It’s hard to believe that U.S. manufacturing, a sector that has shrunk so significantly since the 1970s, could be the source of some good news. But it is, according to a quarterly briefing Thursday at the Federal Reserve Bank of New York on the state of the sector in the New York and New Jersey area.
In 1970, the sector accounted for 21 percent of jobs in the United States. Now it’s below 8 percent. That’s the bad news. (That nearly mirrors what is happening on Long Island. Manufacturing here accounts for 6 percent of all nonfarm jobs, down from 21 percent in 1970, according to New York State Labor Department data).
The good news is that the sector still offers high-wage jobs, said New York Fed President William Dudley.
“Over the past several decades, manufacturing wages have risen, while the number of workers it employs has fallen,” Dudley said in remarks at the gathering in downtown Manhattan.
In the United States, the average annual manufacturing wage was $54,854 in 2009, compared with the $45,551 average for all sectors. (On Long Island, the average annual manufacturing wage -- $57,766 -- outpaces the overall average wage -- $50,883.)
“The manufacturing sector is important to our region because it provides a substantial number of high-wage jobs and, in some parts of the region, is a key driver of business cycles and longer-term trends,” Dudley said.
On the national level, the sector is credited with helping lead the country out of recession.
But manufacturing employment is expected to continue to decline because of structural changes in three key areas: trade, technology and “consumption patterns,” Dudley said.
Trade has changed manufacturing because companies have moved from this region to other states or overseas. Technology has improved productivity so that employers are increasing output with fewer workers. And the mix of products that consumers demand has affected the makeup of manufacturing.
“All of these factors have combined to reduce the number of factory jobs across the nation, with the New York/New Jersey region hit particularly hard,” Dudley said.
But he said what is less well-known is that despite the job declines, the sector’s output continued to grow moderately in the region because of productivity.
“These productivity gains -- the result of innovation and adaptation -- have been accompanied by rising average wages in manufacuturinig,” he said.
As as a result, a lot of lower-wage, low-skilled jobs have disappeared in the region.
Said Richard Deitz, a regional economics officer of the New York Fed and a panelist at the briefing, “Jobs at the lower end of the spectrum aren’t coming back.”
But he said the country can still excel in highly skilled manufacturing areas.
“Where we can compete is producing things that people want customized,” he said.
On a separate note, the panelists said that a variety of economic data show that the recession in New York City ended in November 2009, after the City entered the downturn in May 2008. That duration suggests that the City’s downturn was less severe than the nation’s, they said. The United States entered the recession in December 2007, and it isn’t officially known whether the worst downturn since the Great Depression has ended.