US factories are booming, but finding workers is still a struggle
- The US is experiencing a factory boom driven by computer, electronic, and electrical manufacturing.
- The CHIPS Act and Inflation Reduction Act have accelerated manufacturing construction nationwide.
- With near-stagnant manufacturing job growth this year, some are worried there may not be enough qualified people to take these jobs.
The US may be experiencing a factory boom, but finding the workers to staff them may be a more difficult task.
Data from the Census Bureau released last week shows construction spending on US manufacturing at its highest levels of the 2000s, nearly doubling from $110 billion in May 2022 to $194 billion in May 2023.
Despite that huge jump in manufacturing construction, employment in the sector has been stagnant over the last year, suggesting filling the new factories with workers could be difficult.
The US government has provided billions of dollars in subsidies for electric vehicle and solar panel production in an attempt to compete with countries such as China, whose global value added from manufacturing is about double that of the US.
Legislation such as the CHIPS Act, which provided $280 billion in funding to boost manufacturing of semiconductors, the Inflation Reduction Act, and the Infrastructure Investment and Jobs Act have provided tax incentives and funding to promote manufacturing construction.
According to the Treasury Department, the boom has been driven mainly by construction for computer, electronic, and electrical manufacturing, spending on which nearly quadrupled since early 2022. This component now accounts for over half of total construction spending on manufacturing, whereas in September 2021, it made up just about an eighth of the total.
Notably, other advanced economies have not experienced such surges in manufacturing construction, according to the Treasury Department.
Even though factory construction has been ramping up, manufacturing hiring hasn't kept pace. US manufacturing employment hit its highest level since 2008, though growth has slowed this year, lagging behind much of the labor market. Since President Joe Biden took office, around 800,000 manufacturing jobs were added, or a 6.5% growth rate. This comes in lower than the 9.3% overall employment increase since January 2021.
This year has seen manufacturing employment remain especially stagnant, growing by just around 4,000 employees since January. Manufacturing now makes up just over 8% of the workforce, about half of early 1990s levels and the lowest share ever.
By 2030, the manufacturing skills gap — caused by the labor market's struggle to find workers with highly technical and manual expertise — could lead to 2.1 million unfilled jobs, according to the National Association of Manufacturers. This could potentially cost a total of over $1 trillion in 2030 alone. Manufacturers surveyed noted that finding the right talent was harder in 2021 than in 2018, with 77% saying they will have ongoing difficulties in bringing on and retaining workers.
Though many of the 1.4 million manufacturing jobs lost at the beginning of the pandemic have been recovered, many economists are worried all these new factories across the country could struggle to find enough workers. In a piece for Fortune, University of Tennessee professor Tony Schmitz noted that the US lacks the education system to close the manufacturing labor shortage, with STEM programs that lag those of many other countries.
Training and educational programs are cropping up to help fill that skill gap. Organizations including The American Society of Mechanical Engineers and the STEM For All Foundation have helped establish more equitable access to STEM programs for younger students, though there is still plenty of work to be done. A recent Bloomberg article looked into free technical schools in Tennessee intended to create a pipeline for long-run talent, though even finding students interested in pursuing this work has been challenging.
Though US production will drive jobs and higher wages, smaller manufacturers unable to scale quickly could still struggle even as larger manufacturers continue expanding.
"While the boom in investment may alleviate supply chain pressure brought on by the global pandemic, incentives to build domestically could further strain the labor market, driving up wages and prices in a volatile market," Kendra Blacksher, industrials senior analyst at audit, tax, and consulting firm RSM US, wrote in an email.
The "striking surge" in manufacturing construction has made many optimistic amid increased policy support. But some may soon be asking: Will these jobs be filled?