Measuring Manufacturing: How the Computer and Semiconductor Industries Affect the Numbers and Perceptions

Upjohn Institute Working Paper 14-209

51 Pages Posted: 26 Feb 2014

See all articles by Susan N. Houseman

Susan N. Houseman

W.E. Upjohn Institute for Employment Research

Timothy J. Bartik

W.E. Upjohn Institute for Employment Research

Timothy Sturgeon

Massachusetts Institute of Technology (MIT)

Date Written: February 25, 2014

Abstract

Growth in U.S. manufacturing’s real value-added has exceeded that of aggregate GDP, except during recessions, leading many to conclude that the sector is healthy and that the 30 percent decline in manufacturing employment since 2000 is largely the consequence of automation. The robust growth in real manufacturing GDP, however, is driven by one industry segment: computers and electronic products. In most of manufacturing, real GDP growth has been weak or negative and productivity growth modest. The extraordinary real GDP growth in computer-related industries reflects prices for computers and semiconductors that, when adjusted for product quality improvements, are falling rapidly. Productivity growth in these industries, in turn, largely reflects product and process improvements from research and development, not automation. Although computer-related industries have driven growth in the manufacturing sector, production has shifted to Asia, and the U.S. trade deficit in these products has soared since the 1990s. The outsized effect computer-related industries have on manufacturing statistics also may distort economic relationships in the data and result in perverse research findings. Statistical agencies should take steps to assure that the influence that computer-related industries have on manufacturing-sector statistics is transparent to data users.

Keywords: Manufacturing, computers, semiconductors, productivity, globalization, global value chains

JEL Classification: L60, F60

Suggested Citation

Houseman, Susan N. and Bartik, Timothy J. and Sturgeon, Timothy, Measuring Manufacturing: How the Computer and Semiconductor Industries Affect the Numbers and Perceptions (February 25, 2014). Upjohn Institute Working Paper 14-209. Available at SSRN: https://ssrn.com/abstract=2401075 or http://dx.doi.org/10.2139/ssrn.2401075

Susan N. Houseman (Contact Author)

W.E. Upjohn Institute for Employment Research ( email )

300 South Westnedge Avenue
Kalamazoo, MI 49007-4686
United States
616-343-5541 (Phone)
616-343-3308 (Fax)

Timothy J. Bartik

W.E. Upjohn Institute for Employment Research ( email )

300 South Westnedge Avenue
Kalamazoo, MI 49007-4686
United States
269-343-5541 (Phone)
269-343-3308 (Fax)

Timothy Sturgeon

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

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