Increased Worker Productivity Has Destroyed Millions of Jobs, and We Should Be Grateful

Ron Bullock, chairman of Bison Gear & Engineering Corp, writing in the Washington Examiner:

"More effective foreign competition has led to increasing manufactured-goods trade deficits and the loss of 7 million U.S. manufacturing jobs since 1980."

Don Boudreaux responds:

"This account – repeated ad nauseam – would be more plausible if it were also the case that U.S. manufacturing output, during this same time, had declined. But this output rose. Manufacturing output today is nearly 100 percent higher than it was 30 years ago (see chart). Importantly, manufacturing output is up while manufacturing employment is down for a reason that is cause not for the pessimism that universally attends accounts such as Mr. Bullock‘s but rather for optimism. That reason is substantial growth in productivity, which is the only source of sustained and widespread prosperity."

MP: The graphs above tell the story. U.S. Manufacturing output has more than doubled since 1975 (data here) while manufacturing employment has decreased by about 8 million jobs (data here), resulting in more than a three-fold increase in worker productivity (output per worker) since the 1970s. Therefore, it's the dramatic increase in the productivity of American workers that helps explain the loss of millions of manufacturing jobs, and this a a cause for optimism, not pessimism, as Don points out.

Just like we should celebrate, not mourn, the loss of millions of farm jobs due to the ongoing and significant increases in worker productivity that reduced farming jobs as a share of total jobs from 90% in the 1700s to the current level of only about 2.6% (see chart below, data here), we should also celebrate the loss of millions of factory jobs due to dramatic increases in worker productivity. Any time we can get more output with fewer workers, whether it's farming or manufacturing, it's a sure sign of economic progress and a rising standard of living.