NSF's National Security Mission for the Twenty-First Century
April 3, 2026 • 9:00 am – 12:30 pm EDT
Hosted by Renewing American Innovation
Innovation Lightbulb: Reshoring’s Bottleneck - The Manufacturing Workforce
Photo: ultramansk/Getty Images
Reshoring manufacturing has become a sustained national priority, supported by both Congress and successive administrations. Legislation such as the Infrastructure Investment and Jobs Act, CHIPS and Science Act, and Inflation Reduction Act reflect bipartisan efforts to strengthen supply chain resilience, expand advanced manufacturing capacity, and restore critical production capabilities to U.S. soil. Tariffs have also been used as a strategy to reshore manufacturing to the United States by artificially increasing the cost of imported goods. Yet, achieving a resurgence of U.S. manufacturing will require more than capital and shifts in cost structures—it will demand a significantly expanded skilled technical workforce.
Today, however, the U.S. manufacturing workforce is contracting, not expanding. The manufacturing sector has lost around 70,000 jobs alone since Liberation Day tariffs were imposed in April 2025 while employment overall has declined for the third year in a row and is now below pre-pandemic levels. This decline means that the United States has fewer workers than needed to realize its goal of reindustrialization. Indeed, a 2024 Deloitte study estimates that 1.9 million manufacturing jobs risk going unfilled by 2033, despite 3.8 million jobs being created in the same period. This shortage could cost the U.S. economy upwards of $1 trillion by 2030.
There are two primary difficulties facing the long-term growth of the U.S. skilled technical workforce. The first is demographic: over a quarter of today’s manufacturing workers are eligible for retirement. The second is reputational: younger workers are often not attracted to careers in manufacturing given their reputation for being dirty, dangerous, and dull, making it challenging for companies to find new talent.
Both issues stem from decisions made decades ago. When U.S. companies offshored manufacturing to cheaper labor markets in East Asia and Mexico, domestic hiring and investment dried up, leaving today's skilled technical workforce largely composed of the same workers who have been on the job for decades. Simultaneously, the U.S. broadly de-emphasized vocational training and apprenticeships in favor of four-year college degrees, steering younger generations away from trade jobs and into white-collar careers.
Christina Tutino
Research Intern, Renewing American Innovation
Remote Visualization
Why Manufacturing Matters
Manufacturing is the primary engine of American innovation. It far outweighs its roughly 10% share of GDP. In 2023, manufacturing companies performed $394 billion in domestic R&D, accounting for 55 percent of all domestic research and development (R&D). And as of late 2022, manufacturing accounted for 69% of all issued patents.
Many of the improvements and advancements in manufacturing are dependent on shop floor innovation, which is when new ideas are generated by workers directly engaged in production. These frontline workers possess tacit knowledge that complements researchers, who may be separated from production, in identifying process improvements. For this reason, Tesla places its engineers’ desks directly on the production line so they can identify problems firsthand and are well-positioned to develop solutions.
Second, manufacturing generates outsized economic returns. If measured alone, the U.S. manufacturing sector would be the eighth largest global economy and contributed more than $2.95 trillion to the U.S. economy in 2025. Every dollar spent in the manufacturing industry generates $2.64 in economic activity. But this multiplier effect depends on factories operating at full capacity, which will be increasingly difficult with a growing worker shortfall. In 2024, 20.6 percent of U.S. manufacturing plants operated below full capacity due to labor and skill shortages. Loss of knowledge from an aging workforce exacerbates this issue. When older workers retire, they will take their tacit knowledge with them that could be used to train new talent, creating a severe brain drain problem for the manufacturing industry.
Importantly, manufacturing underpins national security. The defense industrial base depends on a robust skilled technical workforce to produce advanced semiconductors, fighter jets, warships, submarines, and defense systems. The U.S. Navy's shipbuilding challenges illustrate this: although the Navy’s shipbuilding budget has nearly doubled over the past twenty years, the fleet has not grown, and projects have been over budget and behind schedule. Indeed, the Navy is unable to meet its 381-ship goal, primarily due to a critical shortage of skilled labor. As of February 2026, the sector is estimated to need 250,000 additional workers over the next decade to fulfill existing military and commercial demand.
Conclusions
Although the manufacturing industry has made great strides to rebrand itself, the industry continues to struggle with outdated perceptions of a job sector that is seen as unattractive and whose long-term prospects are thought to be in decline. Because of these perspectives, only 14% of Generation Z—the demographic cohort currently in their late teens and twenties— say they would consider industrial roles. In the modern innovation economy, many manufacturing jobs can be highly skilled as well as high paying, with workers earning an average of $106,691 in 2024.
To close the workforce gap and ensure public investments succeed, education pathways should be expanded through apprenticeships, on-the-job training, and K-12 programs that expose younger generations to modern manufacturing and provide new workers with training opportunities to gain the technical skills required to succeed in these roles. Within the US federal system, state and local governments need to step up their role in training the skilled technical workforce and align incentives across students and workers; community colleges and vocational schools; and firms and manufacturers.
Second, tapping into the global talent pool through reformed immigration policy could help meet the reshoring demand. In 2024, immigrants accounted for nearly one in five manufacturing workers in the United States, yet current policies constrain this pipeline, even when domestic workers simply cannot meet demand.
Lastly, tariffs and trade measures, while intended to strengthen domestic production, create higher costs that instead constrain firms’ ability to invest in workforce, training, wages, and hiring. Policymakers must carefully balance supply chain security objectives with the need to sustain long-term workforce growth.
Data visualization by Sabina Hung