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.
Actually, soon even those jobs will not be an option.
http://www.freerepublic.com/focus/f-news/958007/posts
(sarcasm) Well at the rate things are going, the only jobs left for Americans will be crime itself.
...until one fine spring day when the fine fellows that own the magic machines that make all the food and toys realize that they're screwing themselves by allowing the masses to breed. After all, they reason, the children of all the millions of nonworking, hobby-pursuing former workers are going to grow up some day... as will their children... and their children... until one day the descendants of the former working class come marching over the hill, with all the food, free time, and potential for mischief in the world -- breeding and breeding until the nice, green country estates of the owners are overrun with 'em.
But these are rational men, these owners, Unwilling to live in a world lousy with fecund, nonproducing pests, and unbelieving in the quaint notion of God or the sanctity of human life, the owners of the magic machines decide to act. They have their magic machines cook up a lethal virus (one against which they themselves are incoculated) and then simply spread it around the population of vermin, until the good Earth is fumigated of the no-longer-necessary Useless Eaters. The bodies are fed into the magic machines to be turned into cake and dildoes and perfume later. Problem solved. More room for the quality folk, eh?
And so the great struggle ends. With a contented sigh, the owners of the magic machines can at last coil around their marble columns and enjoy the beauty of Eden made new -- a garden of plenty, unspoiled by the presence of God or of human beings other than themselves. The promise of the Serpent has come true at last: they are no longer human beings; they have become as gods.
I mean, as long as we're writing science fiction here, let's speculate on both sides of the fence...
I also wouldn't put down the job of the actual burger flipper...these days with expanded menu choices they're preparing a whole range of products. The fast food industry offers entry level employment in a fast paced environment that should give them a ticket to better opportunities.
The notion that jobs at Mc Donalds invlove flopping butgers is a false myth. Most are employed in sales and public relations rather than production. The smiling young girl at the register has nothing to do with production. Her job is to make a sale and deal one on one with a customer.
Learning to deal with customers is an invaluable skill that can not be taught.
learning tot clean the place is also an important job. Not only just the work, but learning that there are reasons involving compliance with the various reglations is important experience.
Don't dis McDonalds. It is important to the American way.
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