Job Creation in the Manufacturing Revival

Abstract

[Excerpt] After a prolonged slump, the U.S. manufacturing sector is showing notable signs of revival. In part, the upturn in manufacturing output is cyclical, as global economic growth recovers following the downturn in 2008-2009. At the same time, however, there are indications that other forces may be contributing to the revival of U.S. manufacturing. Higher labor costs in the emerging economies of Asia, higher international freight transportation costs, and heightened concern about the risk of disruptions to long, complex supply chains all increase the relative attractiveness of the United States as a location for factory production. In public discourse, the revival of manufacturing is often associated with a variety of policy objectives, particularly with respect to employment. Most notably, proponents of support for the manufacturing sector often associate increased manufacturing activity with the creation of jobs for workers without higher education. Evidence suggests, however, that even strong growth in manufacturing output could well have only modest impact on job creation, and is unlikely to reverse the declining demand for workers with low levels of education.