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A Year of Job Growth Doesn’t Signal a Manufacturing Renaissance

At first glance, the jobs data might seem to herald a new era of manufacturing job growth, especially in durable goods manufacturing. Most durable goods manufacturing industries had job growth rates in excess of the national average between last January and this January, and durable goods manufacturing as a whole saw job growth in all but two months of 2010.

But this doesn’t mean that durable manufacturing jobs will be more important in the next major economic upswing (“the next economy”) than they were in the last one. In fact, the recent growth of durable manufacturing employment tells us absolutely nothing about the long-term future of durable manufacturing as a job generator.

Durable manufacturing employment has always been more volatile than overall employment. The chart linked here shows month-to-month percent changes in employment for durable manufacturing and total nonfarm employment since 1979.

The durable goods manufacturing job gains of the past year are nothing out of the ordinary. In fact, they look a lot like those of 1983, another year of initial recovery from a deep recession, when durable manufacturing added jobs in most months, with its rate of job growth accelerating and usually exceeding the national average.

That episode of manufacturing job growth didn’t usher in a manufacturing renaissance. Between December 1982 and December 1984, when the number of durable manufacturing jobs peaked temporarily, durable manufacturing employment grew by 1.1 million jobs, or about 11 percent. But durable manufacturing’s share of national employment barely budged, growing from 11.3 percent to 11.6 percent before beginning a downward trend that lasted for decades. (In January of this year, durable manufacturing made up 5.5 percent of nationwide employment.)

This doesn’t mean that there can’t or won’t be a manufacturing jobs renaissance. I hope there will be, because manufacturing spurs innovation, improves the trade balance, and reduces wage inequality. But, as Sue Helper and I have argued in recent Brookings papers (here and here), a long-term manufacturing jobs recovery won’t happen on its own but will require sensible government policy at both the federal and state levels. It certainly can’t be inferred from the last year of jobs data.