Wednesday, November 10, 2010

Replacement Jobs for Manufacturing

America’s high unemployment rate will come down as total spending picks up and the economy recovers. Some of the unemployment is the result of the recession but some is the result of long term trends. Many know that manufacturing jobs have a downward trend with jobs off 5.4 million since 2000. When the economy comes back manufacturing jobs will not recover much if at all. Other jobs in service industries will replace the jobs lost in manufacturing, but the new jobs we are taking are different from the jobs we are losing.

The 20 year evolution of America’s eating habits is a good illustration of the differences in the new jobs. In the production-marketing chain of food, restaurants help to have more jobs and probably more than most people realize. Start on the farm and let’s count America’s farmers. Next add all the jobs in pesticide, fertilizer and agricultural chemicals, and all of the jobs in agricultural implement manufacturing. Add in the jobs at farm supply wholesalers, and farm raw material wholesalers.

Then move on to food manufacturing. Add all the manufacturing jobs milling, canning, freezing, bottling, refining, slaughtering, baking, brewing, distilling, fermenting and packaging. Add them to grocery store merchant wholesaler jobs and all the jobs at grocery stores, convenience stores, liquor stores and food stores. The total comes to 6.7 million jobs.

There are 9.3 million jobs in the restaurant business including fast food outlets, bars, and caterers. That was for 2009 a recession year, but there was a monthly average of 9.6 million jobs in 2007 and 2008. The total does not include food service workers at school cafeterias, hospitals, retail stores or ball parks, museums and other recreation facilities. Add them to the total and it comes to almost 11.4 million food service jobs.

Worse, jobs from the farm to the supermarket continue to decline due to productivity growth and imports in the global economy. Restaurants are the only part of the food chain Americans can count on for more jobs.

Gambling is another area like restaurants where Americans spend themselves into jobs as gaming dealers, gaming cage workers, slot key persons, and sports book writers and runners. Gambling employment reached a high of 426 thousand in the private gambling industry in 2007, including casino hotels. Gambling jobs dropped 8 percent in the recession, after nearly two decades of rapid growth.

Work in gambling and restaurants is not the high tech and high wage employment the politicians keep promising for the future, but they are becoming the replacement jobs for manufacturing. The 5.4 million jobs lost in manufacturing are up to 4 percent of America’s jobs, but the jobs people are finding pay less and drop faster in recessions than the manufacturing jobs they replace.

The politicians expect more spending to bring more jobs and restore full employment, but they are ignoring the trend to a higher percentage of jobs in restaurants, gambling, fitness centers, pet care, landscaping, temp work, security, prisons, business and personal services that take the place of manufacturing employment and support millions of jobs.

Politicians are good at counting jobs, but they act like the new jobs are as good as the old ones. The next time you hear the unemployment rate went down; remember the trends in replacement jobs and wonder if we are better off.