It seems that I keep coming back to the subject of jobs; yesterday's post on Las Vegas prompted a reader (thanks "thai") to ask what percentage of the economy is "leisure". Well, 12% of all private sector jobs are now classified as leisure and hospitality - incredibly, the same percentage as manufacturing. By comparison, in 1950 manufacturing jobs accounted for 36% and leisure for 6%. In other words, within a very short time, as history goes, the US gutted its industrial labor force by an astonishing two thirds while doubling "bread and circuses".
Adding healthcare to the jobs picture, employment in what I call the "lifestyle" sector jumped from 12% to 28% in the same period (private education, included in the chart below, is a minor 2%).
Type of Jobs as a Percent of Total Private EmploymentThe process of "dumbing-down" and reducing the value-added of the economy has been ongoing for a long time, but it accelerated further after 2001. Between 2001 and today the US shed 4 million manufacturing jobs and added 2 million leisure jobs, plus 3 million healthcare and social assistance jobs. This does not make for a vibrant, innovative economy and certainly not one that can quickly rise to the technical challenges posed by resource depletion and environmental degradation.
One of America's most attractive attributes has always been its economic adaptability. It came at the cost of a smaller social safety net versus other developed nations, but its benefits were also plain to see. A skilled and mobile labor force kept moving laterally and vertically to grasp opportunity as it arose. The labor force is still mobile, but how skilled is it?
As I have said before, manufacturing is key because it generates tremendous add-on benefits in technological R&D, education and competitiveness. Many claim that everything is still OK because we have Harvard, Columbia and MIT, to name but a few top-notch colleges. But how long will they remain world-class if we keep creating bartender jobs while China and India staff their factories and R&D departments with local graduates? Note that 60% of all engineering PhD's in the US are awarded to foreign nationals who can and do go back home to further enhance their nations' colleges and technological capabilities.
Until just a few months ago finance (+500,000 jobs since 2001) was also viewed as a sector where America held a comparative advantage and one that could serve as a substitute to manufacturing. How many still think so?
And, finally, what better sign of the decline in the once proud blue-collar sector than the populist pandering of McCain and Clinton, who keep pushing for a summertime repeal of the federal gasoline tax? Clinton mentioned it twice in her Indiana speech last night. How can anyone claim that 18.4 cents will make a difference with pump prices at $3.60? That's $10 per month for the average car, a difference that could be made up in half an hour by someone with even a semi-skilled job in manufacturing vs. a waiter on minimum wage.
If $30 or $40 dollars per year is such an important amount to the average American that it becomes a major campaign issue, then we have far more serious problems.
Hellacious:
ReplyDeleteI have been saying this for 28 years! That's right, since 1980.
I went to the graduation of a friend's son last May and while the undergraduates were overwhelmingly American kids, most by far of the advanced graduates were foreign and not just Chinese and Indians but Turks, Malaysians and other small nationalities not popularly associated with prowess in science.
ReplyDeleteIndAcct,
That was a disconnect I always had during the 80's, the stock market was always going up but so was the national debt and the icons of industry were constantly announcing lay-offs. It never made sense to me back then that the welfare of business could be so thoroughly divorced from the welfare of the nation; I've learned different since then.
manufacturing automation has been and will continue to impact manufacturing employment, while it creates jobs at one level it's main purpose is to lower manufacturing cost by eliminating labor.
ReplyDeleteI don't remember if I said this before..
ReplyDeleteWhen I graduated from college some 25 years ago from a private engineering/science school, almost the entire class went on to jobs in the field, or (a very few) to grad school.
In 2007 over 50% of graduates got jobs in finance.
Bubble..?
I agree that automation played a role in the steady decline of mfg. jobs since the 1950's.
ReplyDeleteBut the sharp decline after 2000 is 100% due to the wholesale relocation of industry abroad, mainly to China. We are going to regret this, big time.
Great post.
ReplyDeleteHaving attended a number of different Universities (in Canada)I can attest to the fact that a disproportionate number of 'foreigners' populate the more sophisticated programs, especially the graduate programs... and that the 'basket weaving' courses seem to attract a disproportionate number of 'locals'.
