Lamentations about the decline of U.S. manufacturing have become so commonplace that they can be found anywhere from news reports and comedies to family tables and political debates. This isn’t new – the perception of the state of manufacturing has long centered on employment trends – but the pessimistic narrative has gained particularly wide traction over the last 45 years as manufacturing employment has fallen by 35% from its peak in June 1979. In fact, even as employment trended upward before that peak, doomsayers could already be found. A 1976 article in The New York Times expressed dismay at the prospect of manufacturing jobs being lost in favor of service sector work at the regional level.
While declining employment is often viewed in purely statistical terms, it is important to remember that declines in employment represent the loss of income for a family, and in some cases, the unraveling of communities. Given the destabilizing effects of shifting employment trends, the overall perception of the manufacturing industry has been understandably tied to employment trends and their seismic shifts. However, it would be a disservice to overlook the numerous positive signs for the industry.
Today, despite a lower level of employment, U.S. manufacturing is experiencing a golden age, as measured by output, investment, productivity, and workplace quality. Navigating the future of manufacturing requires a straightforward assessment of where it currently stands. Efforts to restore the environment to a romanticized version of the past risk returning U.S. manufacturing to a gilded age instead of prolonging its current golden age.
Shock and Attenuation
Participation in the U.S. manufacturing sector reached its height in November 1943 amid the manufacturing boom necessitated by the United States’ entry into World War II. At the time, nearly 39% of all employees worked in manufacturing. Since then, the share of the workforce dedicated to manufacturing has fallen. At its employment peak in June 1979, only 21.7% of the workforce was in manufacturing. At present, employment in manufacturing has remained steady, accounting for roughly 8% of the workforce.
This declining share of the workforce is indicative of a shrinking share of the population with direct knowledge of manufacturing. The growing distance between the manufacturing sector and the shrinking share of the U.S. population with manufacturing knowledge can, at least in part, explain the enduring perception that manufacturing processes remain unchanged from previous generations: dirty, dangerous, and backbreaking. However, the safety, work environment, and type of work done by people in manufacturing workplaces have markedly improved from the heyday of those cliches.
The Bureau of Labor Statistics (BLS) compiles data on employer-reported workplace injuries. In 1979, these injuries or illnesses were commonplace in the manufacturing sector, affecting around 13 people for every 100 full-time employees. By 2023, the last year for which statistics are available, that number had fallen to just 2.8 injuries per 100 employees, a decline of nearly 80% and quite comparable to the rate of 2.4 across all private industries.
While worker safety is of paramount importance, the quality of working conditions is also an important distinction of today’s manufacturing work. Many may decry automation as the impetus for replacing workers, but in many instances, automation has made manufacturing a much more attractive career prospect because it reduces dangerous, repetitive, or time-consuming operations. This enables employees to take on newer and often higher-value-added roles in production processes, such as design and inspection, or roles that support production, such as sales, shipping, and finance.
Overcoming the persistent perception that the manufacturing workplace has changed little in the past half-century is critical to attracting new workers. The latest BLS data indicates that there are more than 400,000 currently open positions in the manufacturing sector. These positions are safer and more engaging, fostering a more diverse skill set than manufacturing jobs of the past. U.S. manufacturing output continues to rise, yet the bottleneck of labor availability constrains future growth.
Peaks and Plateaus
With a current shortfall of about 400,000 employees and projections that this gap could reach 2.1 million unfilled jobs by 2030, the current high level of manufacturing activity is astonishing. Looking at the nominal value of U.S. gross domestic product (GDP) for manufacturing, output reached an all-time high in the third quarter of 2024. Since then, output declined slightly but quickly returned to an upward trend in the second quarter of 2025. Over time, however, the share of nominal GDP from manufacturing has declined in a near-linear fashion.
A paper published in the spring of 2017 by YiLi Chien and Paul Morris of the Federal Reserve Bank of St. Louis also highlights this concerning trend. The authors entreat the reader to look at manufacturing as a percentage of real GDP, which takes into account the effects of inflation on prices over time. Chien and Morris find that “Manufacturing’s share of real GDP has been fairly constant since the 1940s, ranging from 11.3 percent to 13.6 percent.” The reason for this difference is that prices for manufacturing output grew a full percentage point slower than prices in the wider economy over the period studied. Productivity gains in manufacturing processes allowed these firms to increase output even amid the recent, unprecedented worker shortages.
