President Donald Trump has been upending the global economy in the name of bringing manufacturing back. President Joe Biden signed into law massive investments aimed at doing something similar. The American manufacturing sector is reviving after decades of decay.
But there’s something a bit weird undercutting this movement to reshore factory jobs: American manufacturers say they are struggling to fill the jobs they already have.
Last year, the Manufacturing Institute, a non-profit aimed at developing America’s manufacturing workforce, and Deloitte, a consultancy firm, surveyed more than 200 manufacturing companies. More than 65% percent of the firms said recruiting and retaining workers was their number one business challenge.
Part of the story has been a tight labor market. There have been similar worker recruitment and retention issues in other sectors, like construction and transportation. But the shortfall of manufacturing workers is about more than just that — and, with both parties pushing to reshore manufacturing, analysts expect the industry’s workforce issues to get even more challenging.
The Biden administration invested over $2 trillion on initiatives aimed at reinvigorating American industry, in legislation like the Infrastructure Investment and Jobs Act (IIJA), the CHIPS and Science Act, and the Inflation Reduction Act (IRA). There’s now an explosion of spending to construct new factories in America, and analysts expect the demand for manufacturing workers to pop.
Note: The data is seasonally adjusted.
Source: St. Louis Federal Reserve/U.S. Census Bureau
Credit: Brent Jones/NPR
The average manufacturing worker is also relatively old, and the industry expects a tidal wave of retirements in the coming decade.
The Manufacturing Institute and Deloitte projected that the industry will need 3.8 million additional workers by 2033, and that as many as “1.9 million of these jobs could go unfilled if workforce challenges are not addressed.”
These estimates, mind you, were calculated before President Trump’s recent tariffs, which, at least theoretically, are supposed to compel even more manufacturers to build factories in America. If things go to plan, we may need even more Americans to start working in manufacturing in coming years.
Today in the Planet Money newsletter: If manufacturing jobs are so great, why aren’t more Americans doing the ones we already have? And what can the industry and the government potentially do to address this issue? (If you have been forwarded this or are reading it online, you can subscribe to our weekly newsletter here).
Robyn Beck/AFP via Getty Images
Industry whiplash
Gordon Hanson is an economist at Harvard Kennedy School who has published influential research on American manufacturing, including on what happened to it in the face of competition with China (We interviewed Hanson about his “China Shock” research in a past newsletter).
Hanson sees what you might call whiplash in an industry seeing a reversal of fortune. “A period in which there’s been a substantial increase in manufacturing — it’s a very recent phenomenon,” Hanson says. “ I think we can fill those jobs, but we're just not gonna fill 'em overnight.”
One big reason manufacturers can’t fill these jobs overnight is because they require workers to have particular skills. And it’s not just skills needed to work on assembly lines. Only around two in five manufacturing jobs are directly involved in making stuff. Manufacturers also employ people to do research and development, engineering, design, finance, sales, marketing, and so on.
Part of the political appeal of bringing manufacturing back is that, historically, they’ve provided good jobs and career ladders for people without a college education. However, many manufacturing jobs these days actually require college degrees.
Carolyn Lee, the president and executive director of the Manufacturing Institute, says that roughly half of the open positions in manufacturing require at least a bachelor’s degree.
That said, the other half of open manufacturing jobs don’t require a bachelor’s degree. And manufacturers say they are also struggling to fill those.
Lee says some of the most in-demand positions in manufacturing right now are maintenance technicians, machine operators, material handlers, and forklift operators.
Is manufacturing pay high enough?
A classic solution to so-called worker shortages: offer higher pay. That would probably convince workers to invest in acquiring coveted skills and enter the manufacturing workforce.
Which is one reason why Oren Cass, the chief economist and founder of American Compass, a conservative think tank, says he’s skeptical whenever employers complain about worker shortages.
“ I have less than zero sympathy for employers who go around complaining about labor shortages and skills gaps,” Cass says. He joked that he has a side hustle, running an “incredibly innovative” biotech firm. “It employs leading scientists at $10 an hour to develop extraordinary cures. I have 500,000 job openings as well, and I have not been able to fill one of them.”
Cass has a point. We’ve covered a similar phenomenon in trucking: trucking companies have complained of a “worker shortage” for decades, yet relatively low wages and challenging work conditions are clearly a huge factor behind that industry’s workforce woes. Addressing those issues would probably go a long way to dealing with their “shortage.”
Manufacturers have, however, hiked their pay in recent years. That has helped slash the number of open manufacturing positions, from their peak of over one million open positions in April 2022. (Like many other industries during the COVID-19 pandemic, manufacturers saw a wave of retirements, deaths, and quits).
Note: This data is seasonally adjusted.
Source: St. Louis Federal Reserve/U.S. Bureau of Labor Statistics
Credit: Brent Jones/NPR
Offering higher paychecks would likely compel more Americans to flock to the remaining open positions.
But the higher pay that Americans demand to work in manufacturing is one of the big reasons why many manufacturers left America in the first place. And so this wage issue begs the question whether many manufacturers, particularly labor-intensive ones, can be profitable and globally competitive in the United States.
Cass believes that tariffs can help even the playing field with foreign competitors. And he stresses that one of the keys to reshoring manufacturing — while maintaining good-paying manufacturing jobs — is higher productivity.
