As the U.S. service sector grows like a weed, let’s remember the enormous economic impact of manufacturing in the U.S.
The manufacturing industry added $2.27 trillion to the Gross Domestic Product (GDP) of the United States in 2020.
Imagine for a minute what our economy would look like without that contribution. Unthinkable, right? And that doesn’t even begin to capture the complete contribution manufacturers make to our way of life.
Consider these facts about the manufacturing industry:
That’s impressive enough, but the true impact of manufacturing on the economy requires you to do some multiplication. Economists know that for every manufacturing job, many other indirect jobs also exist.
The indirect jobs created through manufacturers’ presence in a community is called “employment multipliers.” These multipliers account for backward and forward linkages between industries. For example, suppliers, warehousing, transportation, and professional services all grow from the demands of a manufacturing company.
Wages spent in the community generate even more jobs. These induced jobs also include public-sector jobs supported by tax revenue. The manufacturers support the communities, and the communities support the manufacturers. Everyone wins!
According to the Economic Policy Institute, manufacturing sector employment multipliers are substantial:
For durable manufacturing, 744 indirect jobs exist for every 100 direct manufacturing jobs.
For nondurable manufacturing, 514 indirect jobs exist for every 100 manufacturing jobs.
If you do the math, you will find that the 12 million manufacturing jobs in the U.S. multiply out to an estimated 75 million jobs for American workers.
The economic impact of manufacturing is only one reason why we love partnering with industrial manufacturers here at StratMg. Thank you for all you do!