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Wednesday 3 March 2010
Where Did the Steelworkers Go?

In 1960, US primary steel production was 91 million tons, of which 2.95 million tons were exported; it also imported 3.24 million tons. This part of the industry employed 530,000 people in all capacities, for an annual output of 170 tons/employee.

In 2007, US primary steel production was 98.1 million tons, with exports of 10.1 million tons and imports of 30.2 million tons. Employment was only 97,540 people, coming to 1005 tons/employee.

Exports and imports in 1960 were a wash, nearly enough, so let’s suppose trade patterns had remained comparable and say that all of the net imports were to be made up by higher domestic production: (20.1 million tons)/(1005 tons/worker) = 20,000 extra workers. This would be a substantial increase, but it would still leave employment in steel at only 22% of its 1960 level. Where did the other four-fifths of the industry go?

The most obvious explanation is productivity. The industry in 2007 produced more than it did in 1960, with many fewer employees. In fact, output per employee grew 5.9 times over that period. A six-fold increase in productivity divided by a slight rise in total demand equals a roughly five-fold fall in employment.

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