EI Series_Month 7_10.29.25

Month 7: The Decline of Manufacturing and the Rise of Economic Inequality The post-1970s wave of deindustrialization reshaped the economic geography of the United States. Once-vibrant Midwest factory towns, hubs of well-paid blue-collar work and union strength, experienced dramatic job losses, stagnating wages, and social dislocation. These changes were driven by a combination of globalization, technological automation, and shifting employer practices. As high-quality factory jobs disappeared, education became central to economic mobility, though access to postsecondary and technical education remains unequal. This paper examines the twin crises of deindustrialization and the rising education premium, their differential impacts across racial and geographic lines, and targeted policy interventions to stabilize industrial communities and expand educational opportunity. How deindustrialization devastated Midwest factory towns Between June 1979, when manufacturing employment reached its modern peak of approximately 19.6 million, and the early 2000s, U.S. manufacturing employment fell to roughly 11.5 million, a loss of about 8.1 million jobs, a contraction that hit Midwestern metro areas especially hard. Many communities that had built middle-class life around factory employment saw sharp declines in employment opportunities and real wages, with ripple effects for local tax bases, public services, and family livelihoods. Regions dependent on large single employers or on a narrow industrial base were particularly exposed to plant closures and long spells of economic distress. The pain of deindustrialization did not respect race, but existing inequalities shaped who suffered most and who recovered least. Black workers were heavily represented in manufacturing sectors, such as steel, auto, and machinery, especially in Midwestern cities like Detroit, Cleveland, Gary, and Chicago. Many of these workers had moved north during the Great Migration to escape the racial violence and economic exclusion of the Jim Crow South. The industrial heartland offered unionized jobs, livable wages, and a path to middle-class stability. As those industries declined, those communities, yet again, found themselves in the same predicament they were initially escaping. Although precise long-term totals are hard to determine, between 1998 and 2020, Black workers lost approximately 646,500 higher-quality manufacturing jobs, representing a 30.4% decline in Black manufacturing employment. Due to trade and automation in manufacturing occupations, and compounded barriers such as redlining, educational inequities, African American Alliance of CDFI CEOs Author: Nucdalie Cherident, Policy & Research Associate Date of Publication: November 6, 2025