Thursday, February 16, 2006

Why is manufacturing employment declining?

Employment in manufacturing has been declining. One explanation is higher productivity.

A 2003 Washington Post article told the story of how General Motors needed nearly alf a million workers about a quarter-century ago to turn out five million automobiles a year. Today, the company needs only about a quarter of that employment level to produce the same number of cars. In fact, during the 20-year period from 1980 to 2000, U.S.manufacturing output nearly doubled,whereas manufacturing employment remained flat.

This article argues that changing preferences may be more important. (Hat tip to Bryce Kanago)

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