Wednesday, December 28, 2011

Where will you work in the Free for All

Rosy job reports annoy me. Some of America’s best neo-realistic fiction derives from a one month up tick in jobs. The media looks for any excuse to tell us this month will be the first step in a crescendo of more jobs, but more jobs will not reverse current job trends, nor solve America’s job problems.

Journalists and reporters ought to recognize one of America’s long term job trends because newspaper publishers are one of a group of service industries that have 20 years of a declining count and percentage of America’s jobs. Other service industries using computer technology also have a declining share of America’s jobs, which assures fewer service industries remain to generate replacement jobs and enough new jobs to meet the job requirements of a growing population.

President Lyndon Johnson noticed the long term decline of production jobs back in 1964 when he predicted that the nation would be capable of maintaining its present levels of production in 1975 with 20 million fewer workers. (1) He made the prediction during a period when automation was getting lots of attention. Calculating inflation adjusted GDP dollars per establishment job in 1964 and again for 1975 allows the comparison he was suggesting. He was off in the count; it was 4.5 million fewer workers to produce 1964 production in 1975.

When Lyndon Johnson made his prediction manufacturing was 27 percent of America’s establishment jobs, which was down from a high of 39 percent in 1943. By 1975 it was 22 percent, now it is 8.8 percent. The declining share of America’s jobs in manufacturing reflects part of a long term trend that has advanced far enough since Lyndon Johnson’s day to threaten America’s ability to maintain self supporting work.

Advancing computer technologies have raised productivity in service industries over the last 20 years, which inevitably leads to a smaller share of establishment jobs. For example, retail trade started 1990 with 12.1 percent of America’s jobs. The decade of 1990 to 2000 was a period with job growth faster than population growth. The American economy added 22.3 million jobs when 13.5 million new jobs would have been able to keep up with population growth, but retail ended the decade with only 11.6 percent of America’s jobs.

In contrast the decade of 2000 to 2010 was a period of slow job growth with a precipitous decline of jobs in the recession of 2008 and 2009. The American economy lost nearly 2 million jobs over the decade, but retail trade continued to lose share ending the decade with only 11.1 percent of America’s jobs, a loss of another half percent of America’s establishment jobs.

Over the last two decades other service sectors in addition to retail lost share to higher labor productivity from computer technologies and the ever wider use of the Internet. Services losing percentage share of establishment jobs include wholesale trade, utilities, newspaper, book and periodical publishers, radio and television broadcasting, land line and cell phone communications, banking and financial services.

Declining service sectors and manufacturing, construction and mining defined by the Bureau of Labor Statistics lost 10.5 percent of America’s jobs from 1990 to 2010. The biggest share of expanding service jobs came in health care, education and government service. Another important sector for expanding jobs came in selected professional services like accounting, architecture, engineering, and computer design. Remaining new jobs were in low productivity services like restaurants, gambling, fitness centers, pet care, landscaping, temp work, security, prisons, business support and personal services. These sectors support millions of jobs, but also 10.5 percent more of America’s jobs than 1990.

America needs 1.5 million new jobs a year just to keep up with population growth, but higher productivity keeps shifting the burden of new jobs onto a declining number of service industries. By 2010 manufacturing, construction, mining and the high productivity service sectors have declined to 38.5 percent of America’s jobs. Jobs in these combined sectors have a twenty year record of lower than average growth that guarantees a gradually declining share of America’s jobs. These service sectors had 49 percent of establishment employment in 1990. To have a 49 percent share in 2010 required 13.7 million more jobs. Instead these sectors lost 3.7 million jobs: 17.4 million jobs shifted to other sectors.

It takes an optimistic job forecast to predict that 38.5 percent will not fall further. In effect, job losses in high productivity manufacturing and service sectors assure new jobs will have to come in low productivity service sectors confined to services with just 61.5 percent of jobs as of 2010.

Where will we work in the free-for-all? It’s a question more of us will have to ask in the next decade, but now is the perfect time to start.

(1) Foster Rhea Dulles, Labor in America: A history, (NY: Thomas K. Crowell Co. 1966) p. 403.

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