Reviving U.S. manufacturing has long been a policy goal, especially under former President Donald Trump, who used tariffs as a tool to push for factory growth on home turf. But a deeper challenge remains—labor costs, which paradoxically are both too high and too low.
A Shortfall of Workers, and the Cost to Fix It
A new analysis from Wells Fargo Securities points out that returning to the 1979 peak of manufacturing employment would require a massive shift in the labor market.
Back then, manufacturing accounted for about 22% of all U.S. jobs. Today, it’s closer to 8%.
To reach those 1970s levels, the U.S. would need 22 million more manufacturing workers—far beyond the 7.2 million unemployed Americans as of April, according to the Bureau of Labor Statistics.
And that’s assuming none of those workers came from other industries.
Wages are central to the problem. Compared to developing countries, U.S. labor costs are steep.
On average, American workers earn 16 times more than those in Vietnam, 11 times more than workers in Mexico, and 7 times more than workers in China, according to Wells Fargo.
That gap makes it hard to justify reshoring labor-intensive operations.
To offset these costs, companies setting up shop in the U.S. often invest heavily in automation—robots, advanced machinery, and AI systems.
The trade-off? Fewer human jobs per factory. Wells Fargo estimates that replacing the 6.7 million manufacturing jobs lost since 1979 could cost around $3 trillion.
High-Tech Products Have a Better Shot
Not all manufacturing is equally affected. Higher-value products—such as semiconductors or precision instruments—are more likely to return to U.S. soil because their labor costs represent a smaller share of the total value.
That’s what Farok Contractor, a Rutgers economics professor, told Investopedia earlier this year.
He explained that for products where value is tied more to design and engineering than manual labor, labor costs are less of a deciding factor.
But when it comes to items like toys or furniture, where margins are tight and labor is more central, the U.S. can’t compete as easily.
The Made-in-America Price Problem
One stark example comes from entrepreneur Ramon Van Meer, CEO of showerhead company Afina.
He tested consumer sentiment by offering two versions of the same product: one made in Asia for $129, and a second version made in the U.S. for $239—the lowest price they could offer. Out of 584 sales, not one customer chose the American-made option.
But Wages Are Also Too Low to Attract Workers
There’s another side to this wage story. Even though U.S. labor is expensive by global standards, it’s often not high enough to attract domestic talent.
Manufacturing workers earn less than 90 cents on the dollar compared to the average private-sector job, based on Bureau of Labor Statistics data cited by Wells Fargo.
That pay gap is part of why manufacturers are struggling to fill open roles. A 2024 report from Deloitte and the Manufacturing Institute notes that companies face ongoing labor shortages, especially for skilled trades like welding and electrical work.
Many of those workers are instead drawn to construction or tech—sectors offering better pay or more flexible conditions.
Tomorrow’s Factories Won’t Look Like the Past
Even if the U.S. does bring back manufacturing, it won’t be in the form many expect. The jobs of the future will likely focus less on physical labor and more on digital skills.
Wells Fargo says the next wave of manufacturing will demand workers with expertise in computer science, IT, and leadership—rather than only mechanical know-how.
That shift could pose a retraining challenge for the current workforce, but it also opens up new business opportunities in industrial software, training, and advanced manufacturing tools.
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