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The myth and the reality of manufacturing in America

The production and shipment of goods in the United States is a large, important, and growing part of the economy. Despite the continued growth and long-term health of manufacturing, significant misconceptions remain about the sector’s demand for labor and how it has changed in recent decades. In this brief, we identify and explain a major source of misunderstanding in manufacturing. In the first section, we focus on what effects productivity change, domestic demand, and foreign trade have on U.S. manufacturing employment. We then discuss policy dimensions of these findings. We begin with a brief overview of manufacturing in the United States.