POLICY BRIEF

24-12 Is the United States undergoing

a manufacturing renaissance that will
boost the middle class?
Robert Z. Lawrence
October 2024

Note: The author is grateful for comments from Gary Hufbauer, Adam Posen, and
participants at seminars at Harvard Kennedy School and the Peterson Institute. He
is especially grateful to Steve Weisman and Madona Devasahayam for guidance
and editorial assistance, Barbara Karni for copyediting, Julieta Contreras for data
verification, and Christopher Ong for research assistance.

The historic trend of the declining share of jobs in manufacturing in the United Robert Z. Lawrence
is nonresident senior
States has bedeviled politicians and policymakers over many years. Elected fellow at the Peterson
in 2020 in the wake of an economic downturn aggravated by the COVID-19 Institute for International
pandemic, President Joseph R. Biden Jr. made the goal of his economic policies Economics and the Albert
L. Williams Professor of
to “build back better” and restore the middle class by reviving industrial International Trade and
jobs, especially in the Midwest, which he labeled “growing the economy Investment at Harvard
Kennedy School. This
from the bottom up and the middle out.”1 The emphasis on manufacturing
Policy Brief is a revised and
was reinforced by an economic nationalist goal of returning jobs supposedly updated version of chapter
sent overseas back to US shores—“making and building it in America,” as the 10 of his forthcoming
book, Behind the Curve:
administration proclaimed.2 Can Manufacturing
This emphasis is reflected in the special incentives for US manufacturing in Still Provide Inclusive
Growth? (Peterson
President Biden’s programs. He raised the threshold local content requirement for
Institute for International
procurement by the US government. The Infrastructure Investment and Jobs Act Economics, 2024).
(also referred to as the Bipartisan Infrastructure Law) requires that all iron, steel,
manufactured products, and construction materials used in its projects be made
in America.3 The CHIPS and Science Act appropriates $24 billion in tax credits
for manufacturing semiconductors in the United States and another $39 billion
to provide incentives for investment in chip facilities and equipment in the United

1 White House, The Biden-Harris Economic Blueprint, September 2022, p. 18.

2 Ibid.
3 White House, Fact Sheet: The Bipartisan Infrastructure Deal, Briefing Room Statement,
November 6, 2021.

1750 Massachusetts Avenue, NW | Washington, DC 20036-1903 USA | +1.202.328.9000 | www.piie.com

PB 24-12 | OCTOBER 2024 2

States.4 The Inflation Reduction Act (IRA) provides tax credits for clean energy
investments and production and the purchase of electric vehicles (EVs) that are
assembled in North America and have batteries that use minerals that are mined
and refined in the United States or a country with which the United States has a
free trade agreement.5
The administration’s policies have expanded the base of manufacturing
employment on the margins in recent years. But despite their appeal, these
policies are unlikely to be the key to achieving middle class growth, because
manufacturing no longer plays the role it played in the past in providing
opportunities for workers without college degrees to join the middle class.6
Manufacturing can still help achieve other goals, such as providing hardware for
the digital revolution; weapons for national security; and the EVs, wind turbines,
and solar panels that are vital for decarbonization. But the sector is now too
small to play a major role in reviving America’s depressed regions and providing
significant opportunities for American workers.
The appeal of creating manufacturing jobs is not likely to subside politically
in the United States. But the United States is hardly alone in experiencing a
long trend of declining manufacturing employment. As a result of increased
automation and technological change and the shift in demand toward services,
manufacturing accounts for a declining share of employment and output in all
high-income economies and many emerging-market economies. Remarkably,
declining trends in the share of manufacturing employment are evident even in
countries such as Germany, South Korea, Japan, Singapore, and China, despite
their substantial trade surpluses in manufactured goods (Lawrence 2020, 2024).7

HAS THERE BEEN A US MANUFACTURING RENAISSANCE?

The press and the Biden administration have heralded a resurgence in US
manufacturing. In August 2023, for example, the Financial Times reported that
$224 billion in clean-tech and semiconductor projects had been announced
in the year after the IRA and the CHIPS Act were passed, with every project
worth more than $100 million.8 The following month, in a column titled “The
American Renaissance Is Already at Hand,” David Brooks of the New York Times
wrote about “a torrid manufacturing boom.”9 His colleague Nobel Prize–winning
economist Paul Krugman suggested that the new industrial policies had already

