Facts About Manufacturing

Manufacturing value-added output increased from $2.348 trillion in the fourth quarter to $2.444 trillion in the first quarter, an all-time high. Overall, manufacturing accounted for 11.1% of GDP in the economy. Real value-added output in the manufacturing sector rose from $2.234 trillion at the annualized rate in the fourth quarter to a record $2.270 trillion in the first quarter, as expressed in chained 2012 dollars. This was the best reading in one year, with real value-added output in manufacturing totaling $2.236 trillion in the fourth quarter of 2019, an all-time high. This suggests that the sector has rebounded strongly following COVID-19-related weaknesses over the past year. In the latest data, real value-added output for durable goods increased from $1.250 trillion to $1.296 trillion, a record pace, but with nondurable goods activity declining from $982.8 billion to $972.2 billion. (Source: Bureau of Economic Analysis)

For every $1.00 spent in manufacturing, another $2.79 is added to the economy. That is the highest multiplier effect of any economic sector. In addition, for every one worker in manufacturing, there are another five employees hired elsewhere. For every $1 earned in direct labor income in the manufacturing sector, there will be another $3.14 in labor income earned elsewhere, including indirect and induced impacts. (Source: NAM calculations using 2019 IMPLAN data.)

With that said, recent research suggests that manufacturing’s impacts on the economy are even larger than that if we consider the entire manufacturing value chain plus manufacturing for other industries’ supply chains. That approach estimates that manufacturing could account for one-third of GDP and employment. Along those lines, it also estimated the total multiplier effect for manufacturing to be $3.60 for every $1.00 of value-added output, with one manufacturing employee generating another 3.4 workers elsewhere. (Source: Manufacturers Alliance for Productivity and Innovation)

The majority of manufacturing firms in the United States are quite small. In 2018, there were 246,155 firms in the manufacturing sector, with all but 3,960 firms considered to be small (i.e., having fewer than 500 employees). In fact, three-quarters of these firms have fewer than 20 employees. (Source: U.S. Census Bureau, Statistics of U.S. Businesses)

Manufacturing employment increased by 27,000 in July. Over the first seven months of 2021, total employment in the sector has risen by 135,000, with 12,366,000 manufacturing workers in July. There remained 433,000 fewer manufacturing employees relative to pre-pandemic levels, with 12,799,000 workers in the sector in February 2020. Meanwhile, the U.S. economy added 943,000 workers in July, the best reading in 11 months. The reopening of the economy buoyed the labor market, with the largest growth occurring in leisure and hospitality (up 380,000), as one might expect. The U.S. economy continues to have 5,702,000 fewer workers today than in February 2020.

The unemployment rate dropped from 5.9% in June to 5.4% in July, a post-pandemic low, with the number of unemployed workers decreasing from 9,484,000 to 8,702,000. The labor force participation rate ticked up from 61.6% to 61.7%. For comparison purposes, the participation rate registered 63.3% in February 2020. Encouragingly, the so-called “real unemployment rate”—a term that refers to those marginally attached to the workforce, including discouraged workers and the underemployed—dropped from 9.8% to 9.2%, a 16-month low but still highly elevated. (Bureau of Labor Statistics)

In 2019, the average manufacturing worker in the United States earned $88,406, including pay and benefits. The average worker in all nonfarm industries earned $71,390. Looking specifically at wages, the average manufacturing worker earned more than $29.77 per hour in July, not including benefits, or for production and nonsupervisory workers, the average in the sector was $23.86. That represented a 4.5% increase over July 2020 for production and nonsupervisory employees. (Source: Bureau of Economic Analysis and Bureau of Labor Statistics)

Manufacturers have one of the highest percentages of workers who are eligible for health benefits provided by their employer. Indeed, 92% of manufacturing employees were eligible for health insurance benefits in 2020, according to the Kaiser Family Foundation. This is significantly higher than the 82% average for all firms. Of those who are eligible, 81% participate in their employer’s plans (i.e., the take-up rate). State and local government (90%) and trade, communications and utilities (86%) had higher take-up rates in 2020, with finance and wholesale experiencing the same rate as manufacturing. Meanwhile, the average annual cost of a family health care plan for a family of four in manufacturing was $20,383 in 2020. (Source: Kaiser Family Foundation)

Manufacturing labor productivity has been sluggish since the Great Recession, which has been frustrating, averaging a decline of 0.4% from 2011 to 2020. Nonetheless, output per worker in the manufacturing sector jumped 6.9% at the annual rate in the second quarter, with output rising 3.8%. Unit labor costs fell 1.9% for the quarter. Overall, manufacturers have continued to operate “leanly,” which has helped to make them competitive globally. Output per hour for all workers in the manufacturing sector has increased by more than 2.24 times since 1987. In contrast, productivity is roughly 1.94 times greater for all nonfarm businesses. Note that durable goods manufacturers have seen even greater growth, approaching 2.62 times the output per worker seen 34 years ago. (Source: Bureau of Labor Statistics)

