Posted on 09/30/2005 11:54:00 AM PDT by SirLinksalot
The Great jobs switch
Sep 29th 2005
The fall in manufacturing employment in developed economies is a sign of economic progress, not decline
THAT employment in manufacturing, once the engine of growth, is in a long, slow decline in the rich world is a familiar notion. That it is on its way to being virtually wiped out is not. Yet calculations by The Economist suggest that manufacturing now accounts for less than 10% of total jobs in America. Other rich countries are moving in that direction, too, with Britain close behind America, followed by France and Japan, with Germany and Italy lagging behind (see article).
Shrinking employment in any sector sounds like bad news. It isn't. Manufacturing jobs disappear because economies are healthy, not sick.
The decline of manufacturing in rich countries is a more complex story than the piles of Chinese-made goods in shops suggest. Manufacturing output continues to expand in most developed countries—in America, by almost 4% a year on average since 1991. Despite the rise in Chinese exports, America is still the world's biggest manufacturer, producing about twice as much, measured by value, as China.
The continued growth in manufacturing output shows that the fall in jobs has not been caused by mass substitution of Chinese goods for locally made ones. It has happened because rich-world companies have replaced workers with new technology to boost productivity and shifted production from labour-intensive products such as textiles to higher-tech, higher value-added, sectors such as pharmaceuticals. Within firms, low-skilled jobs have moved offshore. Higher-value R&D, design and marketing have stayed at home.
All that is good. Faster productivity growth means higher average incomes. Low rates of unemployment in the countries which have shifted furthest away from manufacturing suggest that most laid-off workers have found new jobs. And consumers have benefited from cheap Chinese imports.
Yet there is a residual belief that making things you can drop on your toe is superior to working in accounting or hairdressing. Manufacturing jobs, it is often said, are better than the Mcjobs typical in the service sector. Yet working conditions in services are often pleasanter and safer than on an assembly line, and average wages in the fastest-growing sectors, such as finance, professional and business services, education and health, are higher than in manufacturing.
A second worry is that services are harder to export, so if developed economies make fewer goods, how will they pay for imports? But rich countries already increasingly pay their way in the world by exporting services. America has a huge trade deficit not because it is not exporting enough, but because American consumers are spending too much.
A new concern is that it is no longer just dirty blue-collar jobs that are being sucked offshore. Poor countries now have easier access to first-world technology. Combined with low wages, it is argued, they can make everything—including high-tech goods—more cheaply. But that's only partly true. China's comparative advantage is in labour-intensive industries; and a basic principle of economics, proven time and again, is that even if a country can make everything more cheaply, it will still gain from specialising in goods in which it has a comparative advantage. Developed economies' comparative advantage is in knowledge-intensive activities, because they have so much skilled labour. For years to come, China will be more likely to assemble the best computers than to design them.
Employment in rich countries will have to shift towards higher skilled jobs to maintain economic growth. Countries that prevent this shift taking place risk being left behind. Rather than block it, governments need to try to ameliorate the pains which change inflicts by, for example, retraining or temporarily helping those workers who lose their jobs.
People always resist change, yet sustained growth relies on a continuous shift in resources to more efficient use. In 1820, for example, 70% of American workers were in agriculture; today 2% are. If all those workers had remained tilling the land, America would now be a lot poorer
Hmmm... If 10 programmers lose their jobs to 50 programmers in India and the Philippines, Maybe we can re-train all 10 to be project managers ??? But who are they going to manage ?
And if you happen to be in your 50's (10 years off from retirement age) and lost your software programming position, I wonder what course you should take to "retrain" yourself...
And for those without the ability or means to go to college, a blue collar job that can actually support a family, as much of the older manufacturing jobs could, is now increasingly rare.
I've personally wondered if more manufacturing will come back onshore as the cost of transporting goods back and forth across the oceans increases, because of the cost of oil....
No, they have moved to China and India too. Ask Google, GE, and Microsoft.
No cheers, unfortunately.
Full Disclosure: Much of the third world is rife with other problems such as cronyism, pretending to work, and horrible quality and processes. So if you can't provide a solution, there's good money to be made in QA, cleaning up after them.
I love these stories trying to convince us that bad things are actually good, that up is white, that black is thursday!
