Wednesday, December 12, 2007

States continue to hemorrhage manufacturing jobs

from the Economic Policy Institute

by Liana Fox and Lauren Marra

Since March 2001—the most recent business cycle peak—the United States has lost nearly 3 million manufacturing jobs, a decline of 17.4%. The Midwest and East Coast have seen the worst fallout from these losses, with Michigan and the Carolinas losing the largest shares of jobs. Since March 2001, Michigan has lost 5.2% of total employment (or nearly a quarter of a million jobs) due to declines in manufacturing jobs. With a few exceptions, the states hit the hardest are all east of the Mississippi (See Chart).

Interestingly, this decrease in manufacturing jobs comes at a time when productivity growth in manufacturing is largely unchanged.1 As documented in previous EPI research, many of these jobs have been lost due to foreign trade, especially trade with China.

The loss of these relatively high-paying jobs (average weekly wage of $725 compared to overall average of $603) has been a drain on states' economies, as many of these jobs have been replaced by lower wage service sector jobs. The decline in employment in the manufacturing sector also means increased labor competition in other sectors, as unemployed workers try to find jobs elsewhere in the economy. These trends thus threaten to lower labor standards for all workers.

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