By updating this analysis with more current data, we find that manufacturing’s share has declined slightly from the 2017 levels found by Chien and Morris, hovering around 10% of real GDP since the first quarter of 2023. While this could be interpreted as stagnation in the manufacturing sector, the level of real GDP from manufacturing shows that output reached its highest level ever recorded in the second quarter of 2025. This upward trend in real manufacturing GDP, combined with its steady share, means that the growth of manufacturing output has roughly matched the overall economy’s growth since the beginning of 2023.
Other measures of manufacturing activity tell a similar story. Since manufacturing employment peaked in June 1979, industrial production has doubled. Real value added by U.S. manufacturers reached its highest level in the second quarter of 2025. While current manufacturing output is at a historical high, the investments made today will determine the future competitiveness of U.S. manufacturing. The next chapter will be written by those who build yet-to-be-invented products and utilize processes that have yet to be tested.
Terraforming the Manufacturing Landscape
Beginning in 2024, the Bureau of Economic Analysis (BEA) published statistics to measure the economic activity driven by research and development spending. In September 2025, the BEA published data on the economic impact of R&D spending dating back to 2012. From 2012 to 2023, the total impact of R&D spending from manufacturers nearly doubled from $110.3 billion to $208.9 billion. Unsurprisingly, a large portion of this came from computer and electronic product manufacturers as data centers and alternative forms of electrification came online.
While the absolute impact of manufacturing R&D has grown, the share of total R&D impact from manufacturing has declined from nearly 40% in 2012 to 32.6% in 2023, reflecting the growing impact of R&D funds from non-manufacturing sectors of the economy. Between 2012 and 2020, private R&D impact increased by approximately 64%, while the number of utility patents granted rose by 36%. The U.S. Patent and Trademark Office only has data available through 2020, but the lag between patents being granted and R&D translating into economic activity may have been exacerbated by the disruptions caused by the COVID-19 pandemic and ensuing recession.
The R&D that goes into developing new products or processes and the patents that eventually protect them are only half of the equation for future success in manufacturing. Attracting, training, and retaining top talent is the other crucial half; in an effort to bridge the current workforce gap, educational institutions have increased their spending on metalworking machinery more than fivefold between 2012 and 2024, according to the U.S. Manufacturing Technology Orders Report published by AMT – The Association For Manufacturing Technology.
Not all machinery purchased by educational institutions is destined to be used directly to train students for a career on a shop floor; the mere presence of manufacturing technology can acclimate students to the field and inspire them to a lifetime of craft and innovation – and at best, they’ll learn about taking a concept from design to production. Increasing manufacturing fluency among younger generations will pay dividends in future inventiveness and productivity.
Finding Faults
Through the second quarter of 2025, businesses across all sectors invested roughly $1.4 trillion in new equipment on an annualized basis. Of that investment, only about $13 billion is expected to be dedicated to the metalworking machinery AMT members build and sell. The small relative size of the market for manufacturing technology compared to all investment in equipment understates the importance of metalworking machinery to the overall manufacturing economy. Without the technology to cut, bend, form, and fabricate metal parts, the machinery and inputs critical to the rest of the manufacturing industry could not be made domestically, requiring the import of parts, raising potential logistical and national security issues.
Just as society and the economy are markedly different today than they were in 1979, when manufacturing employment hit its historical peak, the industry looks decidedly different from what it was 45 years ago. The future of U.S. manufacturing is intertwined with the health of the market for manufacturing technology, and its strength and success will depend on capital equipment and a skilled workforce to effectively utilize that equipment.
Reconsidering the aims and current effectiveness of industrial and trade policies instituted over the last half-century or more is certainly justified. Yet, as we look toward the future of manufacturing and foster an environment that unleashes American ingenuity and inventiveness, we need to do so with the recognition that, in terms of output levels, the environment for workers, and the opportunities before us, manufacturing is currently in a golden age. To ignore these trends and embrace a path based on a romanticized past – with more employment but less output, more dangerous conditions, and less efficient operations – risks stifling the length of this prosperous period. The result could be a future that looks promising on the surface but lacks the underlying strengths that carried manufacturing through the first quarter of the 21st century on such stable footing.
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