4 Justin Badlam, Stephen Clark, Suhrid Gajendragadkar, Adi Kumar, Sara O’Rourke, and Dale
Swartz, The CHIPS and Science Act: Here’s What’s in It, McKinsey & Company, October 4, 2022.
5 For a comprehensive analysis of the IRA, see Bistline, Mehrotra, and Wolfram (2023).
6 This mistaken view is shared by Robert Lighthizer, US trade representative in the Trump
administration, who advocates increasing tariffs to rejuvenate American manufacturing. See
“Donald Trump’s former trade chief makes the case for more tariffs,” By Invitation: American
trade policy, The Economist, March 8, 2024. In Lawrence (2024), I elaborate on this argument.
7 Singapore had a very large trade deficit as a share of GDP from 1962 until 1997, averaging
25 percent of GDP. But between 1998 and 2018, it averaged a trade surplus of 15 percent of
GDP.
8 See Amanda Chu, Oliver Roeder, and Alex Irwin-Hunt, “Inside the $220bn American Cleantech
Project Boom,” Financial Times, August 16, 2023.
9 David Brooks, “The American Renaissance Is Already at Hand,” New York Times, September 7,
2023.
PB 24-12 | OCTOBER 2024 3

Figure 1
US manufacturing employment, January 2019–July 2024

millions of jobs
13.0

12.8

12.6

12.4

12.2

12.0
January 2021
11.8 Start of Biden administration
11.6

11.4
1.37 million
11.2 Manufacturing jobs lost
(Jan.–Apr. 2020)
11.0

Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May
2019 2020 2021 2022 2023 2024

Source: Federal Reserve Bank of St. Louis, Federal Reserve Economic Data (FRED), https://fred.stlouisfed.org/series/
MANEMP.

generated “a huge wave of private investment in manufacturing, even though

very little federal money has yet been distributed.”10
The White House has also trumpeted the resurgence of US manufacturing.
In March 2023, it boasted that more than 800,000 jobs had been added to
manufacturing employment since President Biden took office, “the most of any
president on record.”11 In December 2023, Lael Brainard, the president’s national
economic advisor, argued that “the Bipartisan Infrastructure Law, Inflation
Reduction Act, and CHIPS and Science Act are fueling a Made in America
manufacturing rebound.”12
In fact, the growth in manufacturing employment was much weaker than
these accounts suggest. The manufacturing employment increases immediately
after mid-2020 need to be judged in the context of the unusual US business
cycle brought about by the disruptions from the COVID-19 pandemic. Between
January and April 2020, manufacturing employment plummeted by 1.37 million
of jobs (figure 1). The employment increases cited by the administration were
simply a rebound from this extraordinary decline, which had already begun
before President Biden took office. After returning to its previous levels, the pace
of manufacturing employment growth slowed markedly, with manufacturing
employment barely growing between September 2022 and July 2024.
In July 2024, manufacturing employment was only 1.0 percent higher than
it had been in January 2019 (figure 2). By contrast, over the same period,

10 Paul Krugman, “Biden and America’s Green Push,” New York Times, August 17, 2023.
11 White House, The Biden-Harris Economic Blueprint, September 2022, p. 17.
12 The White House, Statement from National Economic Advisor Lael Brainard on US Steel,
December 21, 2021.
PB 24-12 | OCTOBER 2024 4

Figure 2
US manufacturing and nonfarm employment, January 2019–July 2024

index, January 2019 = 100

110
5.8% increase
January 2021 Nonfarm employment
Start of Biden administration (Jan. 2019–Jul. 2024)
105

100 Only 1% increase

Manufacturing employment
(Jan. 2019–Jul. 2024)
95

90

85

Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May
2019 2020 2021 2022 2023 2024

Source: Federal Reserve Bank of St. Louis, Federal Reserve Economic Data (FRED), https://fred.stlouisfed.org/series/
MANEMP.

nonfarm employment increased by 5.8 percent. The result was a steady decline
in the manufacturing employment share of nonfarm employment (figure 3). As
of July 2024, the data showed no renaissance in manufacturing employment.
Employment simply recovered to 2019 levels and stagnated.
Output growth in manufacturing has also been relatively slow. Between the
first quarter of 2019 and the first quarter of 2024, the ratio of real manufacturing
output to GDP (both measured in 2017 dollars) fell 5.2 percent (figure 4).
Manufacturing’s role in the expansion of US output has been minimal.
The slow growth in manufacturing employment combined with the sector’s
declining output share resulted in slower growth in labor productivity growth in
manufacturing than in the economy as a whole. In the second quarter of 2024,
labor productivity in the business sector, for example, was 12.7 percent higher
than in the same period in 2017. In contrast, labor productivity in manufacturing
fell by 2.0 percent.13 Between 2017 and 2022 (the latest data available), the
increase in total factor productivity in manufacturing—the more comprehensive
measure of the rise in output relative to all inputs used in manufacturing—was
less than 0.1 percent.14 By contrast, for decades until 2010, faster productivity
growth in manufacturing than in the rest of the economy was the norm.15

