The Unexpected Manufacturing Job Rebound
The COVID-19 pandemic disrupted industries worldwide, but American manufacturing was especially hard-hit, with a loss of 650,000 jobs during the pandemic. Surprisingly, by the end of 2022, all of these jobs had been regained, and the country now holds around 12.9 million manufacturing jobs, up from 12.8 million in 2019. This growth comes with massive investments in advanced sectors like semiconductor manufacturing, electric vehicles, batteries, and clean energy. However, the new manufacturing landscape reveals significant regional and sectoral differences, underscoring a shift in the geographic and industrial focus of the sector.
Which Regions Are Leading Manufacturing Job Growth?
According to EIG, job growth in manufacturing has not been uniform across the country. Texas leads with nearly 50,000 new manufacturing jobs between 2019 and 2023—a 5.5% increase. Other top-performing states include:
- Florida: Nearly 37,000 new manufacturing jobs.
- Georgia: Added 20,303 jobs.
- Arizona: Added 16,797 jobs.
- Utah: Added 15,990 jobs.
These five states alone accounted for nearly two-thirds of the total manufacturing job growth since 2019. Key factors in their success include state policies favorable to manufacturing, large-scale investments in high-tech industries, and a robust infrastructure for logistics and supply chain management.
The States Still in Deficit
While some states are thriving, 20 states have yet to recover the jobs lost during the pandemic. Washington and New York face the most significant deficits, with Washington still down nearly 20,000 manufacturing jobs and New York missing over 18,000. Industrial states like Ohio, Michigan, and Wisconsin have also struggled, as traditional manufacturing hubs grapple with changing industry needs and increased automation.
These disparities highlight a significant transformation in the types of places attracting new manufacturing facilities. Rural areas, once the backbone of American manufacturing, have generally seen job losses. In contrast, small urban counties—those with populations of 50,000 to 100,000—saw substantial gains, accounting for 61% of new manufacturing jobs between 2019 and 2023. This shift reflects a broader trend toward building facilities in areas that balance logistical advantages with affordable costs and access to a skilled workforce.
COVID-19’s Accelerating Impact on Job Shifts and Skills
The pandemic accelerated existing trends that could further redefine the job landscape across economies. Research shows that certain occupations may face long-term negative impacts, especially in roles like food service and customer support, which were significantly disrupted. The rise of e-commerce and the delivery economy has increased demand in warehousing and transportation jobs; however, this growth is not enough to fully offset the decline in many low-wage jobs. In the U.S. alone, nearly 4.3 million jobs in customer service and food service may be at risk, while transportation roles could grow by about 800,000.
High-wage jobs, particularly in healthcare and STEM fields, are expected to see increased demand due to advancements in technology and heightened awareness of public health. These trends reflect a broader need for workforce shifts, requiring many displaced low-wage workers to acquire new skills and transition into higher-paying occupations.
The Skill Gap and Workforce Transition Post-COVID-19
The pandemic’s impact has amplified the demand for higher-wage jobs, causing a shift that may require workers from low-wage sectors to reskill and transition to higher-paying positions. Data suggests that nearly 100 million workers across eight focus countries will need to transition to different occupations by 2030—a 12% increase from pre-COVID estimates, with developed economies potentially seeing a 25% increase.
For many workers, particularly those in the bottom two wage brackets, transitioning to new roles will demand acquiring more advanced skills. The skill requirements across different income brackets vary widely. For instance, those in high-wage jobs typically spend less than 20% of their time using basic cognitive and manual skills, whereas low-wage roles require these skills 68% of the time.
Sectoral Differences in Manufacturing Job Growth
The recovery of manufacturing jobs has also varied significantly across sectors:
- Food and Beverage: This sector has seen the most job gains, driven by demand for localized production and resilient supply chains.
- Transportation Equipment: Bolstered by the 2021 Bipartisan Infrastructure Law, this sector has recorded substantial growth.
- Computer and Electronics: While gaining ground, this sector still has 39% fewer jobs than it did at its peak in 2000.
On the other hand, some sectors remain behind pre-pandemic employment levels, including metals manufacturing, furniture, textiles, and paper and printing. Overall, manufacturing job growth has lagged behind the rest of the economy, according to EIG’s research. However, ongoing investments in advanced manufacturing facilities, such as semiconductor plants, are likely to boost job numbers in the coming years.
