The Value of Making Things
I used to think factories were twice as good as service jobs but I was wrong. They are 6x better.
When a durable goods factory employing 1,000 workers closes, the community loses 7,441 additional jobs [1]. When a shopping mall with 1,000 employees shutters, only 1,221 indirect jobs disappear [1]. This sixfold difference reveals why manufacturing remains the backbone of thriving communities—and why America's emergent shift back to making things is key.
The numbers tell a stark story. The median hourly wage in restaurants, including tips, is $10.00, compared with $18.00 outside the restaurant industry [2]. Meanwhile, manufacturing workers earned $92,832 on average, including pay and benefits [3]. But wages are just the beginning of manufacturing's advantage.
The Multiplier at Work
Every dollar spent in manufacturing adds another $2.74 to the economy—the highest multiplier effect of any economic sector [4]. This isn't abstract economics; it's real prosperity flowing through communities. When a factory pays a technician, that technician buys groceries, hires contractors, and supports local businesses. The grocer, contractor, and shop owners then spend their earnings, creating ripples of economic activity that service-sector jobs simply cannot match.
Consider the career ladder. A manufacturing facility employs everyone from entry-level assembly workers to engineers, from quality inspectors to supply chain managers. Workers can advance from the shop floor to supervisory roles within the same company—a trajectory rarely available in retail or restaurants where management positions are scarce and turnover is high.
The Innovation Engine
Critics dismiss manufacturing as yesterday's economy, but they misunderstand how value is created. As Dan Wang observes in his conversation with Ross Douthat, China didn't invent solar panels or batteries—they mastered the process of making them, causing a 94 percent drop in solar prices since 2000 [5]. Each production cycle teaches something new: tighter tolerances, higher yields, faster throughput. This process knowledge—the accumulated expertise of actually making things—becomes an irreplaceable competitive advantage.
High-tech manufacturing jobs create five additional jobs in the service economy [6], from lawyers to teachers to baristas. But when we outsource production, we lose more than jobs. We lose the capability to turn ideas into products, to solve manufacturing challenges that spawn new innovations, to train the next generation of makers.
The Cost of Service
What happens to communities built on service jobs alone? They become economically fragile, offering workers few paths to advancement and little security. After accounting for demographic differences, restaurant workers have hourly wages that are 17.2 percent lower than similar workers outside the restaurant industry [7]. These jobs rarely offer benefits, stable schedules, or skills that transfer to higher-paying work.
The looming crisis is quantifiable: A manufacturing skills gap could leave 2.1 million jobs unfilled by 2030, costing the U.S. economy $1 trillion [8]. These aren't minimum-wage positions—they're careers that can anchor middle-class lives. Yet we're not training workers to fill them, preferring instead to celebrate the gig economy and service-sector flexibility.
Building Back Better
Manufacturing success requires more than nostalgia for factory towns. It demands treating production as a form of innovation (a topic discussed in Milo’s piece here) and protecting process knowledge as zealously as we protect patents. It means investing in technical education and apprenticeships that create genuine career paths. Most critically, it requires recognizing that making things—not just designing or financing them—creates wealth.
The choice is stark: We can continue transitioning to a service economy where wealth concentrates among the few while most workers struggle with stagnant wages and limited prospects. Or we can rebuild our manufacturing base, creating jobs that pay living wages, offer advancement opportunities, and generate the economic multipliers that lift entire regions.
The data is clear. The path forward is evident. The question is whether we'll rediscover the value of making things—or continue watching other nations capture the value of American inventions.
Sources
Jobs multiplier (7.44 for durable manufacturing vs 1.22 for retail): Economic Policy Institute analysis "Updated employment multipliers for the U.S. economy" - EPI
Restaurant median wage ($10 vs $18 outside): EPI analysis "Low Wages and Few Benefits Mean Many Restaurant Workers Can't Make Ends Meet" - EPI
Manufacturing average compensation ($92,832): NAM/Intrex Aerospace citing industry data - Intrex Corp
Manufacturing multiplier ($2.74 for every $1): National Association of Manufacturers (NAM) using 2018 IMPLAN data - Rhode Island Manufacturers Association
94% drop in solar prices: Dan Wang interview with Ross Douthat - NYT
High-tech jobs creating 5 service jobs: Enrico Moretti research cited in MIT Sloan Management Review - MIT Sloan
17.2% wage penalty for restaurant workers: Same EPI study on restaurant workers
2.1 million unfilled manufacturing jobs by 2030: Deloitte and The Manufacturing Institute report "Creating Pathways for Tomorrow's Workforce Today" - Business Facilities