13 Bureau of Labor Statistics, Labor Productivity and Cost Measures: Major Sectors: Nonfarm
Business, Business, Nonfinancial Corporate, and Manufacturing, August 1, 2024.
14 Bureau of Labor Statistics, Total Factor Productivity and Related Measures, Major Industries,
March 21, 2024.
15 For example, output per worker was 2.5 percent faster in manufacturing than in the economy
as a whole between 1987 and 2000 and 3.69 percent faster between 2000 to 2010 (Lawrence
2024).
PB 24-12 | OCTOBER 2024 5

Figure 3
Manufacturing employment as percent of nonfarm employment in the United States,
January 2019–July 2024

percent
8.8

8.7 January 2021

Start of Biden administration
8.6

8.5

8.4

8.3

8.2

8.1

8.0

7.9

7.8

Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May
2019 2020 2021 2022 2023 2024

Source: Federal Reserve Bank of St. Louis, Federal Reserve Economic Data (FRED), https://fred.stlouisfed.org/series/
MANEMP.

Figure 4
Ratio of real manufacturing output to GDP in the United States, 2019Q1–2024Q1

index, 2019Q1 = 100

100

98

96

94
5.2% decrease
(2019Q1 to 2024Q1)
92

90

88

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2019 2020 2021 2022 2023 2024

Note: Figures are measured in 2017 chain dollars. Data are seasonally adjusted.
Source: US Bureau of Economic Analysis, Chain-Type Quantity Indexes for Value-Added by Industry.
PB 24-12 | OCTOBER 2024 6

Figure 5
US spending on manufacturing construction, 2018–24

billions of dollars, annual rate

250
$235.5 billion

200

150

100

$76.4 billion
50

Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan
2018 2019 2020 2021 2022 2023 2024

Note: Figures are seasonally adjusted.

Source: US Census Bureau via Federal Reserve Bank of St. Louis, Federal Reserve Economic Data (FRED).

In sum, in the first three and a half years of the Biden administration, there
was no renaissance in manufacturing. Employment growth stagnated after the
pandemic recovery, the share of manufacturing in employment and output
declined, and manufacturing labor productivity did not rise.

WILL THERE BE A MANUFACTURING RENAISSANCE?

This analysis may be too backward looking. More manufacturing employment
could be in the offing: Manufacturing construction spending surged, from
an annual rate of $76.4 billion in January 2021 to $235.5 billion in June 2024
(figure 5).16 The major sources of the surge in construction were the computer,
electronic, and electrical manufacturing industries.17
Consistent with this more optimistic narrative, the White House has kept
track of announcements by private firms of their investment plans in the clean-
tech and high-tech sectors that the Biden programs have emphasized. By July
2024, these announcements had reached a cumulative total of $897.8 billion
since President Biden took office, of which $738 billion was in manufacturing and
$160 billion in clean power.18 This figure includes $395.2 billion in semiconductors,
$176.5 billion in EVs and batteries, $159.9 billion in clean power, $80.7 billion

16 Federal Reserve Bank of St. Louis, Federal Reserve Economic Data, Total Construction
Spending: Manufacturing in the United States.
17 US Department of Treasury, Unpacking the Boom in US Construction of Manufacturing
Facilities.
18 White House, President Joe Biden: Investing in America.
PB 24-12 | OCTOBER 2024 7

in clean energy manufacturing, $43.9 billion in heavy manufacturing, and

$41.6 billion in biomanufacturing.
Not all these investments can be attributed to the Biden programs, as some
might have been made regardless of the programs. Nonetheless, a significant
share was undoubtedly made in response to the benefits firms received or
expected to receive through program grants and tax credits by the federal
government and the states.
The White House has provided detailed data on these investments by state.19
These data can be used to provide very rough preliminary estimates of the
magnitude and location of the additional manufacturing jobs these investments
could generate. A simple approach is to assume that (a) the investments
announced represent additions to the net capital stock in manufacturing and
increase employment at a rate that matches the average manufacturing labor
to capital ratio in 2022 and (b) the employment share of each state will be
proportional to its share in the overall value of the announced investments.
The most recent estimate of the net capital stock in manufacturing at the
time of this analysis is for 2022, so the analysis uses 2022 data in making the
projections. According to the Bureau of Economic Analysis, in 2022, the net
capital stock in manufacturing was $5.479 trillion valued at 2022 prices.20
Excluding clean power, which represents investments in utilities, the $730.1 billion
of announced investments in manufacturing as of July 2024 would be equal
to 13.3 percent of the 2022 manufacturing capital stock.21 In 2022, about
12.8 million people were employed in manufacturing.22 Assuming a constant
capital-labor ratio in manufacturing, these investments would increase demand
for manufacturing workers by 0.133 * 12.8 = 1.7 million. The same methodology
suggests that an additional 25,200 workers would be demanded in utilities
producing clean energy.23 Between 2000 and 2023, US employment in
manufacturing fell from 17.265 million to 12.943 million, a decline of 4.323 million
jobs.24 The estimated 1.7 million manufacturing jobs created would represent
39.3 percent of the manufacturing jobs lost between 2000 and 2022—but this
figure overstates the net impact, because it omits displacements and offsetting
declines in other industries.

