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A Nation of Hamburger Flippers
National Review Online ^ | August 18, 2003 | Bruce Bartlett

Posted on 08/18/2003 5:21:14 PM PDT by dr_who_2

A Nation of Hamburger Flippers? No. Manufacturing output is very healthy.

Everybody seems to be worried about manufacturing these days. All the Democratic presidential candidates condemn the practice of “outsourcing” — laying off manufacturing workers and buying their output more cheaply from China. This is not surprising, given that organized labor has made it a high-priority issue. But they are being joined by some on the right-wing fringe as well, such as Pat Buchanan and Paul Craig Roberts, who warn that we are exporting our sovereignty along with our jobs. They all seem to think that more trade protection is the answer.

The truth is that manufacturing is doing just fine in every way except employment. However, few economists would judge the health or sickness of any industry solely based on employment. By that standard, agriculture has been the sickest industry of all for decades. Rather, such things as output, productivity, profitability, and wages better determine industrial health. On this score, manufacturing is actually doing quite well in the U.S.

Let’s start with the bad news. According to the Bureau of Labor Statistics, there were 14.6 million Americans employed in manufacturing in July, down from 15.3 million a year earlier, 16.4 million the year before that (2001), and 17.3 million the year before that (2000) — a decline of 16 percent in 3 years. The recent peak for manufacturing employment occurred in March 1998 at 17.6 million — about the same as it had been for the previous 15 years.

By contrast, industrial production has remained relatively strong. The Federal Reserve Board’s industrial production index is up 5 percent since manufacturing employment peaked in 1998, and down just 5 percent from the index’s peak in July 2000, despite a rather severe recession in the meantime.

Looking at gross domestic product, real-goods production as a share of real (inflation-adjusted) GDP is close to its all-time high. In the first quarter of 2003 — the latest data available — real-goods production was 39.2 percent of real GDP. The highest annual figure ever recorded was 40 percent in 2000. By contrast, in the “good old days” of the 1940s, 1950s, and 1960s, the U.S. actually produced far fewer goods as a share of total output. The highest figure recorded in the 1940s was 35.5 percent in 1943; the highest in the 1950s was 34.9 percent in 1953; and the highest in the 1960s was 33.6 percent in 1966.

In short, manufacturing output is very healthy. There is absolutely no evidence whatsoever that we are becoming a nation of “hamburger flippers.” We are producing more “things” than we have in almost every year of our history for which we have data. The decline in employment is, in effect, a good thing, because it means that manufacturing productivity is very high. That is also a good thing, because it means that employers can afford to pay high wages to manufacturing workers while still competing with low-wage workers in places like Mexico and China.

Remember, what really matters for employers is not absolute wages, but unit labor costs — how much the labor costs to manufacture a given product. If a U.S. worker is five times as productive as a Mexican worker making one-fifth as much, they are exactly equal from the point of view of a producer.

The best measure of comparative productivity levels is real GDP per employed person. According to the Bureau of Labor Statistics, in 2002 the U.S. continued to lead the world in this category. All U.S. workers produced $71,600 in output each (in 1999 dollars). The next highest country was Belgium, where each worker produced $64,100. Japanese workers — renowned for their productivity — produced just $51,600. Korean workers produced even less: $34,600 each. (There’s no data for China or Mexico, but both are probably far below Korea in terms of productivity.)

It is also important to note that virtually every other major country has seen declines in manufacturing employment. Between 1992 and 2002, U.S. manufacturing employment fell by 3.7 percentage points. In Britain, it fell 4.7 percent, in Japan it fell 5.2 percent, and in Germany it fell 6.1 percent. Only Canada and Italy showed any increase over this period.

Finally, it is important to note that much of what is going on here is not “real” in some sense, but definitional changes in job classifications. It used to be that big companies tended to do everything in-house, so people like janitors and accountants were classified as “manufacturing” workers simply because they worked for manufacturing companies. Over the years, such companies discovered that it was more economical to contract out such work. That is why “business services” is one of the fastest-rising categories of employment in the U.S..

Stanford economist Robert Hall recently told the Senate Finance Committee, “There is no sign in the data on output of the onset of chronic ill health in manufacturing.” All the hand wringing is simply unjustified by careful analysis.


