They Didn't Take Our Jobs - American Focus

In my earlier discussion, I tackled the widely circulated notion that the United States is in the throes of a manufacturing job crisis.

Contrary to this narrative, job creation is not only on the rise, but it has also outstripped population growth—meaning that the influx of available workers has been less than the growing number of jobs—this trend has persisted for the better part of forty years.

But is the surge in employment a positive sign for the economy? As is often the case with economic matters, the answer is nuanced. If real wages are climbing and individuals are eager to work more to enhance their quality of life, then yes, let’s toast to the uptick in productivity, output, and earnings. On the other hand, if wages are stagnant and some individuals feel compelled to seek employment merely to sustain their livelihoods, while yearning for non-labor pursuits, then job growth presents a much more complicated picture.

Overall, there is no shortage of job opportunities to consider. I often remind my students that the essential asset for securing and retaining a decent job is an attribute that cannot be easily imparted in a classroom: a robust work ethic and an eagerness to learn. If you can demonstrate reliability, attentiveness, a willingness to learn, and the ability to contribute meaningfully, not only will you fare well, but you’ll also find yourself ascending the employment ladder and enjoying increased wages as you accumulate skills and experience.

Yet, despite the upward trajectory of job numbers, populists will argue that we’ve merely traded high-paying manufacturing jobs for low-wage service sector positions. The service sector, broadly defined, has been the sole driver of employment growth in the U.S., accounting for 90% of the new jobs created since our 1979 baseline, as illustrated in Figure 4. However, we should be cautious about jumping to conclusions regarding a sector that employs nearly 110 million workers. When we evaluate earnings across various economic sectors, we discover that a significant portion of new service sector jobs actually offer better pay than manufacturing roles, and many of these positions are safer and more enjoyable than the factory jobs they’ve supplanted.

Table 1 showcases Bureau of Labor Statistics data on the 15 largest sectors and sub-sectors of the U.S. economy, which collectively capture virtually all net payroll employment increases since the peak of manufacturing jobs (1979 to 2025). This may come as a shock to the anti-globalization advocates: while we’ve lost 7 million manufacturing jobs, alongside some losses in mining, logging, and utility sectors, we’ve gained nearly 69 million jobs overall. Of these net new positions, over half (53.5%) offer average hourly wages exceeding current manufacturing averages. Additionally, another 20% of new jobs have average hourly earnings within 10% of current manufacturing salaries. In simpler terms, while we bid farewell to 7 million well-paying jobs, we welcomed approximately 37 million higher-paying jobs, around 14 million that are comparably compensated, and about 18 million lower-paying positions (approximately 26% of net new jobs earn significantly less than manufacturing jobs).

We’ve established that, despite a significant decline in manufacturing employment, we have gained far more jobs than we have lost over the past 45 years, with most of these new jobs offering better compensation. While economic transitions can be challenging in the short term, they have ultimately delivered increased output and employment opportunities both in the U.S. and globally. Overall, this bodes well for both the U.S. and world economies.

Nevertheless, even if we manage to convince protectionists that high-paying service sector jobs have more than compensated for the loss of factory jobs, they will likely continue to lament, “We don’t manufacture anything here anymore.” This refrain is often accompanied by moans about America’s “deindustrialization,” suggesting that industrial activity has ground to a halt merely due to the diminishing number of one specific job type (factory work). This claim is fundamentally misguided. We may no longer produce certain items, such as garments, toys, or electronics, but this is largely due to global free trade and technological advances that redirect America’s production towards those industries where we hold a comparative advantage. Yet, it is a fallacy to claim that we do not produce anything at all; in fact, we manufacture numerous valuable goods. This is most clearly illustrated by the Industrial Production Index, which tracks total U.S. manufacturing output. As shown in Figure 5, following the expected sharp decline post the Great Recession of 2008-2009, U.S. manufacturing gradually recovered, only to face another challenge during and post-COVID shutdowns. Nevertheless, this index, primarily comprising manufacturing, has rebounded to pre-COVID levels, growing by nearly 100% since the peak of manufacturing employment in 1979.

From an economic standpoint, this is exceptionally positive news. U.S. manufacturing generates double the value with 35% fewer employees. Producing more value with fewer workers signifies that we are more efficient and productive than ever before. These remarkable productivity advancements stem from multiple sources, particularly from technological innovations in areas such as software, robotics, and now the rise of AI, which heralds a new wave of creative destruction. Globalization and outsourcing have also played significant roles, granting American workers the ability to specialize in sectors where our productivity is most pronounced. Regardless of the relative impact of technology versus outsourcing in driving these changes, the broader conclusion remains: the U.S. economy is both more productive and offers more job opportunities than it has in the past.

Economists recognize that framing the trade dynamics as other countries “beating us” or possessing “unfair” advantages is at best futile and at worst disingenuous. I enjoy playing football, but let’s be honest: Jaylen Hurts is a superior player compared to me (and 99.999% of the population). It’s not “unfair”—it’s simply the reality. But that’s alright—I’m probably better at economics and writing than 98% of the population. We all have our niches—he’ll score touchdowns and captivate audiences, while I teach, write, and enlighten many about specialization, comparative advantage, and the perennial benefits of trade. The economic framework will yield more of everything if we each concentrate on our comparative advantages and cease our grumbling about “unfairness.” As I often tell my students, “fairness” is a term absent from the economist’s vocabulary; instead, we prefer terms like “wealth,” “growth,” and “prosperity.” The fundamental lesson of market economics is that trade, based on specialization, is a remarkably positive-sum experience. This holds true not just for individuals but also when we aggregate the benefits at a national level. Since no one can predict or dictate what everyone else’s most productive specialization might be, a decentralized market system is essential. It provides the necessary information and incentives, through price signals, to help individuals identify their best opportunities and integrate into the broader system in a way that enhances productivity and wealth. One of our primary roles as economists, particularly those of us in academia, is to elucidate how this system operates and impress upon our students that a free market, unencumbered by arbitrary and restrictive policies like tariffs, is the sole path to achieving sustained benefits from the division of labor.