A brief presented by Jay Garner, president of analyst Garner Economics LLC, indicates that national productivity in the US has plateaued, but is gaining in some regions. His analysis is based on US Bureau of Labor Statistics and Bureau of Economic Analysis data regarding the productivity of the manufacturing sector for US metropolitan areas.
“The ongoing struggles of the manufacturing sector has been – and will continue to be – a central theme of this year’s election cycle, particularly in the states and metro areas that have been hit hardest by job losses in this industry,” says Mr Garner. “What is missing from the narrative is the fact that, in spite of the job losses, the manufacturing economy in the US has actually continued to grow.”
While the number of manufacturing jobs in the US declined by 29% between 2000 and 2015, the real GDP for the manufacturing sector actually increased by 25%, data indicates. Mr Garner explains that this trend is the result of manufacturing productivity increasing exponentially during the past 15 years, largely due to automation. “With more efficient manufacturing processes, fewer workers are needed to produce the same amount of goods,” he said.
Mr Garner adds that these productivity gains mostly occurred between 2000 and 2010. “From 2010 to 2015, manufacturing employment has rebounded. The US has actually added close to 800,000 jobs in this sector over the past five years, an increase of 7%,” he says. Meanwhile, real manufacturing GDP has only increased by 8% during this period, resulting in very minor productivity increases.
Mr Garner warns that the lack of recent growth in manufacturing productivity should be a major concern for US cities and regions given that it is a key component of profitability for manufacturing companies.
He points to fact that the ten most productive areas for US manufacturing are regions with a broad range of sizes located in multiple parts of the country, including San Francisco-Oakland and Portland and smaller cities like Fairbanks, Alaska.