than historical experience would have predicted, manufacturing employment, which peaked in 1979, grew between 2010 and 2017. This was the second-longest period of manufacturing employment growth in the entire postwar period. Linking these developments was an historically unprecedented, protracted absolute decline in labour productivity. This article provides an overview of these puzzling aggregate developments and of the diverse industry-level changes they summarize. The roles of foreign competition, mis-measurement of real output, and the computer industry are explored, and the value of looking within multi-industry aggregates like manufacturing is illustrated.

Keywords

• manufacturing output
• labour productivity
• employment
• great recession