By Robert Clampett
In what has been termed “a mild surprise” by several economists, factory jobs are returning to the United States at an unexpected clip.
Following decades of diminishing numbers, manufacturing jobs are rebounding at an unprecedented rate — American manufacturers have now added enough jobs to regain all that they shed during the pandemic recession — and then some.
In the past, manufacturing outsourcing and the growing trend installing factory robotic automated equipment rather than human jobs, previous recession led to the loss of factory jobs that never returned. Not this time.
The reason? A growing increase in the number of pharmaceutical plants, craft breweries and ice-cream makers rather than companies bringing back factory jobs that had moved overseas, nor by the brawny industrial sectors and regions
According to the New York Times, American manufacturers cut roughly 1.36 million jobs from February to April of 2020, as Covid-19 shut down much of the economy. As of August this year, manufacturers had added back about 1.43 million jobs, a net gain of 67,000 workers above pre-pandemic levels.
The Times explanation states that while “Covid-19 crimped global supply chains, making domestic manufacturing more attractive to some companies. Also, Federal stimulus spending helped shift Americans’ buying habits away from services like travel and restaurants and toward goods like cars and sofas, helping domestic factory production — and with it, job growth.”
“We had a huge shift away from services and into goods that spurred production and manufacturing and very rapid recovery in the U.S. economy,” Treasury Secretary Janet L. Yellen said.
American manufacturers, like many industries, have struggled to find raw materials, component parts and skilled workers. And yet, they have continued to create jobs at a rate that has surprised even some longtime promoters of American factory employment.
“We have 67,000 more workers today than we had in February 2020,” said Chad Moutray, the chief economist for the National Association of Manufacturers. “I didn’t think we would get there, to be honest with you.”
In recessions over the last half-century, factories have typically laid off a greater share of workers than other employers in the economy, and they have been slower to add jobs back in recoveries. Often, companies have used those economic inflection points to accelerate their pace of outsourcing jobs to foreign countries, where wages are significantly lower, and to invest in technology that replaces human workers.
This time was different. Factory layoffs roughly matched those in the services sector in the depth of the pandemic recession. Economists attribute that break in the trend to many U.S. manufacturers being deemed “essential” during pandemic lockdowns, and the ensuing surge in demand for their products by Americans.
Manufacturing jobs quickly rebounded in the spring of 2020, then began to climb at a much faster pace than has been typical for factory job creation in recent decades. Since June 2020, under both Mr. Trump and Mr. Biden, factories have added more than 30,000 jobs a month.
Sectors that hemorrhaged employment in recent recessions have fared much better in this recovery. Furniture makers, who eliminated a third of their jobs in the 2008 financial crisis and its aftermath, have nearly returned to their pre-pandemic employment levels. So have textile mills, paper products companies and computer equipment makers.
Mr. Biden has pushed a variety of legislative initiatives to boost domestic manufacturing, including direct spending on infrastructure, tax credits and other subsidies for companies like battery makers and semiconductor factories, and new federal procurement requirements that benefit manufacturers located in the United States. Other factors could help hasten more American manufacturing. Due to delayed deliveries, sky-high shipping prices and other supply chain issues have encouraged some chief executives to think about moving production closer to home.
Yet, several manufacturers say the numbers could be even stronger, if not for the continued difficulties attracting and hiring skilled workers amid the low 3.7 percent unemployment rate nationally.