19 The detailed state data by investment category and aggregate investments by state do not
correspond exactly to the aggregates by type of investment and of all states. Summing the
detailed underlying data yields an aggregate investment of $887.2 billion rather than the
$897.8 billion reported by the White House. As the difference is very small (for reasons that are
unclear), it does not make a significant difference to the calculations in table 1 and 2.
20 Bureau of Economic Analysis, Current Cost of Private Fixed Assets by Industry.
21 The White House announced a total of $730.1 billion for manufacturing, but the investments
in the excluded states are small and mainly in clean power, which is not counted as
manufacturing. Alaska ($8 million) and the District of Columbia ($5 billion) have investments
only in clean power, and Hawaii has investments of $95 million in clean manufacturing and
$135 million in clean power. The aggregate manufacturing number is therefore distributed over
the 48 states in the continental United States.
22 Bureau of Economic Analysis, Total Full-Time and Part-Time Employment by NAICS Industry.
23 Utilities are very capital intensive. In 2022, the net capital stock in utilities was $3.531 trillion
and employment was 556,000. An increase of $159.9 billion would increase the capital
stock by 4.5 percent and employment by just 25,178 jobs. The estimated total employment
associated with all the announced investments in manufacturing and clean energy would equal
1.725 million.
24 See Federal Reserve Bank of St. Louis, Federal Reserve Economic Data (FRED), All Employees,
Manufacturing.
PB 24-12 | OCTOBER 2024 8

This approach obviously paints with a very broad brush. The estimates
are intended to provide a sense of the order of magnitudes of the potential
employment impacts of the investments rather than precise estimates. In fact,
capital-labor ratios differ—by industry, firm, and state—and as it will take several
years for the investments to be completed, the ratios are likely to change.
The intention here is to capture the long-run additions to manufacturing
employment if these investment projects are carried out. These estimates do not
include the jobs created in planning, constructing, and equipping the facilities.
The estimates also exclude the long-run value-added and employment generated
in nonmanufacturing sectors.
It should be emphasized that these estimates take account only of positive
prospective additions to employment associated with the investments and ignore
factors that could offset this growth, such as employment declines associated
with the shutting down of manufacturing production dependent on fossil fuels,
declines from auto parts production rendered obsolete by EVs, depreciation
of existing manufacturing assets, possible increases in productivity growth
from automation, declines in other manufacturing industries and price and
employment changes since 2022.
Moreover, some of the investments might not actually be made—because
of changes in firm plans; implementation difficulties, such as failure to obtain
permits, the federal and state grants the announced investments were predicated
upon, and/or sufficiently skilled workers; and changing demand conditions. Since
grants are still being made, however, it is also possible that the tabulations could
underestimate the ultimate magnitudes of the investments eventually spurred
by the programs.
Given that the economy is close to sustainable full employment (the
unemployment rate was about 4 percent in August 2024), most of the workers
who take jobs in these operations are most likely currently working in other
jobs rather than unemployed or out of the labor force. This means that the
estimates should be regarded as depicting potential changes in the industrial
and geographic composition of employment rather than aggregate employment
additions at the national level.

Impacts by State
Some states could experience very substantial percentage increases in demand
for manufacturing employment (table 1).25 The states with manufacturing
employment gains from the announcements of 30 percent or more are Arizona
(139.2 percent increase), Idaho (79.2 percent), West Virginia (57.5 percent), New
York (47.8 percent), Oregon (47.3 percent), and New Mexico (46.3 percent).
A second group of states are above 20 percent. They include Nevada
(28.3 percent), Louisiana (26.4 percent), Texas (25.7 percent), and Georgia
(21.3 percent).
The location of these investments represents a redistribution of US
manufacturing geographically, as the employment effects are concentrated in

25 Because they use more recent data and a slightly different methodology, the estimates in table
1 here differ from the announcement employment numbers in table 10.1 in my book (Lawrence
2024).
PB 24-12 | OCTOBER 2024 9

Table 1
Estimated impact of announced investments (as of July 2024) on wage and salary employment in
manufacturing in the United States, by state

