Why Some Jobs Left and Where They Went

Why It Matters

For most of the twentieth century, a person without a college degree could graduate from high school in a city like Detroit, Cleveland, or Pittsburgh and find a manufacturing job that paid a middle-class wage. The job was not glamorous — it was physically demanding and often repetitive — but it paid enough to own a home, raise children, and retire with a pension. By 2010, most of those jobs were gone.

This matters for understanding economics because it shows that markets, while efficient in the aggregate, do not distribute their gains evenly. When trade agreements opened new markets and allowed goods to be made more cheaply in other countries, the average American consumer benefited from lower prices. But the factory worker in Ohio who lost their job did not experience that as a benefit. They experienced it as the collapse of their livelihood.

The shift also matters for understanding where jobs go when they leave. They do not disappear into thin air. Workers in Bangladesh, Vietnam, China, Mexico, and dozens of other countries got those jobs — and in many cases, those jobs lifted them out of poverty. This is part of the story too, and it is part of honest reckoning. Both things are true: some American workers were hurt, and some workers elsewhere were genuinely helped.

The scale matters. Economists David Autor, David Dorn, and Gordon Hanson published influential research in 2013 estimating that Chinese import competition alone displaced 2 to 2.4 million US manufacturing jobs between 2000 and 2007. That is not a rounding error. It is a structural change in the American labor market concentrated in specific regions, specific industries, and specific communities.

A Story

Marlene and the Plant That Moved

In the spring of 1992, Marlene Torres had been working on the assembly line at a small auto-parts plant in Monroe, Michigan, for eleven years. She made crankshaft bearings. Her shift started at 6 a.m. The work was loud and precise and she was good at it. She made $16.50 an hour, had full health insurance, and was five years away from a pension. She owned a three-bedroom house. Her daughter was in sixth grade.

In April, the plant manager posted a notice that the company was relocating most production to a new facility in Monterrey, Mexico. The transition would take eighteen months. Employees would be offered severance of one week’s pay per year of service. Training for new employment would be available through the state.

Marlene was not surprised exactly. She had heard rumors for months. The company had been under pressure from the Big Three automakers to cut its per-part price. Mexican workers doing similar work were making roughly $2 an hour. Michigan workers were making $16 to $18. The math was not complicated. The move was not personal. But it was real.

She stayed until the line shut down in September 1993. Her severance was $9,075 for eleven years of work. She enrolled in a retraining program run by the state, which offered courses in computer operation, bookkeeping, and nursing aide certification. She chose bookkeeping. The coursework took eight months.

The bookkeeping job she eventually found paid $9.50 an hour with no pension and a health insurance premium that cost her $180 a month. At 37 years old, she was effectively starting over, earning roughly half what she had made on the line. The house was still manageable but tight. Her retirement savings, which had been on track, were now uncertain. She could not afford to max out her IRA most years.

Her daughter, Keisha, grew up watching her mother work two jobs through her teenage years to keep the house. Keisha was smart, got into Michigan State, took out loans, and became a nurse. She left Monroe at 22 and has not lived there since.

Monroe itself changed. The plant had employed about 420 people at its peak. The businesses around it — the diner where workers ate breakfast, the hardware store, the union hall, the parts supplier down the road that lost its main customer — all felt the ripple. Some survived. Some did not. The neighborhood around the plant is quieter than it was in 1990. A few windows are still boarded.

Marlene retired at 67 on Social Security plus a modest savings account. She says she does not blame the company — she understood the economics. She blames the trade agreements that made the move so easy and the lack of any serious plan for what would happen to the workers left behind. “They planned the move very well,” she says. “They just didn’t plan anything for us.”

Vocabulary

Manufacturing employment

The total number of people whose jobs involve making physical goods in factories, plants, or workshops. US manufacturing employment peaked around 19.5 million in 1979 and is now roughly 12 million.

NAFTA

The North American Free Trade Agreement, signed in 1994. It eliminated most tariffs between the US, Canada, and Mexico, making it easier for US companies to move production to Mexico where labor costs were lower.

The China Shock

The concentrated economic disruption caused in specific US manufacturing regions when China joined the World Trade Organization in 2001 and US imports from China rose sharply. Economists estimate it displaced 2 to 2.4 million US manufacturing jobs between 2000 and 2007.

Currency manipulation

When a government keeps the value of its currency artificially low by buying foreign currencies, making its exports cheaper in global markets and its imports more expensive. China was widely accused of this in the 2000s.

Automation

The use of machines, robots, or software to do work previously done by humans. Automation eliminated some manufacturing jobs independently of trade — a factory that uses robots needs fewer workers even if it never moves offshore.

Severance

A payment an employer makes to a worker when they lay them off or close a plant. Severance is rarely enough to bridge the full economic gap left by a job loss, especially for workers with years of service.

Guided Teaching

Let’s separate the causes of manufacturing job losses, because they are often lumped together when they are actually quite different forces operating at different times.