Over the next decade, 4 million manufacturing jobs will likely be needed, and 2.1 million are expected to go unfilled if we do not inspire more people to pursue modern manufacturing careers. Moreover, according to a recent report, the cost of those missing jobs could potentially total $1 trillion in 2030 alone. (Source: Deloitte and The Manufacturing Institute)

After nearing an all-time high in 2018, the global economy has weakened on trade policy and COVID-19 challenges. Yet, the longer-term trend line has been encouraging, especially if—as expected—trade volumes rebound in 2021 and beyond. In 1990, for example, U.S. manufacturers exported $329.5 billion in goods. By 2000, that number had more than doubled to $708.0 billion. In 2018, it was just shy of the all-time high reached in 2014, which was $1.403 trillion. U.S.-manufactured goods exports have declined from $1,399.7 trillion in 2018 to $1,365.3 trillion in 2019 to $1,171.4 trillion in 2020. Even at that lower level, however, total U.S.-manufactured goods exports in 2020 were 3.55 times the levels seen three decades ago. (Source: U.S. Commerce Department)

Manufactured goods exports have grown substantially to our largest trading partners since 1990, including to Canada, Mexico and even China. The North American market remains vital for manufacturers in the United States. Indeed, Canada and Mexico purchase more manufactured goods from the U.S. ($483.8 billion in 2019) than from our next 10 largest trading partners combined ($460.3 billion in 2019). Meanwhile, U.S.-manufactured goods exports to China have nearly tripled from $31.9 billion in 2005 to $87.5 billion in 2019. (Source: U.S. Commerce Department)

World trade in manufactured goods has multiplied 2.67 times between 2000 and 2019—from $4.8 trillion to $12.75 trillion. The U.S. share of world trade in manufactured goods was 8.1% in 2019. (Source: World Trade Organization)

World trade in manufactured goods has more than doubled between 2000 and 2017—from $4.8 trillion to $12.2 trillion. The U.S. share of world trade in manufactured goods has grown from 7.6% in 2002 to 8.7% in 2017. (Source: World Trade Organization)

Taken alone, manufacturing in the United States would be the eighth-largest economy in the world. With $2.27 trillion in value added from manufacturing in 2019, only seven other nations (including the U.S.) would rank higher in terms of their GDP. Those other nations with higher GDP in 2019 were (in order) the U.S., China, Japan, Germany, India, the United Kingdom and France. After manufacturing in the U.S., the next five economies would be Italy, Brazil, Canada, Russia and South Korea, in that order. (Source: Bureau of Economic Analysis, International Monetary Fund)

Foreign direct investment in U.S. manufacturing reached a new record level in 2019. Overall, foreign direct investment has jumped from $499.9 billion in 2005 to $1,785.7 billion in 2019. The manufacturing sector comprised 40% of total foreign direct investment in 2019, as expressed on a historical cost basis. These data should continue to grow over the coming years, with the sector increasingly more competitive globally, and yet, it would not be a surprise if foreign direct investment was lower in 2020 due to COVID-19 and the global economic recession. (Source: Bureau of Economic Analysis)

U.S. affiliates of foreign multinational enterprises employed nearly 2.5 million manufacturing workers in the United States in 2016, or roughly one-fifth of total employment in the sector. In 2016, the most recent year with data, manufacturing sectors with the largest employment from foreign multinationals included motor vehicles and parts (407,300), chemicals (364,400), food (301,000), machinery (228,100), primary and fabricated metal products (168,000), plastics and rubber products (156,900) and computer and electronic products (152,900). Total compensation in the manufacturing sectors from these affiliates was $228.2 billion, and those entities spent $43.0 billion in research and development. (Source: Bureau of Economic Analysis)

Manufacturers in the United States perform 57.9% of all private-sector R&D in the nation, driving more innovation than any other sector. R&D in the manufacturing sector has risen from $132.5 billion in 2000 to $295.7 billion in 2020. In the most recent data, pharmaceuticals accounted for 35.7% of all manufacturing R&D, spending $105.7 billion in 2020. Computer and electronic products (16.0% of manufacturing R&D), semiconductor and other electronic components (13.3%) and motor vehicles and parts (8.0%) also contributed significantly to R&D spending in 2020. (Source: Bureau of Economic Analysis)

Manufacturers consume more than 30% of the nation’s energy consumption. Industrial users consumed 32.3 quadrillion Btu of energy in 2018, or 32.3% of the total. (Source: U.S. Energy Information Administration, Annual Energy Outlook 2019)

The cost of federal regulations falls disproportionately on manufacturers, particularly those that are smaller. Manufacturers pay $19,564 per employee on average to comply with federal regulations, or nearly double the $9,991 per employee costs borne by all firms as a whole. In addition, small manufacturers with fewer than 50 employees spend 2.5 times the amount of large manufacturers. Environmental regulations account for 90% of the difference in compliance costs between manufacturers and the average firm.