Factors Fueling Growth in U.S. Manufacturing Jobs
The resurgence of factory jobs isn’t happening in a vacuum. Several factors have converged to boost American manufacturing employment. Key drivers include:
- Reshoring and Nearshoring Initiatives
Many American companies have embraced reshoring and nearshoring to reduce dependency on international supply chains and mitigate the impact of global disruptions. Manufacturers are increasingly recognizing that producing goods closer to home can lead to a more resilient supply chain, faster delivery times, and more control over quality. - Government Support and Policy Changes
Federal initiatives like the CHIPS Act and the Inflation Reduction Act have bolstered U.S. manufacturing by providing billions of dollars in incentives, tax breaks, and direct funding to support local production. These policies encourage companies to build infrastructure and create jobs domestically, while also fostering technological advancements in areas like semiconductor production, clean energy, and electric vehicles. - Consumer Demand for American-Made Products
Consumer sentiment has shifted significantly, with more Americans seeking products made domestically. This shift stems not only from a desire to support local economies but also from concerns about environmental impacts and labor practices abroad. “Made in America” is increasingly seen as a mark of quality and integrity, further driving demand for U.S.-made goods. - Technological Advancements and Automation
Modern manufacturing plants are adopting automation and other advanced technologies to become more competitive globally. While automation has raised concerns about job displacement, it’s also allowed companies to produce goods more efficiently, which can keep jobs in the U.S. rather than sending them overseas. Additionally, automation creates opportunities for new, high-skilled jobs in areas like robotics, programming, and maintenance. - Supply Chain Challenges
The logistical challenges presented by the pandemic have reshaped perspectives on global supply chains. The risks associated with long-distance sourcing have made localized production more attractive. Companies have realized that depending on international suppliers can be risky, particularly during times of crisis.
Why Manufacturing Job Growth Matters: Economic and Social Impacts
The resurgence of manufacturing jobs has had profound effects on local economies, especially in areas that had long struggled with underemployment and economic decline. Key impacts of this job growth include:
1. Revitalization of Local Economies
Manufacturing jobs are particularly valuable to local economies because they tend to offer competitive wages and stable employment. The influx of jobs has revitalized local businesses, increased the demand for housing, and supported the expansion of community services in areas seeing new factories.
2. Increased Demand for Skilled Labor
With the rise of high-tech manufacturing, there is a growing need for workers skilled in fields like robotics, CNC machining, and automation. Companies are investing in partnerships with technical schools and community colleges to close the skills gap and prepare the workforce for modern manufacturing roles.
3. Strengthening National Supply Chains
Manufacturing job growth reduces dependency on international supply chains, making the U.S. economy more resilient to global disruptions. This self-sufficiency is critical in sectors like semiconductors and renewable energy, which have implications for both economic stability and national security.
Addressing Challenges in Manufacturing Job Growth
Despite these positive trends, the manufacturing sector faces several challenges that could hinder its growth. Key obstacles include:
1. Supply Chain Vulnerabilities
Although the move toward reshoring has reduced reliance on foreign suppliers, certain critical materials, such as rare earth elements, are still largely sourced overseas. Ensuring a steady domestic supply of these materials is essential for the growth and sustainability of U.S. manufacturing.
2. Labor Shortages
As manufacturing facilities become more advanced, the demand for highly skilled labor has increased. However, many areas, particularly rural regions, struggle to attract the skilled workforce required to meet the sector’s demands. Addressing this shortage will require greater investment in vocational training and educational programs that prepare workers for high-tech manufacturing roles.
3. High-Interest Rates
Recent high-interest rates have affected factory job growth, as financing for new projects and expansions has become more costly. However, with signs of potentially lower rates in the future, manufacturing investment is likely to accelerate.
4. Balancing Automation with Employment
The increasing automation of manufacturing processes raises concerns about job displacement. Companies must balance the need for efficiency with the goal of creating meaningful employment opportunities. As technology advances, manufacturing job roles will continue to evolve, requiring a workforce that can adapt to and manage these innovations.
The Role of Industrial Policy in Shaping the Future of Manufacturing
The recent growth in U.S. manufacturing jobs has been supported by significant policy shifts, with an emphasis on bolstering domestic production in strategic industries. The Bipartisan Infrastructure Law, the CHIPS Act, and the Inflation Reduction Act have provided crucial funding and incentives for companies to invest in domestic manufacturing. Policymakers continue to focus on areas that ensure the U.S. remains a global leader in sectors essential to the future economy, such as high-tech electronics, electric vehicles, and clean energy.
As the U.S. industrial policy takes shape, enforcing trade laws and preventing unfair practices from foreign competitors are essential. Policymakers must continue to ensure that the playing field is level, enabling American manufacturers to compete fairly on the global stage.
Looking Ahead: A Future of Opportunity and Innovation in U.S. Manufacturing
The resurgence of manufacturing jobs is a hopeful sign, but sustaining this growth will require continued innovation, investment, and strategic planning. The factory construction boom suggests that the demand for skilled labor will continue to rise, especially in high-growth sectors like semiconductors and clean energy. If policymakers and industry leaders can navigate challenges like supply chain vulnerabilities and labor shortages, the manufacturing sector is poised to play a pivotal role in the U.S. economy for years to come.
Investing in training and workforce development, supporting advanced manufacturing facilities, and encouraging sustainable practices are crucial for maintaining momentum. With the right industrial policies and support, American manufacturing could achieve sustained growth, creating high-quality jobs and ensuring the U.S. remains competitive in a rapidly evolving global economy.
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