Saturday, June 2, 2007

From Factory Floor To Tending Bar

The May employment numbers came out yesterday significantly stronger vs. expectations (+157.000) and higher than the previously released ADP report tracking the private sector only (+97.000). Analysts cheered and proclaimed the economy is strengthening once again. The new jobs, however, were very unevenly distributed amongst the sectors of the economy: bars and restaurants added 34.500, healthcare 35.800 and education 18.000. In other words, 56% of the new jobs were created in the "lower tier" of the service sector pay scale.

Meanwhile, jobs in the goods-producing sector are being constantly lost: in the last 7 years a tragic 2.23 million such jobs have been destroyed from plant closings and "re-sizings".

Goods-Producing Jobs (Data: BLS)

And what about those bar and restaurant jobs? A net 1.53 million of those were "created" in the same time. Factory workers apparently went from producing goods to tending bar. How very, very sad.

Food Service and Drinking Places Jobs (Data: BLS)

It is thus no wonder that real earnings have stagnated for years: the low-end service jobs that are being "created" pay much less than skilled factory jobs. In December 2001 workers' average real wages were $17.24/hr and today they are $17.30/hr. This explains the massive household borrowing binge and negative saving rate: people try to maintain their living standards for as long as possible, even if their incomes can no longer support them.

P.S. I use "created" in quotation marks for those low-end jobs because they are not a sign of economic vibrancy but the necessity to survive, even at measly wages and tips.


  1. this guy seems quite bullish.

  2. Another excellent, concise post. Thanks.

    I would like to add that the destruction of a decent supply of well paying semi-skilled employment opportunities is concomitant with the ruination of Democracy here in Freedumbs Land. To clarify my thinking, I offer that with the absence of decent paying jobs, save for the easy issuance of debt to most any homeowner, regardless of their circumstances, the U.S. would no longer have what still passes for a middle class. The middle class in the U.S., once thought to be a neccessary component for general social stability, is now, like our manufacturing base, more a quaint abstraction than a living, breathing reality. It should go without saying that this bodes ill for social stablilty going forward.

  3. If the numbers seem "bullish", it's probably because they reflect the "average" instead of the "median". Let's say Bill Gates walks into a bar. The "average" income of every person in the room immediately goes up 10,000 percent. But the "median" income hardly changes at all.

    Meanwhile, any debate about the wages of "American" workers seems trivial when the incomes of "American" CEOs tend to be approximately 431-times higher, and well over $1-trillion is transferred annually from the roughly 90-million working-class families in "America" to corporations and the wealthiest non-working-class households. See Jack Rasmus at the following URL for details:

    This isn't difficult to understand. Under capitalism, a small minority of exploiters appropriates the surplus created by labor, leaving just enough for the actual producers to survive. The exploiters dispose of the surplus to meet their own private interests, regardless of larger societal needs.

    As Edwardo observes (above): "The destruction of a decent supply of well paying semi-skilled employment opportunities is concomitant with the ruination of Democracy here in Freedumbs Land". Political democracy is indeed hollow without economic democracy, especially under the artificially "representative" democracy that paralyzes its members in the United States of Enron.

    But who is responsible to maintain a genuine system of "democracy" -- in this land, or any other? Does "We The People" ring a bell? At what point did "American" workers stop ringing the "Liberty Bell"? Was it ever "workers" who rang the damn thing in the first place? Or have "American workers" been a ridiculous herd of stupid sheep all along?