Estimated additional employment due to

Percent share announced investments (above 2022 levels)
of employment
Manufacturing Total in the Cumulative Share of Share
employment, employment, announcements share of manufacturing of total
2022 2022 (as of July announcements Number of employment employment
State (no. of jobs) (no. of jobs) 2024) (percent) jobs (percent) (percent)

1 Arizona 189,823 3,206,670 15.5 15.5 264,179 139.2 8.2

2 Idaho 73,559 865,816 3.4 18.9 58,277 79.2 6.7

3 West Virginia 46,448 709,777 1.6 20.5 26,714 57.5 3.8

4 New York 423,805 9,601,792 11.9 32.4 202,720 47.8 2.1

5 Oregon 192,959 2,008,171 5.4 37.8 91,216 47.3 4.5

6 New Mexico 28,984 878,478 0.8 38.6 13,417 46.3 1.5

7 Nevada 65,454 1,528,778 1.1 39.7 18,501 28.3 1.2

8 Louisiana 134,072 2,001,020 2.1 41.7 35,444 26.4 1.8

9 Texas 924,919 13,887,510 13.9 55.7 237,313 25.7 1.7

10 Georgia 420,508 4,988,559 5.3 61.0 89,742 21.3 1.8

11 North Carolina 474,624 5,011,689 5.4 66.4 92,007 19.4 1.8

12 Utah 150,327 1,759,886 1.5 67.9 26,194 17.4 1.5

13 South Carolina 261,614 2,307,528 2.2 70.2 38,232 14.6 1.7

14 Ohio 686,149 5,632,510 5.8 75.9 98,123 14.3 1.7

15 Kansas 168,944 1,502,382 1.3 77.2 22,375 13.2 1.5

16 Tennessee 367,734 3,305,841 2.8 80.1 48,064 13.1 1.5

17 Kentucky 252,490 2,062,126 1.9 81.9 32,036 12.7 1.6

18 Indiana 543,813 3,281,893 4.0 86.0 68,694 12.6 2.1

19 Michigan 610,763 4,454,417 3.6 89.6 62,119 10.2 1.4

20 North Dakota 27,457 446,727 0.2 89.8 2,739 10.0 0.6

21 Mississippi 148,555 1,226,196 0.8 90.5 12,903 8.7 1.1

22 Colorado 153,262 3,003,053 0.7 91.3 12,110 7.9 0.4

23 Alabama 273,952 2,154,012 1.2 92.5 20,960 7.7 1.0

24 Arkansas 163,242 1,331,331 0.7 93.1 11,299 6.9 0.8

25 South Dakota 45,254 475,287 0.2 93.3 2,914 6.4 0.6

PB 24-12 | OCTOBER 2024 10

Estimated additional employment due to

Percent share announced investments (above 2022 levels)
of employment
Manufacturing Total in the Cumulative Share of Share
employment, employment, announcements share of manufacturing of total
2022 2022 (as of July announcements Number of employment employment
State (no. of jobs) (no. of jobs) 2024) (percent) jobs (percent) (percent)

