Mike Walden's You
Decide: How are farming and manufacturing
Dr. Mike Walden
North Carolina Cooperative
I have a soft spot in my heart for both farmers
and factory workers. One of my grandfathers was a
farmer in Ohio during the early 1900s. My father –
the eldest son – told me many stories of awakening
before sunrise to do numerous chores before he
walked to school. My grandfather’s skill in raising
both livestock and crops, as well as my
grandmother’s abilities to cook, can and sew, kept
their farm running almost as a self-sustaining unit.
My wife’s father worked for decades in a
factory in New York, making equipment for post
offices. He was the typical factory worker of the
time – wearing overalls and a slouched hat, carrying
a lunch pail with his mid-day meal as he left for
At their peaks, farming and factory
jobs ruled the employment world. In the early 1900s
farming jobs in North Carolina accounted for more
than half of all jobs, and in the 1970s more than
one-third of our state’s workers were in factories.
If you weren’t employed on the farm or in the
factory, you were a unique worker.
today. Only 11 percent of workers in North Carolina
now leave home for the factory. And just 1 percent
of workers now say farming is their primary
Does this mean we no longer
raise crops and livestock or manufacture products?
Absolutely not: Farming and manufacturing are still
very important to the North Carolina economy.
Today’s output of farms in our state is eight times
more than in 1900, four times greater than in 1950
and twice as much as in 1980.
The gains are
just as significant for manufacturing. The output of
North Carolina’s factories is six times greater than
it was in 1950 and three times higher than in 1980.
Of course, what is grown and raised on the farm
and made in the factories has dramatically changed
over time. North Carolina farmers have shifted from
growing crops -- mainly tobacco -- to raising more
animals, primarily hogs and poultry. During much of
the 20th century, North Carolina’s manufacturing was
dominated by furniture, textiles and tobacco
products --cigarettes. In the last quarter century,
firms in technology, pharmaceuticals, food
processing, machinery and vehicle parts have become
Thus, both farming
and manufacturing have followed similar paths. They
have significantly increased production but cut
employment. Yet how could this have happened? With
fewer workers, shouldn’t both farming and
manufacturing be declining rather than expanding?
The answer requires a brief (I promise!) detour
into the economics of production. The making of any
product or service uses three inputs – land, labor
and capital. Land is the site of the production,
labor is workers, and capital includes machinery and
Over time, businesses can use
different proportions of land, labor and capital.
Indeed, this has happened “big time” in both farming
and manufacturing, where the trend for the last 50
to 100 years has been to use less labor and more
capital. Thus, whereas today’s farm and factory use
fewer workers, they have added machinery and
technology in large amounts. Tractors, irrigations
systems, robots, computer programs and sensors have
replaced people. The substitution has been done in a
way to actually increase output.
been two big benefits of this shift from labor to
machines and technology.
First, both food
and manufactured products have become less expensive
for consumers. In the last 100 years, food costs as
a percent of disposable (after-tax) income have
dropped 40 percent. Also, in the last 30 years, the
prices of manufactured products have fallen 30
percent relative to other prices.
since labor costs tend to be cheaper in many foreign
countries, without the switch from labor to capital
more domestic food production and more factories
would have moved overseas.
trends in farming and manufacturing likely won’t
reverse. In fact, they will probably become
stronger. This means we shouldn’t necessarily judge
the economic significance of farming and
manufacturing by the number of workers the sectors
employ. Still, we should focus on the kinds of jobs
that individuals who would have been farmers or
factory workers are able to find.
farm isn’t my grandfather’s farm, and today’s
factory isn’t my father-in-law’s factory. Both are
increasingly high-tech, machine-intensive operations
with extraordinary high levels of productivity but
relatively few workers. Their employment impacts are
mainly “downstream” on their suppliers or “upstream”
on marketers and retailers. There are between two
and four jobs created in other economic sectors for
every job in farming or manufacturing.
So the farm and factory are, by no means, dead – but
they are very different than their predecessors. You
decide if this represents a step ahead!
Dr. Mike Walden is a William Neal Reynolds Professor
and North Carolina Cooperative Extension
economist in the Department of Agricultural and
Resource Economics of N.C. State University’s
College of Agriculture and Life Sciences. He
teaches and writes on personal finance, economic
outlook and public policy. The College of
Agriculture and Life Sciences communications unit
provides his You Decide column every two weeks.
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