In the mistaken belief that outsourcing is a major factor contributing to America’s loss of manufacturing jobs, Congress continues to push bills that limit manufacturers’ ability to expand abroad. Combined this with the hyper-bolic “America Does Not Make Anything Anymore,” and legislators feel compelled to offer bills restricting manufacturing firms’ flexibility to expand geographically. This legislation not only breeds uncertainty, but chills U.S. economic growth.
In 1948, the nation’s gross domestic product (GDP) in manufacturing was $70.1 billion. By 2010, U.S. manufacturing GDP had expanded to $1.8 trillion for an annual growth of 5.3 percent. During this same period of time U.S. manufacturing lost nearly three million jobs. Thus between 1948 and 2010, each worker’s productivity skyrocketed with GDP per worker expanding from approximately $5,000 to $145,000 over the 62 year period.
If manufacturing GDP per worker had grown at the slower rate of the rest of the economy, U.S. manufacturing employment would have been 5.8 million higher in 2010. Thus, the real culprit explaining U.S. manufacturing employment declines has been soaring productivity driven by vastly improving technology and processes.
As a result, critics that wish to blame out-sourcing for pullbacks in U.S. manufacturing employment should more properly turn their scorn to rising productivity which has generated ever improving living standards for Americans.
Only Luddites and hyperbolic politicians would limit the freedom of manufacturers to choose the levels of capital, labor and outsourcing that are most appropriate for their firms. American manufacturing productivity growth, much like agriculture before it, has been a driver of higher U.S. living standards. Ernie Goss.