Digging Deeper Into President Obama's Manufacturing Jobs Claim

During his 2013 State of the Union address, President Obama said ..

After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three.

The 500,000 number sounds impressive!  Is it true? Fortunately, the government keeps good records for all this data, so I checked.

The following chart shows the number of those employed in manufacturing (MANEMP) from January, 2008 until today. The minimum over the last three years happened in January, 2010 when the manufacturing workforce fell to 11,460 thousands, or 11.46 million.  The peak manufacturing workforce in the last three years happened in July, 2012 at 11,957 thousands, or 11.957 million jobs.  The difference between the peak and the trough is 497 thousand manufacturing jobs, which is certainly close enough to the claimed 500,000 for government work. However, the current tally through January, 2013 falls slightly to 450,000.

Because I know what the definition of "is" is and I'm semi-fluent in how politicians sometimes manipulate statistical data, my spidey senses were all a tingle from the "over the past three" years statement.  President Obama has been in office longer than three years, right?  How many manufacturing jobs have we created since he took office?  Here's the same chart as before, but now let's measure from February, 2009, when he was first inaugurated as President, until today.  By picking slightly different data points, we've now LOST 436,000 manufacturing jobs.  That's only a difference of 933,000 manufacturing jobs--nearly a million jobs difference--between the President's best-case numbers and the President's term in office.

Yes, I'm quite aware that President Obama was standing way too close when the big chunks struck the proverbial fan after the subprime mortgage bubble collapsed.  I'm also aware that we've bailed out banks, purchased one of the world's largest auto makers (General Motors), spent $878 BILLION on a Stimulus program, spent $3 BILLION on the "Clash for Clunkers" auto rebate that also benefited foreign auto manufacturers, had interest rates near 0% for years, and the Federal Reserve purchased over $1 TRILLION in U.S. debt.  Excuse me for saying, but I would have expected a much bigger jump in manufacturing employment given that amount of rocket fuel.

Yes, it's good that we increased the number of manufacturing jobs in the United States.  But let's compare the ratio of all manufacturing jobs (MANEMP) to the number of all those on non-farm payroll (PAYEMS).  This ration was about 0.1 back in January, 2008 meaning hat about 1 in 10 jobs was in manufacturing.  After the global financial crisis, this number dropped to about 1 in 11.2 jobs and has remained fairly flat over the President's time in office.

How can we be adding jobs but be losing manufacturing jobs as a percentage of the workforce?  Fortunately, total non-farm payroll (PAYEMS) has been slowly clawing its way back after the global financial meltdown. So, despite more manufacturing jobs, their percentage of the total workforce remains roughly the same (and even falling slightly the last few months).

That's the "good" news.  What's the bad news?  The percentage of people participating in the civilian workforce (EMRATIO) remains fairly stagnant and near a 30-year low.  Yes, even after all that rocket fuel.

Likewise, the average duration of unemployment (UEMPMEAN) is at a 30-year high, well above previous levels.  This may be due, in part, to Congress extending federal unemployment benefits to 99 weeks.

In summary, yes, it's good that we have employment growth in the manufacturing sector.  However, that growth is not as robust as the President's claim might lead people to believe.  We still have a long way to go toward a healthy economy, despite the massive infusion of cash, stimulus, and aid into the system.  We've also been in a 30-year trajectory (MANEMP) of lower and lower manufacturing employment, especially after the September 11, 2001 terrorist attacks.  There are many driving forces, including globalization (cost differences, tax policy, new competitors) and improved manufacturing technology (robotics) that lead to improved productivity.