TOPICS: Business/Economy
KEYWORDS: brucebartlett; freetrade; leftwingactivists; manufacturing; skyfallingjobs
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The obvious solution is to reduce the productivity of the U.S. manufacturing sector by destroying machines, killing skilled, educated workers everywhere, and getting rid of competition.
1 posted on 08/18/2003 5:21:15 PM PDT by dr_who_2
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To: dr_who_2
Already posted and it was posted again before that. People keep on changing the title.
2 posted on 08/18/2003 5:22:20 PM PDT by lelio
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To: dr_who_2
That nasty steam engine has got to go. Power from the people ('s arms and legs).
3 posted on 08/18/2003 5:22:25 PM PDT by Cyber Liberty ( 2003, Ravin' Lunatic since 4/98)
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To: lelio
Talk to the source websites' editors. This is a rare case where doing a title search is useless, I guess....
4 posted on 08/18/2003 5:23:39 PM PDT by Cyber Liberty ( 2003, Ravin' Lunatic since 4/98)
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To: lelio
That's not fair. The author of this article has been cross-posting on us. The swine.
5 posted on 08/18/2003 5:24:54 PM PDT by dr_who_2
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To: dr_who_2
Actually, the machines are being physically shipped to Mexico and China (like the Coats American thread-making machines in the town where I live). The highly skilled workers are just being left to compete with the uneducated illegal aliens for the menial service jobs.
6 posted on 08/18/2003 5:26:21 PM PDT by snopercod
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To: dr_who_2
Impossible!

We need government interference! We are not good enough! We can't compete!

It is not fair!!!

We whine like school children!

Help us!!!
7 posted on 08/18/2003 5:26:26 PM PDT by MonroeDNA (No longshoremen were injured to produce this tagline.)
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To: lelio
I apologize for leaving off the question mark in the NRO version of the title. Was hoping to annoy some habitual anti-globalism whiners.
8 posted on 08/18/2003 5:26:54 PM PDT by dr_who_2
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To: dr_who_2
We must tarrif anyone who sells steel below what we can make it for.

This is a matter of union security!
9 posted on 08/18/2003 5:27:46 PM PDT by MonroeDNA (No longshoremen were injured to produce this tagline.)
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To: dr_who_2
We have two economic futures before us. In one, we automate and computerize everything, and all human beings are free to stop working, spend more time with their children, and pursue hobbies. In the other future, we work like slaves at mind-numbing, repetitive jobs inside cavernous factories.

Guess which future the Democratic Party supports?

10 posted on 08/18/2003 5:29:24 PM PDT by JoeSchem (I'm running for governor too! Write me in!)
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To: snopercod
Well, if those uneducated jacklegs in Mexico mess up those machines, the owners of those machines get what's coming to them. Ha-rumph!
11 posted on 08/18/2003 5:29:49 PM PDT by dr_who_2
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To: dr_who_2
alas even the hamburger flippers will be automated. In orlando the McDonalds has an automated French fry machine. Potatoes go in one end and McDonalds french fries come out the other.

Can Automated Big Mac makers be far behind. Food production untouched by human hands.


...That is untill friday, then its Soylent Green day. :-)
12 posted on 08/18/2003 5:30:37 PM PDT by longtermmemmory (Vote!)
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To: dr_who_2
It is only fair that longshoremen union folks in the LA docks make an average of $120,000 per year. It is only fair that janitors in government make $100,000 a year.

(maybe the IT whiners should get a mop).
13 posted on 08/18/2003 5:30:49 PM PDT by MonroeDNA (No longshoremen were injured to produce this tagline.)
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To: JoeSchem
However, the problem here isn't just the Democrats.
14 posted on 08/18/2003 5:30:56 PM PDT by dr_who_2
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To: dr_who_2
Flipping hamburgers is not so bad. The job comes with nice benefits like free uniforms!


15 posted on 08/18/2003 5:30:59 PM PDT by Bluntpoint
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To: dr_who_2
Someone should email NRO the following email

From: FreeRepublic Admin Moderator
Subject: Please keep original titles
Body: cut it out
16 posted on 08/18/2003 5:31:11 PM PDT by lelio
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To: dr_who_2
Back to the good ol' days of buggies! We've put thousands of stable workers out of a job.
17 posted on 08/18/2003 5:31:42 PM PDT by Dog Gone
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To: dr_who_2

18 posted on 08/18/2003 5:32:21 PM PDT by hole_n_one
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To: dr_who_2
And there's no doubt this analysis will do just that.
19 posted on 08/18/2003 5:32:31 PM PDT by anniegetyourgun
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To: dr_who_2
And company cars!


20 posted on 08/18/2003 5:32:38 PM PDT by Bluntpoint
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