---
title: "US Manufacturing Employment Is Growing Faster Than Output—That’s a Problem"
summary: |-
  The United States is becoming less productive in manufacturing, even as productivity rises across nontraded sectors. To maintain U.S. industrial leadership, policymakers should incentivize manufacturers to adopt productivity-enhancing technologies.
date: "2026-08-18"
issues: ["Manufacturing", "Skills and Future of Work"]
authors: ["Trelysa Long"]
content_type: "Blogs"
canonical_url: "https://itif.org/publications/2026/08/18/us-manufacturing-employment-growing-faster-than-output-thats-a-problem/"
---

# US Manufacturing Employment Is Growing Faster Than Output—That’s a Problem

Manufacturing is a cornerstone of U.S. global competitiveness. The more efficiently a country can produce goods, the lower its production costs will be and the more competitive its manufacturers will become in global markets. As such, rising manufacturing productivity is essential to maintaining U.S. industrial leadership.

However, the United States is becoming less productive in manufacturing even as its productivity rises across nontraded sectors. Indeed, Bureau of Labor Statistics (BLS) [data](https://www.bls.gov/productivity/tables/) show that manufacturing employment has grown faster than the sector’s real sectoral output over the past 15 years, suggesting that manufacturing labor productivity has declined. Meanwhile, labor productivity in the nonfarm business sector increased over the same period. These trends indicate that productivity is growing faster across the broader business economy than it is in the manufacturing sector. Policymakers should incentivize manufacturing companies to adopt productivity-enhancing technologies, such as robots and automation, to reverse this trend and strengthen U.S. competitiveness.

Labor productivity measures the amount of output workers produce with a given amount of labor. While productivity growth across the economy matters, productivity gains in manufacturing are especially critical because they directly affect a country’s ability to compete in global markets and maintain leadership in strategic industries. For example, if manufacturing 10 cell phones required 50 workers in 2010 but only 10 workers in 2025, labor productivity would have increased substantially. These efficiency gains would lower production costs, allowing manufacturers to offer more competitive prices and capture greater international market share. The resulting cost savings could also be reinvested in R&D and automation, further driving competitiveness and productivity gains. In contrast, productivity improvements in a local service industry may allow a business to reduce costs or increase output, but they will not necessarily help the United States compete for market share in globally traded industries.

Unfortunately, U.S. manufacturing labor productivity growth has slowed. Between 2010 and 2025, manufacturing employment grew 9.4 percent, while real sectoral output (not value added) increased by just 5.1 percent.[1](#_edn1) (See figure 1.) In comparison, the nonfarm business sector’s labor productivity rose nearly 25 percent during the same period. Together, these trends show that manufacturing productivity is not growing as quickly as that of non-manufacturing sectors.

**Figure 1: Manufacturing sector's real sectoral output and employment change from 2010 to 2025**

**![image](https://itif-publications-production.s3.amazonaws.com/Manufacturing%20Jobs%20Growing%20Faster_final_files/image001.png)**

This trend is especially concerning as China continues to strengthen its position in advanced manufacturing. According to [ITIF's Hamilton Index](https://itif.org/publications/2026/05/06/hamilton-index-2026-chinas-dominance-in-advanced-industries-is-growing/), China already leads global production in 7 of the 10 advanced industries analyzed, outpacing all other nations, and is projected to expand its lead further. As Chinese manufacturers continue to lower production costs, the United States risks falling further behind if it fails to extend productivity gains to strategically important manufacturing industries.

To reverse this trend, policymakers should encourage manufacturers to invest in productivity-enhancing technologies such as industrial robots, artificial intelligence, advanced automation, and smart manufacturing systems. These technologies will enable workers to produce more output in less time while improving quality, reducing costs, and increasing global competitiveness. Congress can accelerate their adoption by expanding tax incentives for capital investment, strengthening manufacturing extension programs that help small and medium-sized manufacturers modernize, and supporting workforce training so workers can effectively use new technologies. Improving manufacturing productivity is one of the most effective ways to ensure that the United States remains globally competitive.

# Endnotes

[1](#_ednref1). Real sectoral output is defined as the amount of goods and services produced by an industry for delivery to consumers outside that industry.

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*Source: Information Technology & Innovation Foundation (ITIF)*
*URL: https://itif.org/publications/2026/08/18/us-manufacturing-employment-growing-faster-than-output-thats-a-problem/*