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
Weath is CREATED by converting raw/unusable materials to finished goods. That's manufacturing.
We make almost none of our clothes or shoes or TVs anymore. And more of our food comes from other countries. So, we're becoming less and less able to clothe and feed ourselves, to meet our own most basic needs. Bad.
What is the most sophisticated manufacturing done in a country?
China household goods
Japan electronics
Germany autos
USA aerospace
When China can produced a B2 bomber or a Nimitz class carrier or a SSBN submarine I'll be worried.
The U.S. may be incapable of "nation-building" in Third World sh!tholes, but we could probably sink an enemy nation's entire 500-ship navy in about 45 minutes.
From the pages of Control Engineering
Tech industry employment brightens
-- 9/27/2005
Chicago, IL—The U.S. tech sector added nearly 190,000 jobs between January 2004 and June 2005, according to data generated by the U.S. Bureau of Labor Statistics and compiled by AeA, a high-tech U.S. trade association. The increase brings the total number of jobs in the sector to 5.72 million, a 3.4 % increase. The data, which show the tech sector has produced a net increase in jobs over the last six-, 12-, and 18-month time spans, are from a study released this month as part of AeA's ongoing Competitiveness Series.
"The data confirm our suspicion that the high-tech industry has recovered from the bursting of the tech bubble of 2000-2001," said AeA's president and CEO, William T. Archey. "While industry growth is by no means explosive, the rise in high-tech jobs has been steady, and we find it encouraging that even tech manufacturing experienced a small increase. The trend over the last 18 months has impressed us. After precipitous declines in 2001 and 2002, job losses began to slow, but only now are we witnessing actual gains. This benefits our economy as a whole because tech jobs pay 84% more than the average private sector job."
At the individual sector level, technology manufacturers added a net 21,800 jobs in the U.S. from January 2004 to June 2005 for a total of 1.36 million jobs, a 1.6 % increase and the first growth in tech manufacturing employment since 2000. Tech services providers added a net 167,000 jobs over the same time period for a total of 4.36 million jobs, a 4% rise. Within this sector, engineering and tech services added the most: 100,800. Software services came in second, with an employment growth of 75,600 jobs. Only communications services declined, losing 9,400 jobs.
Acknowledging the positive trends, Archey remained guardedly optimistic. "Continued growth of the U.S. tech sector is linked to our overall competitiveness in science and technology. Understand that while the United States remains preeminent in these spheres, our lead is slipping. Once we start addressing this issue, it will only enhance job growth in our industry. We need to renew our commitments to research and development, an educated workforce, and high-skilled immigration. The rest of the world is catching up to us and it’s time we start realizing that."
Consider how much more destructive modern weaponry is today. Then consider how 'networked' the world economy is. The result: WW3 would either be very brief, or it must not be fought at all -- take your pick.
Nobody is going to build fleets of bombers, ships & tanks the way we did in WW2 becaused modern warfighting doesn't require them. Therefore the manufacturing sector that builds them will be much smaller, and highly integrated -- and therefore more vulnerable to disruption.
IQ-wise: forget about India (they might have 200 million of IQ>100, but their other 1 billion with IQ<100 is a gigantic millstone around those 200 million's collective neck), and better watch China: avg IQ 100, and that includes poor areas with nutrition and medical services problems. After they pull them up, it will be 105-107. Our only hope is that their social system with its maniacal insistence on control would damp them down.
If FDR had proposed a $600 billion Medicare prescription drug plan in 1939, World War II never would have taken place at all -- because the Japanese wouldn't have bothered attacking three canoes and a couple of rickshaws at Pearl Harbor in 1941.
Outstanding posting!
I can sure tell. The consulting rates' have been going up and the employers don't seem to mind too much at all. I'm getting recruiters call about once a week for different positions.
Exactly my concern also.
Our electronics industry has been gone for years. Who makes the circuit boards for military computers, guidance systems, avionics?
Even our small arms are coming from Italy, Germany.
The vaunted Hellfire missile is British.
I understand even small arms ammo is being outsourced because our mfgr.s can't keep up with demand.
This country bombed a third-rate shmuck like Slobodan Milosevic into submission just because he tried to nationalize his country's mining industries, so I have no doubt that any such thing would generate a pretty harsh response from the U.S.
"Higher-value R&D, design and marketing have stayed at home"
Not really true today. A lot of engineering is going overseas now too.
>>>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 >>>
My husband lost his job this year in the textile industry to China. Literally. The slip said "trade with China has resulted in less ability to compete in the market". According to the Trade Agreement, he gets 2 years opportunity to go to school, but he can't work in those two years or he loses the benefit. So they will pay for school, but he has no income. He worked there for 32 years, expected to retire. People like Boortz will just deride him for not going to college, but he put his effort in this industry. Trained for robotics arm technician, made decent money. Now he has no marketable job skill.
I'm for free trade, just kind of sucks when you are in the position of losing a job for it. Also, we have to be realistic and understand that not every person in this country is capable of a college education. There are different levels of intellegence and there does need to be a place for them to take care of themself or the government will ultimately (or society) pay for it.
Don't know the answer.
>>>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.>>>
This does not apply if you are not in the country that they are hiring in.
IE: Hiring techs in India. No matter how good you are at your job, if you are not in the country they place their base, you are screwed.
This is anecdotal, but in the one instance I've had fist had experience with, your assesment of the quality is about right.
I'm sure they'll get better over time though.
As for your point re the high level jobs staying here: That's fairly true right now, but the problem is there aren't that many of those jobs.
I got real concerned about the capabilities of the Japanese when I saw how they built their cars. I stopped being concerned when I saw how they drive them.
This is true. In 1939 the USA had less than 4,000 aircraft registered, both military and commercial. In the month of April, 1945, America produced over 4,500 aircraft in just that month alone. Even accounting for the differences in the complexity of propeller aircraft to jets, the equivalent level of production, adjusted for technology, could not be achieved by the US in 5 years. Even with the Chinese, supervised by American lawyers, programming the computers.
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