More disturbing is the fact that the 'locals' are the ones that feel entitled to the higher paying opportunities for which they refuse to adequately prepare themselves...
In a class of about 75 students, about one third were Canadian (that doesn't make them necessarily Caucasian). Of the 75 students that completed their MBA in Finance at least half were from overseas and most of them intended to work a year or two before heading back home.
Nothing like training the competition... (In Canada we even subsidise it. Wicked clever. Go idiot politicians go.)
"Note that 60% of all engineering PhD's in the US are awarded to foreign nationals who can and do go back home to further enhance their nations' colleges and technological capabilities."
ReplyDeleteUnfortunately, our education system can't compete with that of most countries, so our graduating high school students lose out to foreigners at our math/science colleges. THen, after the foreigners graduate, we don't allow them to stay and work here but force them to go home. We do, however, make it easier for relatives of current citizens to immigrate, no matter their age, education, or ability to support themselves.
manufacturing automation has been and will continue to impact manufacturing employment,...
ReplyDeleteAll you have to do is look at the US trade deficit in manufactured goods to see that automation has played only a minor role.
Maybe he meant the automation of China.
ReplyDeleteQuote for the article Yoyomo referenced yesterday:
ReplyDelete"They hoped to show that the “free exchange of goods, services, and labor in the free market would not have to mean mindless consumerism or eternal exploitation of people and natural resources.” "
(A company tried an experiment in the 1930s for a 30 hour work week. People supposedly did wholesome things with their extra spare time such as raise children and engage in civic projects. Politicians were concerned they'd get involved in the political process..)
Definitely an interesting article, Yoyomo. But consider: spare time will be used to exacerbate an individual's natural tendencies (i.e. a slug will fill up with more TV, a reader will read more, a criminal will commit more crime).
So the Malay getting the engineering PhD and the American getting the History of TV B.A. degree are both Homo Sapiens; why the different choices? It all boils down to psychology. Culture, political system, educational paradigm, economic format, child-rearing method all boil down to psychology (sociology just being a complex of individual psychological agents). We need to stop thinking of psychology as some touchy-feeling pseudo-science. There's ~6.5B of these psyches roaming the Earth and they're making a mess. We gotta teach all the current ones (regardless of age) and all newborns how to self-control. Lack of individual self-control seems to be the root from which all societal problems spring from.
Apologies for the off-subject rant. I hear UNLV offers some great Statistics course ;)
UNLV offering statistics..
ReplyDeleteYup, and Rome's Collegium Coliseum probably had a degree in SwordEd.
Speaking of which, would anyone care to calculate what attendance in all US sports and gambling venues is per year to compare with Imperial Rome's "bread and spectacles"?
H.
dink is correct. and what lead to this? american democracy and capitalism. now because of america the whole world is out of control.
ReplyDeleteDink,
ReplyDeleteTruer words were never spoken but there are too many party people and like you mused on in a previous thread, is it morally acceptable for the disciplined minority to impose order on the unruly masses? And could that minority be trusted to act in the public interest and not selfishly?
Better education is the best hope but there are interests that would be threatened by a more enlightened populace. I read an article in Harper's that people were better thinkers before the mass advent of public education and that this was by design:
Against School by John Taylor Gatto Harper's Sept2003
I don't know if this article is online but I have run across similar articles online by this author but I don't have any links. His contention was that the behavioral scientists of the day were enlisted to design a curriculum that discouraged independent critical thinking and encouraged passive acceptance of information and direction from authority figures.
Sure fits the lead up to the Iraq invasion. Saddam couldn't protect his territory from weekly bombing for 13 years but yet was a threat to the US mainland because Bush said so.
Maybe if people were better critical thinkers they could better appreciate the consequences of their acts of commission and omission and behave a little more responsibly. Maybe; it's just a hope, at least some of them.
ReplyDeletei am one of those Ph.D. foreigners that stuck around and built a business, employ people and pay more in taxes than 95% of people earn...
ReplyDeleteBack after the Nasdaq bubble popped I was horrified with the clam down on the H-1 visa workers that lost their tech jobs. This was before 9/11 mind you. The white house just came down hard on those people pretty much forcing them to leave the country.
many of my friends left in tears, only to reach the other side and start outsourcing companies. up till that time most high tech outsourcing was limited to couple of companies like Informix and IBM.
