Why is US manufacturing so unproductive?

Throughout the 2010s, many people – including myself – treated it as a truism that manufacturing industries have faster productivity growth than service industries.

Historically that was true, and the reason wasn’t hard to grasp – machines improve faster than human beings do, so industries that depended on better machines naturally tended to advance faster than labor-intensive service industries.

But this particular piece of conventional wisdom stopped being true over a decade ago. In 2011, manufacturing productivity in the US hit a ceiling, and has actually declined in the years since:

Joey Politano has a good post where he breaks this productivity stagnation down by industry and shows that it holds true across industries in general. Here’s his key graph:

Importantly, this manufacturing slowdown isn’t mirrored by a general labor productivity slowdown across the economy! Service industries have been picking up the slack here, and keeping labor productivity growth going:

Service productivity rising faster than manufacturing productivity runs counter to many of the narratives you see in economics and policy debates. But it appears to be the reality for the last 13 years.

Americans seem to be waking up to the fact that something is wrong here. Greg Ip had a good chart showing that the stagnation in manufacturing productivity isn’t worldwide – the US and Japan have done uniquely badly since 2009:

A word of caution here: This data is cobbled together from various different sources. One or more of those sources might have major problems, and even if not, they might make different methodological choices that make them not directly comparable (for example, including subcontractors or not).

But the stagnation is so broadly