In a recent column for the Cato Institute, economist Scott Lincicome made the bold claim that U.S. manufacturing “ended 2025 with a thud.” However, his analysis falls short by focusing solely on employment as the measure of success in a labor-constrained economy. In reality, the state of American manufacturing is far from dismal, with rising productivity, output, and wages painting a much more positive picture.
Lincicome’s argument centers around the fact that manufacturing employment has declined in the United States over the past few decades. While this may be true, it fails to take into account the larger context of a changing global economy. The rise of automation and technological advancements have led to a decrease in the need for manual labor in manufacturing. This is not unique to the U.S., as many other developed countries have also experienced a decline in manufacturing employment.
However, this does not mean that the manufacturing sector is in decline. In fact, data from the Bureau of Labor Statistics shows that productivity in the manufacturing sector has been steadily increasing since the 1990s. This means that despite a decrease in employment, the output of goods and services has continued to rise. This is a clear indication of the efficiency and competitiveness of American manufacturing.
Furthermore, the U.S. manufacturing sector has also seen a significant increase in output over the past few years. In 2019, the sector reached a record high of $2.38 trillion in output, surpassing the previous peak in 2007. This growth has been driven by a variety of factors, including increased investment in technology and innovation, as well as a focus on high-value products and services.
But perhaps the most promising aspect of American manufacturing is the rise in wages for workers. Despite the decline in employment, wages in the sector have been steadily increasing. In fact, the average hourly wage for manufacturing workers in 2019 was $23.83, higher than the average for all private-sector workers. This is a testament to the high-skilled and well-paying jobs that are available in the manufacturing industry.
One of the key drivers of this resurgence in American manufacturing has been the policies of the Trump administration. President Trump has made it a priority to bring back manufacturing jobs to the U.S. and has implemented policies such as tax cuts and deregulation to incentivize businesses to invest and grow in the country. These efforts have paid off, with the manufacturing sector adding over 500,000 jobs since Trump took office.
In addition, the administration’s tough stance on trade has also played a role in boosting American manufacturing. By renegotiating trade deals and imposing tariffs on certain imports, the U.S. has been able to level the playing field for domestic manufacturers and protect them from unfair competition. This has given American companies the opportunity to grow and thrive, leading to the positive trends we see in productivity, output, and wages.
In conclusion, while Lincicome’s analysis may have painted a bleak picture of U.S. manufacturing, the reality is far from it. The sector is experiencing a resurgence, driven by increased productivity, output, and wages. This is a testament to the strength and competitiveness of American manufacturing, and the policies of the Trump administration have played a significant role in this success. As we move forward, it is important to recognize and support the growth of this vital sector, which continues to be a cornerstone of the American economy.