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News from EPI Manufacturing is Still a Large and Vital Part of the U.S. Economy

Despite policies that have shrunk manufacturing employment and hurt its international competiveness, U.S. manufacturing is still a large and vital part of the U.S. economy, according to The Manufacturing Footprint and the Importance of U.S. Manufacturing Jobs, a new study from EPI Director of Trade and Manufacturing Policy Research Robert E. Scott.

Manufacturing directly employs 12 million workers—8.8 percent of U.S. employment—and indirectly supports an additional 17.1 million workers. All told, manufacturing accounts for 21.3 percent of employment in the United States—a total of 29.1 million jobs. Moreover, manufacturing jobs are high-quality jobs—especially for workers without a college degree, who earned an 11 percent wage premium ($1.78) in 2012 and 2013.

Manufacturing directly generated $2.1 trillion in gross domestic product in 2013, or 12.5 percent of U.S. GDP. Manufacturing is also a significant source of demand for goods and services in other sectors of the economy; manufacturing contributes $5.9 trillion to the economy—35.4 percent of U.S. GDP.

“Manufacturing is not the dying or outdated sector of the economy it’s frequently made out to be,” said Scott. “On the contrary, manufacturing is still the most important part of the U.S. economy. It is a source of good, well-paying jobs. Policymakers should not ignore manufacturing or write it off. Instead they should work to shore up and expand our manufacturing sector.”

Manufacturing plays a particularly important role in the labor markets of the Midwest and the South. The top ten states in terms of percentage of the workforce employed by manufacturing are Indiana (16.8 percent), Wisconsin (16.3 percent), Iowa (14 percent), Michigan (13.5 percent), Alabama (13.1 percent), Arkansas (12.9 percent), Ohio (12.6 percent), Kentucky (12.4 percent), Mississippi (12.3 percent), and Kansas (11.9 percent).

Nearly twenty years of policy failures have eroded U.S. manufacturing, but there are steps that can be taken to reverse its decline. In the paper, Scott identifies addressing currency manipulation, reducing U.S. trade deficits, and investing in infrastructure and research and development as key ways to rebuild and expand U.S. manufacturing.