Want a manufacturing job? A college degree will help.
According to research by Ball State University (Muncie, IN) economist Michael Hicks, the US economy is at the height of industrial production, and tomorrow’s new jobs in manufacturing are likely to go to those with college degrees.
Hicks, director of Ball State’s Center for Business and Economic Research (CBER), found the that US industrial production index peaked in December 2007, then dropped by roughly 15% by the summer of 2009.
It took five years to recover to a second peak in 2015.
As the world economy dipped in 2015 and 2016, so too did American industrial production. But Hicks says we are back at a record level of industrial output. It’s worth noting that total US industrial production is more than twice what it was back in 1979, when employment peaked.
“Other measures tell the same story. Inflation-adjusted manufacturing GDP [is likely to have peaked] in Q4 2017, both in dollar and quantity index measures,” Hicks says. “Importantly, new data on value-added of manufacturing offers an even more interesting insight into America’s manufacturing strength. Value-added is a measure of production that subtracts all the goods used in production. By making this calculation across all US manufacturing, we omit all the spending by factories on imported parts. That number is at a record high right now, a full decade after the start of the Great Recession.”
Manufacturing employment rises by one million
Hicks also notes that manufacturing employment, which all too many people believe is a good sign of the industry’s health, is about 1.5 million less than it was at the start of the Great Recession and about a third lower than at its peak month in 1979.
“While manufacturing employment has gained a full million jobs since the end of the recession, that rebound seems to be slowing,” he says. “Still, the loss of manufacturing employment has been swamped by growth in other sectors. For every job…lost in manufacturing since December 2007, we’ve gained six jobs in other sectors. The problem is the new jobs require different skills in different places. Moreover, turnover within manufacturing has had a very uneven effect on workers.”
Hicks points out that since about 2000, manufacturing jobs held by non-college graduates have declined by almost 45%, while manufacturing jobs held by those with a college degree are up almost 17%. “That means in net, all the new jobs and almost all the replacement jobs in manufacturing are going to college graduates. That trend also accelerated during the Great Recession.”