From President Obama trumpeting its resurgence to economists praising the sector for leading the U.S. economic recovery, domestic manufacturing hasn’t looked this good for years.
But a recent study by a non-partisan think tank suggests that economics, pundits and policymakers are getting an overhyped view because they aren’t looking at the right numbers. The Information Technology and Innovation Foundation argues U.S. government statistics overstate factory output and productivity.
“When measured properly, U.S. manufacturing output actually fell 11 percent over the last decade while GDP increased 17 percent, something that has not happened before, at least since WWII,” according to the report.
The report also contends manufacturing productivity grew by only 32 percent, not the 72 percent reported by the Bureau of Economic analysis. The study argues output must have declined because if it hadn’t, the industry would have added 3.8 million more jobs between 2000 and 2010.
The study also rejects that manufacturing jobs were lost because of the rise in productivity.
“U.S. manufacturing lost jobs because manufacturing lost output, and it lost output because its ability to compete in global markets —some manipulated by egregious foreign mercantilist policies, other supported by better national competitiveness policies, including much lower corporate tax rates — declined significantly.”
Ultimately, the authors of the study want legislators, economists and wonks to better understand the manufacturing environment so they can create policies to better support the industry.
“The United States can restore manufacturing competiveness and balance manufacturing goods trade within a decade if it adopts the right set of policies in which can be termed the ‘four T’s’ (tax, trade, talent, and technology),” the authors wrote.