They Took Our Jobs: The Sequel

In my earlier discussion, I tackled the widespread assertion that America is hemorrhaging manufacturing jobs.

However, the reality is that job numbers are not just increasing; they are outpacing population growth—meaning there are more positions available than there are people to fill them. This trend has persisted for the majority of the past forty years.

So, is the rise in employment a positive sign for the economy? Well, as is typical in economics, the answer is nuanced. If real wages are on the rise and individuals are eager to work more to enhance their quality of life, then yes, we can toast to the uptick in productivity, output, and income. On the flip side, if wages remain stagnant and some individuals would prefer non-traditional paths but feel compelled to work to meet living costs, then the job growth may turn out to be a somewhat mixed blessing.

Broadly speaking, there is no shortage of jobs available. I often remind my students that the crucial skill for securing and maintaining a good job isn’t something that can be taught in a classroom: a robust work ethic combined with a readiness to learn. If you can demonstrate the ability to show up, listen, learn, and contribute effectively, not only will you thrive, but you’ll also ascend the employment ladder, enjoying enhanced wages alongside your growing skill set.

Yet, amidst the encouraging job statistics, certain demagogues will argue that we’ve merely swapped high-paying manufacturing roles for lower-paying service industry jobs. Indeed, the service sector has encompassed nearly all employment growth in the U.S., accounting for 90% of new jobs created since our 1979 benchmark, as illustrated in Figure 4. However, be wary of hastily dismissing a sector that employs nearly 110 million people. When we analyze income across various economic sectors, we find that a significant portion of new service sector positions offer better pay than manufacturing jobs, and many are safer and more enjoyable than the factory jobs they have supplanted.

Table 1 showcases data from the Bureau of Labor Statistics regarding the 15 largest sectors and sub-sectors of the U.S. economy, which collectively account for nearly all of the net increase in payroll employment since the peak of manufacturing jobs (1979 to 2025). This may surprise those in the anti-globalization camp: while we have lost 7 million manufacturing jobs, as well as some jobs in mining, logging, and utilities, we’ve actually gained nearly 69 million jobs overall. Of these new positions, over half (53.5%) offer average hourly earnings that exceed the current average hourly wage in manufacturing. Additionally, another 20% of new jobs provide average hourly earnings within 10% of manufacturing jobs. In simpler terms, we’ve lost 7 million decent jobs but gained about 37 million better-paying ones, approximately 14 million comparable-paying roles, and around 18 million lower-paying jobs (with about 26% of new positions offering significantly lower wages than manufacturing).

In summary, despite a significant drop in manufacturing employment, the past 45 years have seen a net gain of many more jobs than we lost, with most of these new roles offering better pay. While economic shifts can be disheartening in the short term, they have ultimately led to increased output and employment not just for the U.S. but globally as well. This is promising news for both the American and world economies.

However, even if we persuade the protectionists to accept that high-paying service sector jobs have effectively replaced lost manufacturing jobs, they are likely to continue lamenting, “We don’t produce anything here anymore.” This complaint aligns with the narrative of America’s “deindustrialization,” suggesting that industrialization has ceased simply because one type of industrial job (factory work) is diminishing. This perspective is not only misleading but blatantly incorrect. We don’t produce certain items, like clothing, toys, or electronics, because global free trade and technological advancements have shifted American production toward industries where we hold a comparative advantage. But make no mistake—Americans are still producing valuable goods. This is clearly illustrated by the Industrial Production Index, which measures total U.S. manufacturing output. As shown in Figure 5, following the anticipated steep decline after the Great Recession of 2008-2009, U.S. manufacturing gradually rebounded, only to be hit hard again during and after the COVID-19 shutdowns. Nevertheless, this index, primarily reflecting manufacturing, has recovered to pre-COVID levels and has experienced nearly 100% growth since the peak of manufacturing employment in 1979.

From an economic standpoint, nothing could be more encouraging. U.S. manufacturing now generates twice the value with 35% fewer workers. Achieving greater value with fewer workers indicates we are more efficient and productive than ever before. These remarkable productivity gains stem from various sources, particularly technological advancements in fields such as software, robotics, and the recent emergence of AI as a catalyst for creative destruction. Globalization and outsourcing have also played a role, enabling American workers to specialize in sectors where we have a significant productivity advantage. Regardless of the relative impact of technology versus outsourcing in driving these changes, the overarching message remains clear: the U.S. economy is both more productive and offers more job opportunities than ever.

Economists recognize that discussions about other countries “beating us” in trade, or claiming unfair advantages, are at best misguided and at worst insidious. I enjoy playing football, but let’s face it: Jaylen Hurts is a far superior player than I (and 99.999% of the population). It’s not “unfair,” it simply is. That’s perfectly fine—I’m likely better at economics and writing than most. So we each find our niche—he throws touchdown passes and entertains millions, while I deliver lectures, write articles, and teach hundreds about specialization, comparative advantage, and the ever-present gains from trade. The entire economic framework benefits when individuals focus on their respective comparative advantages and cease lamenting perceived injustices. As I often tell my students, “fairness” isn’t a term in the economic dictionary; instead, we prioritize terms like “wealth,” “growth,” and “prosperity.” The first lesson of market economics is that trade based on specialization is a significantly positive-sum game. This holds true for individuals and remains valid when we aggregate national gains. The challenge is that no one can predict in advance what everyone’s most productive specialization will be; thus, we require a decentralized market process that provides us information and incentives through price signals to help everyone identify their best opportunities and integrate into the broader system in a more productive and wealth-enhancing fashion. One of the primary responsibilities of economists, particularly those of us who teach the subject, is to elucidate how this system functions and to emphasize that a free market—unhindered by arbitrary and restrictive policies like tariffs—is essential for achieving sustained gains from the division of labor.

They didn’t “steal” our jobs. As long as we maintain even a somewhat functional market economy, there will always be jobs available. The real challenge today lies not in job creation but in cultivating a workforce—individuals who are prepared, willing, and able to show up, commit, and learn. It’s time to cease the grumbling about “unfair” trade practices and the finger-pointing at other nations—especially our allies—for “taking our jobs” or “exploiting us” through trade that is inherently mutually beneficial. Instead, let’s focus on our advantages and make the most of a positive situation. By instilling a strong work ethic in people, the rest will naturally fall into place.