The Decline Of Manufacturing In The United States And Its Impact On Income Inequality

The decline of manufacturing in the United States has been a perceptible trend, starting in the aftermath of World War II when manufacturing represented over one quarter of our Gross Domestic Product, to today, when it is less than 12%. The unemployment of the Great Recession, and the most recent State of the Union Address by President Obama, have now made this front page news. The declining trend has been masked by the facts that the U.S. remains, in total, the world’s largest manufacturer, and, along with China, the top value added producers. A second trend has been the decline of manufacturing employment as a percentage of the total labor force, running from just under one quarter post WWII, to less than 8% today. And finally the third trend has been the premium of manufacturing compensation versus all industries, from 11% in 1950 to 23% in 2010. Together these three trends are the major components of the increasingly palpable trend of income inequality from 1950 to 2010. In 1950 the top 20% had 17.3% of family income, whereas in 2010 it was 20%. The Gini coefficient, another measure of negative income distribution, moved from .379 to .440 over the same time frame