The U.S. economy continues to shift away from manufacturing and towards other industries as the country recovers from the downturn of 2007-2008. Data shows that the overall gross domestic product continues to rise steadily, as it has for decades, but U.S. manufacturing declines while services increase.
In 1950, factories produced much more value to the overall economy than in the 2000s, while services were much less. As data moves forward in time, these two figures diverge. U.S. manufacturing declines steadily, while services increase steadily. This happens, in part, due to less expensive labor overseas following globalization of the economy. Textile industries went first, followed by consumer electronics and other technology-based manufacturing. Statistics from the U.S. Department of Labor predict manufacturing may decline by as much 549,000 workers between 2012 and 2022.
Income inequality statistics correlate to the rise and fall of U.S. manufacturing. During the 1950s and early 1960s, when middle-class incomes rose and economic prosperity moved forward, factories made automobiles, appliances and televisions as Americans settled into suburban life. Meanwhile, the GINI index as compared to manufacturing output changed dramatically from the post-World War II era. This index measures the distribution of income within a certain country. A higher negative correlation in this index means greater income disparity. During the manufacturing boom, the GINI index hovered around -0.165, but then it changed to -0.958 from the 1970s to 2014.
What does this mean? These statistics mean that the more U.S. manufacturing declines, the more income inequality increases. Data also indicate that as the value of factory output, as a percentage of overall GDP, declines as part of the overall economy, income disparity also increases. Disparate incomes put even more strain on government programs such as food stamps, welfare and medical health insurance for impoverished families.
Consumer spending on goods from high-tech manufacturing processes continues to rise, yet income disparity also rises. Part of this remains due to overseas suppliers that deliver raw materials, while other aspects of new technology involve wireless communication among factories and facilities in different countries. Suppliers can deliver real-time estimates of items made to parent companies in the United States even if these facilities are thousands of miles away from headquarters. As such, innovations such as cloud computing and data storage make U.S. manufacturing even more efficient as executives monitor input, output, costs and logistics.
What can Americans do to bring back middle-class incomes? Instead of working in factories, many laborers must retrain themselves for jobs in other industries such as finance or hospitality. U.S. manufacturing continues to rely on high-tech jobs such as engineering and robotics, so higher education plays a role in piquing the interest of children for science and technology courses. Otherwise, Americans may see more and more people on low-income programs by 2022.
Photo courtesy of Gualberto107 at FreeDigitalPhotos.net
Become a member to take advantage of more features, like commenting and voting.
Register or sign in today!