Automation came first and has been continuous. From the 1950s onward, machines replaced workers in manufacturing. An auto plant that made 500 cars per day in 1960 with 1,200 workers might make the same 500 cars per day in 1990 with 700 workers. The workers did not lose because production moved — they lost because the same production needed fewer people. This is a different phenomenon from offshoring, and it is not caused by trade policy.

Trade agreements accelerated geographic movement. NAFTA in 1994 lowered tariffs between the US, Canada, and Mexico. US companies that had been making goods in Michigan or Texas could now make the same goods in Monterrey, ship them across the border duty-free, and sell them at the same price while paying dramatically lower wages. The incentive to move was enormous. Between 1994 and 2000, some estimates put manufacturing job losses attributable to NAFTA at between 300,000 and 700,000.

China’s WTO entry in 2001 was the largest single shock. When China joined the World Trade Organization, US tariffs on Chinese goods dropped sharply. China had hundreds of millions of workers who could be paid a fraction of US wages. Industries that had already survived NAFTA — textiles, furniture, electronics assembly, small appliances — now faced competition that was simply too cheap to match. Textile and apparel jobs moved to China and later to Bangladesh and Vietnam. Electronics assembly moved to Shenzhen and other manufacturing hubs. The adjustment happened faster than workers, communities, or retraining programs could absorb.

Ask: if a US textile company was paying workers $14 an hour in 2002, and a factory in Bangladesh could produce identical fabric with workers earning $0.40 an hour, what would the company’s owners be tempted to do? What would stop them?

The distribution of harm was geographic and concentrated. This is one of the most important points in the lesson. The gains from cheaper imports were spread across 300 million American consumers who paid slightly less for clothing, appliances, and electronics. The losses were concentrated in specific cities and towns in Ohio, Michigan, Indiana, Tennessee, and the Carolinas. Communities built around one industry — steel in Youngstown, textiles in Kannapolis, furniture in Galax — absorbed enormous damage while the rest of the country barely felt it.

Retraining was not the answer people hoped. Government programs promised that workers who lost manufacturing jobs could be retrained for better jobs in the service economy or in technology. The reality was harder. A 50-year-old machinist retrained for bookkeeping often ended up making half what they made before. Middle-aged workers who had spent decades mastering a physical skill found the transition to desk work slow and often demoralizing. The retraining programs were real but modest in what they could actually deliver.

The honest summary: multiple forces drove manufacturing job losses, and assigning all the blame to trade, or to automation, or to corporations, or to foreign governments misses the complexity. Trade agreements made offshoring easier and faster. Automation was ongoing regardless of trade. Lower wages abroad created real cost pressures. Currency policies by trading partners made US goods more expensive in global markets. All of these interacted. Understanding the combination is more useful than having a single villain.

For Discussion

1. 1.What are the three main forces that reduced US manufacturing employment since 1979? How are they different from each other?
2. 2.In the Marlene story, the company did not move to Mexico out of malice. What were the economic reasons? Does understanding the reasons change how you feel about the outcome?
3. 3.The gains from cheaper imports went to all American consumers, while the losses were concentrated in specific communities. Is that fair? How should a society handle that kind of uneven distribution?
4. 4.What is the difference between job loss caused by automation and job loss caused by offshoring? Why does the difference matter?
5. 5.Research says China’s WTO entry displaced 2 to 2.4 million US manufacturing jobs between 2000 and 2007. How big is that number compared to the total US workforce? How big is it compared to the population of a city?
6. 6.Marlene said the company planned the move well but did not plan anything for the workers. What would planning for the workers have looked like? Who should have been responsible for that?
7. 7.Where did the manufacturing jobs go? Did the workers who got those jobs benefit? Does that matter morally?

Practice

The Made-In Map

1. 1.Pick a category of product — clothing, electronics, tools, or kitchen goods — and find ten specific items from that category in your home.
2. 2.For each item, find where it was manufactured. Look at the label, the box, or the bottom of the item.
3. 3.Make a tally: how many were made in the US? China? Mexico? Bangladesh? Vietnam? Elsewhere?
4. 4.For one of the items made in a low-wage country, try to estimate what the item might cost if it were made in the US at US wages. You can look up approximate US manufacturing wages (around $25-30 per hour) and think about how much labor goes into that item.
5. 5.Discuss with a parent: what would happen to your family’s budget if everything in that category suddenly had to be made in the US? Who benefits from current prices and who pays the cost?

Memory Questions

1. 1.Approximately when did US manufacturing employment peak, and how many workers were there at that peak?
2. 2.What is NAFTA, and how did it affect manufacturing employment?
3. 3.What is the China Shock, and how many US jobs did economists estimate it displaced?
4. 4.What is the difference between job losses from automation and job losses from offshoring?
5. 5.Why were the costs of manufacturing job losses concentrated in specific communities while the benefits were spread widely?
6. 6.Where did specific types of manufacturing jobs go — textiles, electronics assembly, auto parts?