No. of Recommendations: 9
The first time China upended the U.S. economy, between 1999 and 2007, it helped erase nearly a quarter of all U.S. manufacturing jobs. Known as the China Shock, it was driven by a singular process — China’s late-1970s transition from Maoist central planning to a market economy, which rapidly moved the country’s labor and capital from collective rural farms to capitalist urban factories.
This a great narrative, but it has the disadvantage of being entirely false.
The China shock was primarily an effect on economics, NOT employment. US manufacturing employment fell from the 1950s peak almost precisely the amount you would expect based on rising per capita income levels. As countries get richer, manufacturing employment slides as a percent of jobs because richer people spend more on services and manufacturing becomes more productive because of capital intensity. (US manufacturing output hasn't been falling overall, it just employs a smaller fraction of the population). If there was an effect on US blue collar employment from the China trade shock it may have been that the entry of Chinese labour onto the world's stage made the US so much richer so quickly that the US moved up the usual curve a little faster than they might otherwise have done.
Manufacturing/industrial employment typically rises among growing poor countries, peaks when GDP per capita reaches about $15000-25000 USD (2024 prices), then starts sliding slowly. China has been climbing the first part of the curve, right where you'd expect, and seems to be nearing its peak. And the US has been slowly sliding down the rich half of the curve, right where you'd expect.
The main anomalies (imperfect fits to the curve) are
* the UK and Germany had more manufacturing jobs (as a percent of total) at their respective peaks than the US and most other countries did at that income level. The UK has fallen back to the usual line so their anomaly is over. Germany is sliding on schedule but still at a higher level than is usual.
* US manufacturing employment as a percentage of jobs ROSE slightly 1999-2019. Not much, a rise from roughly 17% to around 20%. It's about the same level now as in 1990, and has been in a fairly narrow range the entire time since then.
Although places like these are growing again, most job gains are in low-wage industries.
Again, it's worth noticing that the perceived demise of manufacturing jobs is a bit of an odd thing to lament. An average can hide a lot of sins, but the average US service job has BOTH higher pay and better working conditions than the average manufacturing job. Better for your health on both counts.
Jim