Insight into Manufacturing Policy: November 2020

Are the weak manufacturing productivity numbers an accurate reflection of reality?

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Michael Mandel

Data from the Bureau of Labor Statistics (BLS) show an astonishing collapse in long-term productivity growth in the domestic manufacturing sector, starting with the financial crisis of 2008-2009 (Figure 1). Are these numbers giving an accurate picture of the state of U.S. manufacturing?  

We’re not talking about the short-term impact of the pandemic on manufacturing. Even before that historically disruptive event, output per hour in U.S. manufacturing grew at only a 0.5% annual rate in the ten years from 2009 to 2019 (Figure 1). That’s compared to the 3.6% productivity growth rate in the 20 years between 1989 and 2009.

Figure 1: Manufacturing Labor Productivity 10 year growth rate