Manufacturing jobs boom not yet reaching places hit by the China Shock

By Connor O’Brien and Adam Ozimek

The post-pandemic recovery in manufacturing employment has been remarkable — as we pointed out in a recent EIG report, this is the first time manufacturing jobs have fully recovered from a recession in five decades. 

Glitzy investment announcements from businesses that make everything from electric vehicles to semiconductors — paired with enormous growth in manufacturing construction — might also give the impression that a booming new era of manufacturing employment, in which the sector recovers some of its faded prominence as a large source of good-paying jobs, has just begun.

It’s not likely.  

While this recovery has been impressive in historical terms, there is no sign yet that we are witnessing a fundamental break from the sector’s long-run decline as a source of employment for American workers. Even amidst a historic employment recovery, manufacturing accounts for a smaller share of jobs than it did in 2019. 

And there are signs that those hoping for an “everything bagel” outcome that reshores critical sectors and does so in struggling regions while offering high-wage, unionized jobs might be in for a disappointment. Tradeoffs may still exist after all. 

We highlight three such indicators. 

1. The manufacturing jobs boom is not reaching the places most exposed to the “China Shock.”

There is a bipartisan desire to address the challenges of economically struggling places by boosting manufacturing employment. Is it happening? Is the historic recovery in manufacturing employment since the pandemic actually reaching these places? Not yet. 

One place to look is at the communities hit hardest by the “China Shock,” which was famously quantified by economists David Autor, David Dorn, and Gordon Hanson in a 2013 paper. These are the parts of the U.S. whose local manufacturing ecosystems took the biggest hit from cutthroat competition from Chinese imports in the 2000s, with negative effects that in many places have persisted. 

While policymakers are hoping that the manufacturing boom will finally bring relief to these communities, post-pandemic manufacturing job growth is disproportionately happening in places that were least exposed to the China Shock. 

Breaking down U.S. counties by the degree to which they were exposed to competition from Chinese imports during the 2000s, we used the Quarterly Census of Employment and Wages (QCEW) to find that the most exposed places are not participating in the manufacturing boom. Indeed, the hardest-hit places still have fewer manufacturing jobs than they did before the pandemic. 

As the manufacturing construction boom starts to yield new factories, this could change, of course. Brookings Metro has tracked private manufacturing investment announcements since 2021, finding that they have been concentrated in places hit hardest by the China Shock. But at least so far, such investments have not yet altered local labor market realities.