The U.S. Economy Has Gained, Not Lost, Jobs in the past 6 years
Protectionists are quick to point to the 3 million or so lost jobs in manufacturing in the U.S. during the past 6 years. What they rarely point to, however, is the gain of 8 million jobs in the rest of the economy, for a net gain of 5 million jobs.
To be blunt, I think job counting is misleading. If we think the economy tends toward the natural unemployment rate, job creation and job destruction seem pretty meaningless.
That having been said, Steve Polos has a good treatment of the job creation and destruction issues:
To be blunt, I think job counting is misleading. If we think the economy tends toward the natural unemployment rate, job creation and job destruction seem pretty meaningless.
That having been said, Steve Polos has a good treatment of the job creation and destruction issues:
What kinds of jobs have been created? Mostly jobs in the services sector – some 7 million of them. For example, there were 1.8 million new jobs in health care, 1.3 million in government, 700,000 in finance, 500,000 in education and 84,000 in transportation. The hospitality sector contributed 1.4 million jobs. Besides this, over 800,000 jobs were created in construction, and 100,000 in mining.
Some have responded to this analysis by claiming that the new jobs being created were of lower quality, with lower wages, than those being lost, often citing job growth in hospitality. However, the average service sector wage was only 4% below the average manufacturing wage back in 2001; and today, that gap is only 1%. This is because since 2001 service sector wages are up 21%, whereas manufacturing wages are up 17%. And construction sector wages – a common destination for displaced manufacturing workers – are about 20% higher than the average manufacturing wage. This is why total U.S. income and spending have been strong, despite the woes of manufacturers.
It must also be recognized that this restructuring of the U.S. economy did not begin in 2001. There has been a gradual but steady shift away from manufacturing and into other sectors for the past 50 years. Back in 1955, 31% of all U.S. jobs (15.5 million workers) were in manufacturing. Today, that figure is only 10.3%, or about 14 million workers. Meanwhile, the number of construction workers has risen by a factor of 2.7, and service sector workers by a factor of 3.6, in the past 50 years.
International trade is playing a key role in this story. The productivity and wages of American manufacturing workers have increased enormously over the past 50 years. Much of this has come by using international trade to make companies more efficient, offshoring low-productivity tasks and raising the capital intensity of production in the U.S. Two-way trade is more than four times as important to the U.S. economy today as it was in 1955. Lower-cost manufactured imports boost spending power in the U.S., which leads to the creation of jobs in other sectors of the economy.
Category: Economics, International Trade Posted on
Wednesday, March 21, 2007 at 1:11am
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The NAIRU (avoiding the discussion on the notion itself) is mostly determined by the structural shifts in the economy, I think. Compared with the mismatch of skills to jobs, other issues (information, etc.) might be minor (fiscal treatment could be an exception).
It seems to me that jobs are clustered... high elasticity of substitution within cluster, very low outside of it.
If the trends in these trade growth rates continue, the growth of exports from the U.S. to China may begin outpacing China's exports to the U.S. as early as this summer and the so-called "trade deficit" will begin closing.
How much would you want to bet that you'll never see this change reported anywhere? And since I strongly suspect it may not ever be reported, what do you suppose the Chinese are importing from the U.S.?