I watched in bemusement as the new companies in India and others took traction.
Those folk now think the best thing that happened to them was the Administration forcing them to leave after they lost their jobs.
In the same boat as you born2code, and can't agree with you more. USA is dumbed down to the core.....haven't seen a single American born person in my PhD class. Well, there was one, but he moved to China after graduation.
ReplyDelete"psychology as some touchy-feeling pseudo-science"
ReplyDeleteI do not know about the touchy-feeling part, but psychology and economics as taught in school are pseudo-sciences.
Born2code and Greenie-- please accept my apology for America's bizarre populist "keep the foriegners out" mindset.
ReplyDeleteHell, would you be willing to 'flesh out' (perhaps in another posting) your claim that the loss of manufacturing jobs in America after 2000 has been of a qualitatively different character-- more the result of 'offshoring' and less the result of automation.
While I am certainly open to a different understanding of this issue, your claim runs in contradiction with everything else I have ever read on this issue (which admittedly was 4-5 years ago).
But even if your claim is true-- I am still having a hard time accepting what I see you viewing as the logical consequence of the issue: manufacturing jobs uniquely "generate tremendous add-on benefits in technological R&D, education and competitiveness" in a way other jobs like healthcare do not.
For while I certainly see how productivity improvements in manufacturing have traditionally been much easier to achieve than (say) healthcare productivity improvements, this is not at all the same thing as saying manufacturing therefore generates additional competitiveness in the future in a way that healthcare does not (if I am reading your logic correctly)-- and this is especially not true in a world that might move away from permagrowth and shopping as a way of life model (since this is the very economic model manufacturing services).
If you will indulge me in what is perhaps a bad analogy: I view manufacturing as 'the muscles' of the American economy. I do not view manufacturing as 'the brain'. While I certainly think we need/want 'big muscles', I really think we only need our muscles to be 'so big'... one they reach the right amount, I would take more brain power over muscle power any day of the week.
Gotta love that financial sector. Taking a huge shovel and moving debt from one pile to another while charging exorbitant fees. That's gonna keep the economy booming. The envy of the rest of the world.
ReplyDelete/sarcasm off
My employer has a hard time keeping foreign academics employed due to Visa requirements (Genetics/Stats/Programming). Funny how we use a bunch of taxpayer money to educate those people in the first place and then run'em off. I always told them they should just claim to be Mexican and there wouldn't be a problem. It really sucks because we have a severe shortage of American science PhD.s. The locals are more into "Speech Communications", African Studies, English, Leisure Studies and of course MBA (YES, they were all majors at UNCG where I went for undergraduate...Leisure Studies ...WTF???). That's maybe a nice hobby for somebody that's independently wealthy, but insufficient to run a competitive economy.
I reckon in the long run you can't build an economy on selling houses to each other and securitizing debt.
We're in for a hard lesson. Neiter presidential candidate has grasped the gravity of the situation. 18 cents gas tax relief and some lender/speculator bailout ain't gonna cut it; quite to the contrary.
Yoski, it is musical chairs; if they moved the debt pile from Americans to foreigners' trash cans, then from America's nationalist viewpoint, those financial types were worth every bit they were paid.
ReplyDeleteI am not saying I approve of this by the way (I would prefer we simply consume less in the first place)... simply it is what it is.
Hell-
ReplyDelete"Speaking of which, would anyone care to calculate what attendance in all US sports and gambling venues is per year to compare with Imperial Rome's "bread and spectacles"? "
Is it grim? There was a book published a few years ago called "Reefer Madness" which claimed that illegal drugs and porn made more money than Hollywood, the NBA, and the NFL combined.
Anon-
"now because of america the whole world is out of control."
Well, capitalism certainly amplifies certain instincts. The instincts themselves are human, not just American.
Greenie-
"psychology and economics as taught in school are pseudo-sciences"
Agreed, as currently taught. But scientists/mathematicians have gone after economics in the last couple decades and made a lot of progress (Thai has mentioned a book titled Origin of Wealth which chronicles this). Now we just need them to go after psychology with the same prowess so that we don't have rogue psyches attacking civilization. Honestly, people's minds are developed so haphazardly its amazing the world has made it this far.