26 Wyoming 9,780 290,384 0 93.4 606 6.2 0.2

27 Oklahoma 129,268 1,743,257 0.3 93.7 5,762 4.5 0.3

28 Rhode Island 40,320 511,841 0.1 93.8 1,781 4.4 0.3

29 California 1,329,773 18,814,316 2.9 96.7 50,144 3.8 0.3

30 Illinois 569,256 6,190,308 0.7 97.4 11,693 2.1 0.2

31 Maine 54,598 651,797 0.1 97.5 1,044 1.9 0.2

32 Washington 268,573 3,750,100 0.3 97.8 5,071 1.9 0.1

33 Maryland 111,705 2,823,994 0.1 97.9 2,089 1.9 0.1

34 Virginia 245,025 4,255,727 0.3 98.2 4,429 1.8 0.1

35 New Jersey 250,888 4,307,291 0.3 98.4 4,387 1.7 0.1

36 Massachusetts 238,450 3,779,020 0.2 98.7 4,033 1.7 0.1

37 Vermont 29,035 316,746 0 98.7 438 1.5 0.1

38 Minnesota 324,192 2,992,223 0.2 98.9 3,462 1.1 0.1

39 New Hampshire 69,914 700,357 0 98.9 746 1.1 0.1

40 Pennsylvania 565,320 6,194,150 0.4 99.3 6,013 1.1 0.1

41 Wisconsin 483,506 3,036,037 0.3 99.6 4,807 1.0 0.2

42 Montana 22,035 526,075 0 99.6 210 1.0 0

43 Delaware 26,303 482,138 0 99.6 245 0.9 0.1

44 Nebraska 103,508 1,051,451 0.1 99.7 893 0.9 0.1

45 Florida 409,195 9,798,386 0.2 99.9 3,415 0.8 0

46 Missouri 282,509 2,997,480 0.1 100.0 1,587 0.6 0.1

47 Connecticut 157,295 1,728,113 0 100.0 816 0.5 0

48 Iowa 223,734 1,627,793 0 100.0 0 0 0

Total 12,772,893 152,993,763 100.0 1,701,962 13.3 1.1

Note: Data are based on 48 states. Alaska, Hawaii, and the District of Columbia are excluded. The estimates in this table differ from the
announcement employment numbers in table 10.1 in my book (Lawrence 2024) because of different methodologies and data used.
Sources: US Bureau of Economic Analysis, https://www.bea.gov/data/employment/employment-by-state; White House, Investing in America,
https://www.whitehouse.gov/invest (accessed August 5, 2024).
PB 24-12 | OCTOBER 2024 11

Table 2
Effect of announced investments on employment, by group of states (percent above 2022 levels)

Share of US Share of Share of US Share of

manufacturing total US manufacturing employment Increase in Increase in
employment, employment, job losses, from the manufacturing total state
Group 2022 2022 2000–2022 announcements employment employment

Top 10 states 19.6 25.4 15.1 61.0 41.5 2.6

Next 10 states 27.7 19.1 28.7 28.8 13.8 1.6

Rest of states 52.7 55.5 56.1 10.2 3.7 0.3

Total 100.0 100.0 100.0 100.0 13.3 1.1

Rust Belt 27.1 18.4 32.2 14.8 7.3 0.9

States Biden won in 2020 53.6 57.7 63.5 50.2 12.5 0.9

Swing states in 2020 22.0 18.2 24.2 31.6 19.1 1.9

Source: Table 1 and CNN 2020 Presidential Election Results, https://www.cnn.com/election/2020/results/president.

western and southern states not traditionally specialized in manufacturing. The

10 states with the largest percentage increase in manufacturing employment in
the announcements accounted for 19.6 percent of manufacturing employment in
2022 and 25.4 percent of overall US employment (table 2).
The new investment is not especially focused on the places in which
manufacturing jobs have been lost. The top 10 states with the largest percentage
growth in manufacturing employment accounted for just 15.1 percent of the
US manufacturing jobs lost between 2000 and 2022.26 But in these states the
share of manufacturing employment associated with the announcements would
account for 61 percent of the additional manufacturing jobs, and the impact on
manufacturing employment demand in these states could be substantial. On
average, manufacturing employment in these states could increase 41.5 percent.
The next 10 states, which account for 27.7 percent of US manufacturing
employment in 2022, would obtain 28.8 percent of the additional employment
share due to the announcements, and their average manufacturing employment
would increase 13.8 percent. These states accounted for 28.7 percent of the
manufacturing jobs lost between 2000 and 2022.
By contrast, the remaining states—which accounted for 52.7 percent of
manufacturing employment in 2022, 55.5 percent of total US employment in
2022, and 56.1 percent of the manufacturing jobs lost between 2000 and 2022—
make up just 10.2 percent of the share of additional employment associated
with the announcements. On average, this would represent manufacturing
employment increases of just 3.7 percent in the rest of the states. These
announcements will thus have very small impacts in states accounting for more
than half of US employment, and their impact will not be concentrated in the
states in which most of the manufacturing losses occurred after 2000.

26 Bureau of Economic Analysis, SAEMP27N Full-Time and Part-Time Wage and Salary
Employment by NAICS Industry.
PB 24-12 | OCTOBER 2024 12

Consider, for example, the effect on the Rust Belt (defined here as Illinois,
Indiana, Michigan, Ohio, Pennsylvania, and Wisconsin). These states are
disproportionately dependent on manufacturing jobs. In 2022, these states had
27.1 percent of US employment in manufacturing but just 18.4 percent of US
employment overall. The Rust Belt’s employment share of the announcements is
just 14.8 percent, and demand for manufacturing employment in these states due
to the announcements is projected to increase by just 7.3 percent, far less than
the 13.3 percent increase in overall manufacturing demand in the United States
(table 2).27 The announced investments are projected to create 251,448 jobs, equal
to 17.3 percent of the 1.45 million manufacturing jobs these states lost between
2000 and 2022. For the Rust Belt, these investments will not represent a rebirth.

