One factor contributing to the rise of populist sentiment in the United States has been the decline in manufacturing jobs, from 17 million in 2000 to 11 million in 2010, with a small bounce-back since then.
President-elect Trump promises to bring manufacturing jobs back. In thinking about policies that might accomplish this, it is important to keep three economic trends in mind.
First, job loss in manufacturing derives primarily from technological change, not from trade. Manufacturing’s share of U.S. production is quite stable, but its share of employment has declined at a steady rate because productivity growth in manufacturing is higher than in services.
This trend can be observed in all of the advanced economies, including ones such as Germany that have large trade surpluses. Manufacturing’s share of employment in Germany declined by 15.5 percentage points during 1973-2010, very similar to the U.S.’s 14.7 percentage point decline.