What’s Great about Manufacturing?

The Economist lists four reasons governments worldwide are eager to increase manufacturing in their economies:

  • Manufacturing provides stable middle-class jobs.
  • Manufacturing drives innovation and growth.
  • Manufacturing can support environmental responsibility.
  • Tensions between America and China make individual countries think they need to produce their own goods.

Spoiler alert: they go on to question all of these assumptions.

Good jobs?

The Economist starts right off with questions about whether manufacturing still offers good jobs. They point out, and they are correct, that factories used to offer well-paying career paths to people without college degrees. With modern Ai-enhanced machinery, they say, there are fewer entry-level jobs available, and more manufacturing jobs require specialized skills. The typical factory doesn’t employ 150 unskilled machine operators any more. instead, there are jobs for eight engineers.

There is some truth to that. It is true that there are fewer unskilled jobs and more highly-skilled ones. But that doesn’t mean that degrees in engineering are always required. It also doesn’t always mean that there aren’t enough entry-level jobs to go around.

The U.S. Bureau of Labor Statistics shares current data that shows a cheering picture for workers:

  • Unemployment level in manufacturing: 2.6% and falling every month this year
  • Average hourly wage in manufacturing as a whole: $32.38
  • Average hourly wage for entry-level positions: $26.41
  • Average weekly work hours: 40+

That is much better than jobs in the service sector, which is the other area where people without college degrees (and sometimes even with college degrees) tend to end up. Factories across the country are still dealing with labor shortages. The days when an entire town would work at the local factory may be behind us, m but manufacturing continues to provide good jobs.


The Economist suggests that in the old days, people moved from agricultural work to manufacturing, raising productivity levels and bringing new people into environments where they could work toward innovation and growth more effectively. Even from a global perspective, most manufacturers are not relying on fresh-faced farm boys and girls leaving their sheep and cows to try their hand at big city life. They go on to say that innovation and growth can come from other sectors, not just from industry.

This may matter to The Economist. It’s an abstract point — does manufacturing actually create growth and innovation the most out of all sectors of all economies?

We can take a narrower view.

Bill LaPlante, undersecretary of defense for acquisition and sustainment, said recently, “As an engine of economic growth, American manufacturers contribute more than $2.35 trillion to the U.S. economy — every dollar spent in manufacturing results in an additional $2.79 added to the economy, making it the highest multiplier effect of any sector.”

The Brookings Institution also identifies manufacturing as the primary driver of growth and innovation in the United States. McKinsey makes similar claims: “Today, the manufacturing sector represents just 10 percent of US GDP and jobs but drives 20 percent of the nation’s capital investment, 35 percent of productivity growth, 60 percent of exports, and 70 percent of business R&D expenditure.”

We may not be seeing the kind of growth and innovation that was visible during the Industrial Revolution, but at least in the United States, manufacturing continues to be a driver of growth and innovation.


The Brookings Institution also describes manufacturing as providing “a disproportionately large contribution to environmental sustainability.”

Oh yeah? Manufacturing certainly contributes to climate change and pollution. But manufacturing — and the innovation it drives — is also an important hope for the future.  Producing green goods and new, energy-saving technologies may rescue humanity from the consequences of our poor stewardship yet.

China and the U.S.?

Since we are admittedly thinking about the United States more than about the world as a whole, the fourth point is less salient for us. If people in Norway are thinking that they had better start making more of their own goods in case tensions between the U.S. and China disrupt supply chains, we can be sympathetic. But we can’t see this as a problem with manufacturing.

“When Russia launched its war in Ukraine last year, continental Europe received 40% of its gas from the invading country. Supplies dwindled in the summer; gas prices shot up four-fold. Politicians feared that entire industries would grind to a halt, disrupting supply chains and leading to a brutal recession,” The Economist observes. “The actual outcome was more benign. Governments secured supplies elsewhere; firms invested in gas-saving equipment, or found different energy sources; households consumed less…Markets have a natural capacity to overcome shortages, for the simple reason that firms seek to make money.”

It’s not completely clear how The Economist was expecting this argument to go. Are they telling governments of smaller countries not to hasten into manufacturing, since China and the U.S. can’t really mess up the supply chains that badly? Do they mean that there’s no reason to look ahead in fear of supply chain issues? We’ll leave this one alone.

Manufacturing does provide stable, well paid jobs, drive growth and innovation, and provide hope for environmental improvement in the future. Let’s celebrate that!