Electoral Considerations
Most Republicans opposed the IRA, which was responsible for the clean-tech
dimension of these investments, and only 24 House Republicans supported the
CHIPS Act. Despite Republicans’ lack of support, the announced investments
have not been biased toward states that voted for either presidential candidate
in 2020. The states that President Biden won in 2020 accounted for 53.6 percent
of manufacturing employment in 2022 and 63.5 percent of the manufacturing job
decline between 2000 and 2022. The employment share of these states from the
announced investments would equal 50.3 percent (see table 2).
Investments are more concentrated in swing states (defined as states in
which the margin of victory in the 2020 election was less than 3 percent).
Three of these states (Arizona, Nevada, and Georgia) are among the top 10
in terms of percentage increases in manufacturing employment tied to the
announcements; North Carolina, another swing state, with a 19.4 percent
increase in manufacturing employment tied to the announcements, ranked
11th (table 1). Together these four states, which are sometimes the focus of
an electoral strategy emphasizing swing Sun Belt states, have 49 votes in the
electoral college.
The manufacturing employment increases associated with the
announcements are smaller in Rust Belt swing states, such as Michigan
(10.2 percent), Pennsylvania (1.1 percent), and Wisconsin (1.0 percent), which
together account for 44 electoral college votes.
Whether these investments will have a political impact remains to be seen.
The investments could increase support for politicians who voted for the
programs, in which case Democrats would benefit. But they could also increase
support for incumbents, in which case the effects could be more balanced. If
these investments are to help the administration politically, they point to focusing
on their relatively large effects in the marginal western and southern states rather
than Rust Belt states, especially Pennsylvania and Wisconsin.

27 According to the US Treasury, a disproportionate number of announced investments in clean

energy projects are being located in regions of the country that experienced more pronounced
losses in manufacturing employment in the 1990s and early 2000s (US Department of
Treasury, “New US Department of the Treasury Analysis: Inflation Reduction Act Driving Clean
Energy Investment to Underserved Communities, Communities at the Forefront of Fossil Fuel
Production,” Press Release, November 29, 2023). But it is important to explore not simply the
dollar value of these investments but also the jobs they will create, because clean power plants
are very capital intensive and produce relatively few jobs.
PB 24-12 | OCTOBER 2024 13

It is also possible that the political impact of these policies could differ
from their economic impact. Autor et. al (2024) report that while the economic
impact of President Trump’s tariffs on China had few positive effects, they did
strengthen Republican support politically. Thus similarly, the expressive role of
these programs in demonstrating concern for workers could ultimately be more
powerful than the purely economic impact.

Effect on Total Employment

The manufacturing employment estimates of the investment announcements
equal only 1.1 percent of total US employment (table 1). The largest percentage
impacts occur in Arizona (8.2 percent), Idaho (6.7 percent), Oregon (4.5), and
West Virginia (3.8 percent). Even in these states, the aggregate employment
effects are still relatively small, however. Moreover, except for New York (at
2.1 percent), the increases in employment in the remaining states are all less
than 2.0 percent—and in 24 of the states they are less than 0.5 percent. These
investments would not, therefore, fundamentally change the aggregate sectoral
employment composition of US employment. Taking account of the negative
impact on fossil fuel–related employment, their impact would increase the
manufacturing employment share by considerably less than 1 percent.

LONG-TERM OUTLOOK FOR MANUFACTURING EMPLOYMENT

Every year, the Bureau of Labor Statistics reports detailed projections of US
employment by industry and occupation for the decade to come.28 Its September
2023 report—which presumably took account of the anticipated impacts of
the Biden programs passed a year earlier, as well as most of the announced
investments that were made over the subsequent year—forecasts that between
2022 and 2032, manufacturing employment would decline by 113,500 to
12.7 million while aggregate employment would increase by 4.7 million (table 3).29
Using a comprehensive measure of the labor force that includes self-employed
workers, these projections imply that the manufacturing employment share
would fall from 7.8 percent in 2022 to 7.5 percent in 2032. The calculations of
the employment impact of the new investments ignore offsetting effects, but
even if we assume that they increase manufacturing employment by the full
1.7 million jobs and that they have all been overlooked in the BLS projections,
these investments would increase the manufacturing employment share to
8.5 percent—just 0.7 percentage points more than it was in 2022. But these
official projections of manufacturing employment growth provide evidence
that this would overstate the manufacturing employment in the future. In
the BLS projections, implicitly, any employment increases attributable to the
Biden programs would be more than offset by employment declines in other
manufacturing industries.
The BLS report projects employment growth in manufacturing in only six
industries, which together would add 218,500 jobs, of which more than half

28 It uses a comprehensive measure of the US labor force that includes not only nonfarm wage
and salary workers but also workers in agriculture and the self-employed.
29 Bureau of Labor Statistics, Employment Projections 2022–2032, September 6, 2023.
PB 24-12 | OCTOBER 2024 14

Table 3
Projected changes in US employment between 2022 and 2032, by sector

Change in number of
Sector (NAICS code) jobs (thousands)