I bet the author of this piece cannot even balance his own checkbook.
An excellent example of the worth of economists.
You hit it. No one within ten years of retirement should have to ask themselves could they be laid off. By this time they should be an indespensible leader in what they do because they have 40 years or so of experience and training behind them. In fact when they do retire, their company should offer to take them back with improvements to their working conditions and salary.
If you are within ten years of retirement and the above does not describe you, get some more training fast, you are not likely to have your position for long.
" In 1820, for example, 70% of American workers were in agriculture; today 2% are. If all those workers had remained tilling the land, America would now be a lot poorer"
DUH.......you mean in 1820, they were farming and not building Corvettes and computers??
What the economist did not mention is, how nice those people are who taking these manufacturing jobs off our hands. They are nice enough to lend back to us all the money we are sending out of the country for the production of these goods that we stilll need and use but do not manufacture here.
It's amazing what a bunch of whiners there in this thread.
"Stop the economy, I want to get off!"
So true, and now one person can do the work of ten, thanks to automation. Whether that's an entirely positive thing depends if you're the one remaining worker or the nine laid off. I know it's a positive thing to upper management.
I know that there is a growing trend for corporations -- largely in highly complex technology or health fields -- to establish programs that entice older or retired experts back to work.
They are not well publicized, and there are discrimination laws that need to change before this practice can become widespread.
Business need the older, more experienced talent, and many have an interest in keeping the organizational wisdom that these workers often own almost exclusively.
I think unemployment is caused by an entrepreneurship deficit. And, it is apparent in IT, where men like my brother worked as a high paid systems analyst in several countries while Indian entrepreneurs built companies in Silicon valley and then wanted to and have hired Indians. By contrast, my son is a young programmer and says that his associates take a dim view of outsourcing. Nobody is owed a job, obviously. Jobs are created by people who start and run businesses.
What the author of this article doesn't mention is that the primary factor in the "loss of U.S. manufacturing jobs" has nothing to do with outsourcing, labor costs, automation, productivity, etc.
The single biggest reason for all of these "lost jobs" has been the manner in which these jobs are counted. U.S. employment by economic sector has traditionally been listed according to the NAICS (North American Industry Classification System) classification of the employer, not the type of employment. General Motors, for example, is considered an auto manufacturer -- so all of their employees at any given location were classified as "manufacturing employees" regardless of their job function.
So if General Motors decided one day to lay off all their accountants and hire an outside accounting firm instead, these accounting jobs were magically transformed from "manufacturing" to "service" jobs -- even if the accounting firm hired all of the former GM accountants to do the work.
Jeez... what a bunch of closet libs, what a bunch of union sympathizers!!!!
Conservative Economics 101:
1. In order for an economy to function properly, those who can produce a better product for less money need to be doing it.
2. While governments can subsidize goods by protecting it from competition, or giving tax breaks or keeping the exchange rate low, this policy isn't sustainable. Remember Japan, who did all of the above? Their economy boom is soooooo 80's (and hasn't been seen since).
3. There is a difference between a job being obsoleted due to technology changes and being outsourced. This author talks about both, and the rants confuse the two. Some auto jobs went to Mexico and Korea, but most were phased out as technologies made robots cheaper, and new cars last longer.
4. There are some jobs that we don't want. Tech support jobs are outsourced to India, but as in the USA they are wretched jobs (I did it for one year and know first-hand) and the Indian recruiters can't fill those spots either. Have you ever been yelled at by a person with a Ph.D who can't figure out how to connect their mouse? I have.
5. There is a difference between having to change jobs, or careers, and being consigned to the economic dustheap. In the case of programmers, everyone knows that the demand for programmers goes through boom and bust cycles. It might be scarier for a 50 year old to retrain and relocate, but this is the reality of many professions.
6. All of you closet commies who say things like "no one in their 50's should have to worry about losing their job" should remember that France, Spain, and Portugal have such labor laws... and those aren't exactly the economies that we're worried about. Cuba and North Korea also have economies where people don't have to worry about life after 50 either.
"And if you happen to be in your 50's (10 years off from retirement age) and lost your software programming position, I wonder what course you should take to "retrain" yourself..."
Never make yourself dependent upon a stranger for employment...
mark to read later
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