Why The Loss of US Manufacturing Jobs Isn’t All Bad News

You’ve probably read an article in the past few years about the alarming numbers in the US manufacturing sector.  Well, the fact is the United States remains the world’s largest manufacturer in terms of industrial production.  Some confusing reports have been release recently which suggested that China had surpassed the US.  That is not true.  China has the largest manufacturing level as a percentage of GDP and the most manufacturing employees.  The US levels in these categories are declining  however but that is not necessarily a bad thing.  Higher productivity levels and more diversity in commerce have had more impact on the decline than jobs heading overseas.
The US is still the top dog in manufacturing, at should be for at least the next 10 years.  Currently, the United States’ industrial manufacturing output is so large that surpasses the entire GDP of all but 7 countries in the world. When analyzing manufacturing reports it is important to contrast physical quantity (volume of manufacturing) and the actual dollar output because fluxuations in prices & exchange rates can have a large impact.  Also, do not confuse Gross Domestic Product (GDP) which is the total economic output of a nation with and its manufacturing component called the Real Manufacturing Value-Added.  The manufacturing value is what needs to be focused on.
Manufacturing value-added statistics are frequently published by the UN.  The latest report shows the US is still the leader having 20+% of the world manufacturing output.  China is nipping at the heals however having reached the 15% level.  You can also find similar reports by checking the U.S. Department of Commerce’s website. It is interesting to examine how poor the manufacturing productivity of Russia is.  They have over 20 million industrial workers yet are able to produce an anemic level of output that is on par with the UK who has only a fraction of the number of workers.  If you ever have doubts about the effectiveness of free markets verses communism this statistic should be referenced.  Decades of corruption and a state run economy in Russia have greatly hindered the efforts of the working class.
The silver lining in the declining US manufacturing jobs numbers is that US productivity is the best in the World.  Quite simply put, the United States industrial worker can out produce any other in the world.   That is not bad news at all.