Total 4,665.5

Manufacturing (31–33) –113.4

Food manufacturing (311) 81.2

Beverage and tobacco manufacturing (312) 34.4

Textile mills and textile product mills (313, 314) –22.0

Apparel, leather and allied product manufacturing (315, 316) –27.7

Wood product manufacturing (321) –4.7

Paper manufacturing (322) –44.1

Printing and related support activities (323) –63.4

Petroleum and coal products manufacturing (324) –1.7

Chemical manufacturing (325) 21.6

Plastics and rubber products manufacturing (326) –5.9

Nonmetallic mineral product manufacturing (327) –8.1

Primary metal manufacturing (331) –28.5

Fabricated metal product manufacturing (332) –7.1

Machinery manufacturing (333) 8.2

Computer and electronic product manufacturing (334) 29.8

Electrical equipment, appliance, and component manufacturing (335) 43.3

Transportation equipment manufacturing (336) –87.7

Furniture and related product manufacturing (337) –29.8

Miscellaneous manufacturing (339) –1.3

NAICS = North American Industry Classification System

Note: Figures are for wage and salary earners and self-employed earners.
Source: US Bureau of Labor Statistics, Employment Projections, Employment by major industry sector.

would be in food and beverages and tobacco. Employment in other industries

that were projected to grow included electrical equipment (by 43,300);
computers and electronics (by 29,800 mainly because of 30,800 jobs in
semiconductors); and chemicals (by 21,600, mainly because of an additional
19,100 jobs in pharmaceuticals).
These additional jobs were insufficient to offset the declines in 13 other
industries, which total around 332,000. They included losses of 96,900 jobs in
PB 24-12 | OCTOBER 2024 15

motor vehicle parts, which constituted the bulk of the 87,700 jobs projected
to be lost in transportation equipment manufacturing, presumably because of
EVs. Employment was also expected to fall in printing (63,400 jobs lost), paper
(44,100), furniture (29,800), primary metals (28,500), textiles (22,000), and
apparel (7,700). Thus, although, with the notable exception of transportation,
the sectors targeted by the Biden program with the CHIPS Act were expected to
show some employment growth, these gains were offset by more pervasive jobs
losses in the rest of manufacturing.
These estimates of manufacturing employment growth could be too low, but
the analysis points to the perils in proclaiming a manufacturing “renaissance”
based on selective anecdotes from a few industries and projects rather than a
comprehensive consideration of the entire sector.

CONCLUSION
Although it will spur rapid manufacturing employment growth in nontraditional
locations, the Biden programs have not created a broad renaissance in US
manufacturing, and they are unlikely to do so in the future. The effects of
the programs on the Rust Belt states that experienced large manufacturing
employment losses since 2000 are likely to be modest, and the impact will not
significantly change the sectoral composition of the US labor market.
Manufacturing still has an important role to play in providing the goods
necessary to rebuild US infrastructure, promote the digital revolution, and ease
the transition to a decarbonized US economy. But because of its relatively
small overall employment share—and the growing bias toward hiring more
educated workers—the sector no longer provides noncollege workers with the
opportunities it used to. Although the Biden programs may achieve important
social objectives, they are therefore unlikely to improve the opportunities
for most workers without college degrees or help most of the country’s
disadvantaged places.
Additional announcements are likely as grants from the Biden programs are
awarded. The results from updated numbers are unlikely to change the central
conclusion of this analysis, however. Even if additional announcements were to
increase the manufacturing employment estimates used here by an additional
50 percent, manufacturing’s role in overall US employment would remain very
modest. Additional policies with a focus far wider than manufacturing are
needed to improve the prospects of non-college-educated workers and left-
behind communities.30

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Autor, David, Beck Anne, Dorn David, and Hanson Gordon. 2024. Help for the Heartland?
The Employment and Electoral Effects of the Trump Tariffs in the United States. NBER
Working Paper 32082. Washington: National Bureau of Economic Research.
Bistline, John, Neil Mehrotra, and Catherine Wolfram. 2023. Economic Implications of the
Climate Provisions of the Inflation Reduction Act. Brookings Papers on Economic
Activity (Spring). Washington: Brookings Institution.

30 For proposals for some these policies, see chapter 11 of Lawrence (2024).
PB 24-12 | OCTOBER 2024 16

Langdon, David, and Rebecca Lehrman. 2012. The Benefits of Manufacturing Jobs.
Washington: US Department of Commerce.
Lawrence, Robert Z. 2020. Trade Surplus or Deficit? Neither Matters for Changes in
Manufacturing Employment Shares. PIIE Working Paper 20-15. Washington: Peterson
Institute for International Economics.
Lawrence, Robert Z. 2024. Behind the Curve: Can Manufacturing Still Provide Inclusive
Growth? Washington: Peterson Institute for International Economics.
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