The Way We Were: The Changing Geography of US Manufacturing from 1940 to 2016

This report, released in 2019, shows how the geography of manufacturing has changed from 1940-2016 and provides data at the state and county levels for the 18 states in which manufacturing was the largest employer at the beginning of the 21st century. As the authors note, the evolution of manufacturing across the American landscape has involved three connected trends in manufacturing: a decline in share of economic output as the role of services in the economy grew; a decline in share of the workforce; and a rise in output per worker that has allowed manufacturing to increase its overall output even as its relative importance in the economy and share of the workforce have fallen. "These trends help explain both how manufacturing lost its position as the crown jewel of the American economy, and how it has avoided plummeting into obsolescence."

Manufacturing’s smaller output share corresponded with its reduced role in the workforce. By 2000, the share of all workers employed in manufacturing had fallen to 14 percent even as it remained the largest employer in 18 states. Meanwhile, employment in services had grown from 21 percent of the labor force in 1940 to 49 percent. At the same time as the economy shifted from manufacturing to services, the geography of manufacturing changed. By 2000, the Northeast was no longer the heart of the industry and manufacturing employment had become more concentrated in the Midwest. It had also shifted to the Southeast as foreign and U.S. companies chose to build plants in lower-cost production sites.

The decline in manufacturing’s relative importance in terms of both output and employment has continued into the first decades of the 21st century. By 2016, manufacturing output shrank to 18 percent of the economy, while services industries comprised 49 percent of the economy’s output. Employment in manufacturing had fallen to 10 percent of all workers, while more than 50 percent of workers were employed in the services sector.

• Employment in agriculture, mining, and manufacturing combined fell from more than 40 percent of U.S. workers to less than 15 percent.
• The greatest growth in skilled-service industries was in health services which increased from 2 percent to 14 percent.
• The share of workers almost tripled in educational services, real estate, financial activities, and professional and management services while the share of workers nearly doubled in food, leisure, administrative, and other service areas.
• Business and professional services – combined with insurance, finance, real estate, rental and leasing – increased from 10 percent of the nation’s economic output in 1947 to 30 percent in 2016.

• Last Updated:
• Created:
• Resource Publication Date: 2019
• Author(s): Anthony P. Carnevale, Ban Cheah, Neil Ridley, Jeff Strohl, Kathryn Peltier Campbell
• Funding Source: JP Morgan Chase
• Resource Availability: Publicly available
• Posted by: Wesley Peterson
• Posted in: Workforce System Strategies