Yoski-
"Leisure Studies ...WTF???"
Seriously, WTF?
Optimists stockpile gold and silver, pessimists stockpile guns and canned goods, realists stockpile shoes and socks.
ReplyDeleteYou didn't know that 99.5% of shoes sold in America were made overseas?
Bill Gates had some recent comments about the sorry state of science and engineering in the USA. I graduated in the mid-90s with a science degree, and the job market was awful mainly because the entry level chemist and biologist positions had been sent out to temp agencies. The message was clear: why bust your butt through P-Chem only to land a job paying $14 an hour with no benefits when you can get a B.A. in Business Administration and pull down $120k trading securities? Bill Gates can complain all he wants: until there is enough of an incentive to slog through a science or engineering program, graduates will choose finance and marketing over anything technical.
ReplyDeleteWhat's really sad but true is that, for a lot of families, saving $30 to $40 a year is a big deal. Federal minimum wage is still under $6 an hour and people who get tips make even less in some states.
ReplyDeleteMore than anything else, this country needs to have limits placed on executive pay. Seriously.
Hellacious:
ReplyDeleteAt my blog I have a few posts about the "Harvard MBA Indicator". Enjoy. The large percentage of college grads going into finance is indicative of a bubble. You might read a Fortune article titled "Manhunt in the Oil Fields", 6 October 1980. Just before the oil bust! Even though it was 28 years ago, I never forgot it.
The kids are usually wrong. When I told a college kid three years ago to major in geology, geophysics, geochemistry or petroleum engineering, he thought I was crazy.
It's not just finance/MBAs that get paid well, lawyers can be well compensated too.
ReplyDeleteI went to law school rather than get a Ph.D. in chemical engineering.
Corporate attorneys are well paid if you want to live in a big city and work for a large firm.
See:
http://www.nalp.org/content/index.php?pid=147
Salaries at Largest Firms Continue to Rise Rapidly (September 14, 2007 Press Release) — According to the 2007 Associate Salary Survey just released by NALP, the median, and in fact prevailing, first-year associate salary at firms of 501+ lawyers rose to $145,000 as of April 1, 2007, an increase of $10,000 in just one year. The median starting salary for firms of all sizes was $113,000 — up modestly from the 2006 median of $105,000, and driven mostly by growth at the high end of the scale.
I read the the following NYT article and thought some of you might find it interesting/relavant to the posting.
ReplyDeleteAnonymous:
ReplyDeleteFor the Class of 2006, the vast majority of graduates who were employed as of February 15, 2007 (71% of those employed) started work in small firms of 50 or fewer lawyers, or in non-firm settings, such as government, public interest, or business. Just 20% took jobs in firms of more than 100 lawyers. The earnings reality for Class of 2006 graduates, therefore, is that the cluster of salaries of $135,000 and $145,000 is more than matched by the cluster of salaries in the $40,000-$50,000 range.
All this shows is that there is two-tiered system for attorneys as well as the general population. And don't forget, to get those salaries, the attorneys have to work 80-100 hours per week. Not exactly the most desirable in terms of having a life outside the office.
I'll take my current 8-5 job any day.
Thai,
ReplyDeleteIn one sentence Ms. Link states that 10 million return to society each year from the corrections system; that number is impossibly high. In the next sentence she throws out a number of 600,000. She sounds like someone trying to justify her calling.
This isn't rocket science, I think plain old-fashion common sense would suffice for 95% of what people need to regulate their leisure time responsibly, no need to devote a college curriculum to it.
Add Realtors to the list of very-counter-productive professions.
ReplyDeleteSeveral years ago, during the fevered housing boom, some agents could make sales simply by going to work and answering the telephone, California Real Estate Commissioner Jeff Davi said, addressing the San Diego Association of Realtors. ‘Well, those days are over.One in 53 adults in California has a real estate license,’ Davi said, drawing laughter from the crowd.
May 10, 2008 Prices Are Falling Faster Than Sales In California.
http://thehousingbubbleblog.com/?p=4495
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