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U.S. Job Loss in Manufacturing during the 2000s Decade: A Geo-Graphical Representation

January 8, 2011

I’m doing a followup for this post, in which I talked about how it appeared as though the overall drop in U.S. income during the 2010 decade coincided in severity with the major manufacturing regions of the country. I initially intended on estimating manufacturing job loss sensitivity with regards to globalization, as my hypothesis was that trade flows were leading to the dismantling of the manufacturing base. A similar paper shows that here, however they looked at 1970’s to 2007 rather than the last decade.

Their conclusion is:

“We find evidence of reallocation in three dimensions. At the industry level, exposure to low wage country imports is negatively associated with plant survival and employment growth. Within industries, the higher the industry’s exposure to low-wage country imports, the bigger is the relative performance difference between capital- and labor- intensive plants. Finally, there is a positive association between exposure to low-wage country imports and industry switching.”

I couldn’t find state-level data that matched the U.N. data I had, so the project got put on hold. However, in the interest of providing some sort of analysis I have a graphical representation of U.S. manufacturing job loss by state from March 2001-June 2008.

We can compare it to the census information on household wage loss, and what we see is a significant similarity between states with high manufacturing job loss and overall household wage loss.

For More Analysis and a State-by-State representation Click Here:

For the West Coast  (Jobs lost as a share of total March 2001 Employment)

For the East Coast  (Jobs lost as a share of total March 2001 Employment)

Overall what we see is the states hit the hardest by income loss in the 2010 decade were the same states that suffered significant declines in manufacturing jobs. In the time period in question (March 2001-June 2008) the U.S. lost 2.6% of its total manufacturing jobs.

The Economic Policy Institute provides some good analysis of the overall situation:

“A common theme in many of these states is that manufacturing represents a large part of the state economy. Before the recession began, four of these states (Indiana, Michigan, North Carolina, and Oregon) were well above the national average in terms of manufacturing jobs. As that industry declined, these state economies were unable to shift gears quickly enough and move workers to other jobs. As evidence of this, in these four states manufacturing jobs made up 14.6% of the total jobs, yet represent 41.2% of the total jobs lost since the recession began.

That is a scary statement when you think about it. The overall picture is not good for states which have historically focused on manufacturing. These jobs have left, are not likely coming back, and have rendered the human capital of large segments of the population worth less. It is indeed a sad story, and if anything the strong regional linkage between falling overall household wages and the declining U.S. manufacturing bases tells us the importance for the general economy of maintaining the traditional capital-intensive, high value added industries that helped build this country’s economy after World War 2.

For a brief discussion and some examples of the decline of U.S. manufacturing during 2010 click here.

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