“ If somebody in the United States is 20 times as productive as somebody in China and you have to pay them 20 times as much, you are equally competitive,” Cass says.
So, if American manufacturers can prove to be much more productive than foreign competitors — meaning American workers can make more in less time — they can pay the higher wages needed to attract and retain American workers while still remaining globally competitive.
That, however, is a big if. American manufacturing has been seeing an alarming slowdown in productivity growth in recent years.
The manufacturing PR and skills problems
Lee agrees that manufacturers will be able to entice more people into the industry by offering higher pay. However, she says, the industry’s issues with recruitment and retention go beyond dollars and cents.
For one, she suggests, manufacturing has a PR problem. Many Americans have outdated notions of what manufacturing jobs actually entail. She suggests that many imagine they’re the dirty, monotonous, and dangerous factory jobs depicted in Charles Dickens novels. But, Lee says, they’re actually “clean and bright and full of technology.” She sees changing American perceptions about manufacturing as one crucial part of convincing more young people to work in the sector. More generally, if the industry is seen as vibrant and growing, as opposed to dying, that will probably help with recruitment.
But even if the word gets out and more young Americans want to do these jobs, they’ll still need the skills to be able to do them.
“These jobs are in factories that are completely different from the factories of 25 years ago,” Hanson says. “They require people to know how to use pretty sophisticated machinery.”
“The hardest skills to find are the ones that maintain and fix equipment,” Lee says. “Every company we speak with is trying to hire technicians. Every single one. The challenge is that there is no one walking around on the street with these skills, and it takes 1-2 years to teach those skills and another 1-2 years to contextualize those skills to the specific plant environment.”
Harry Moser, the founder and president of the Reshoring Initiative, argues that America should invest much more heavily in apprenticeships to build the manufacturing workforce of the future. Apprenticeships provide young people with pathways to learn vocational skills without having to obtain an expensive, four-year college degree. Moser says American leaders have overemphasized college to the detriment of vocational training, and that our system of apprenticeships pales in comparison to the ones in countries like Germany and Switzerland.
According to Third Way, a centrist think tank, in 2022 only 0.3% of the American working-age population was in apprenticeship programs. For comparison, in Switzerland, that number was 3.6%, or 12 times higher.
Apprenticeships and other means to help Americans obtain vocational skills may be especially important for the high-tech manufacturing jobs we have today. Lee says today’s manufacturing jobs often require some combination of “knowledge of electrical systems, mechanical systems, logic controllers, hydraulic power, and robotics.”
The Manufacturing Institute has been working to develop better apprenticeship programs to help Americans build the skills the manufacturing sector needs. “ The very best models of workforce development that we see and that we engage in at the Manufacturing Institute are locally and regionally led public-private partnerships, where manufacturers come to the table — and with the support of the community college system and the local business community — they build the talent pipelines that they need,” Lee says.
Lee told us about one particular apprenticeship program that she’s very excited about. It’s called The Federation for Advanced Manufacturing Education, or FAME.
FAME was founded by Toyota back in 2010. The car company had trouble finding machine technicians at their manufacturing plant in Georgetown, Kentucky. So they did something proactive: they partnered with other local companies and a community college and developed an apprenticeship program to create the workforce they needed.
Lee says FAME is a 21-month program in which students juggle work and school. Each week, they spend three days at the factory and two days at a community college, learning how to operate and repair high-tech equipment, and other crucial skills.
“And at the end of the 21 months, students come out with, in most cases, no college debt,” Lee says. These students also see dramatically higher earning potential.
One study, by the Brookings Institution and Opportunity America, found much higher graduation rates for students who entered the FAME program. “Earnings and employment gaps were if anything more pronounced,” the authors write. “Five years after completion, FAME graduates were earning nearly $98,000, compared to roughly $52,783 for non-FAME participants — a difference of more than $45,000 a year.” It pays to have scarce, in-demand skills.
Lee says that FAME has become a model of workforce development for other manufacturing companies. In 2019, she says, Toyota “recognized we’re a car company, not an apprenticeship operating company,” so they handed the program over to the Manufacturing Institute to expand it around the country.
All the sources we spoke to agreed that the government and businesses need to do more to invest in programs like these to provide opportunities to Americans and develop the workforce that the manufacturing industry needs.
“As we go from this period of declining jobs to expanding jobs, we shouldn't expect that we're just gonna automatically reincorporate all that labor overnight,” Hanson says. “It takes a workforce system to make it happen.”
Late last month, President Trump issued an executive order aimed at “preparing Americans for the high-paying skilled trade jobs of the future.” President Trump ordered various administration officials to create “a plan to reach and surpass 1 million new active apprentices.”
We’ll be watching to see what the details of this plan are, and whether that plan becomes action.
But what is clear is that bringing American manufacturing roaring back will likely require more than just slapping up tariffs or investing lots of money to build new factories. Leaders may need to regear our education system to help more Americans acquire the skills that manufacturers need for a productive and capable workforce.
Which brings us to an even bigger question: What warrants all these interventions to boost one particular sector of the economy? Is manufacturing actually special? And, if so, what makes it so special? That’s next week in the Planet Money newsletter.
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