A Nation of Hamburger Flippers

National Review Online ^ | August 18, 2003 | Bruce Bartlett

[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.

[dr_who_2]

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.

[lelio]

Already posted and it was posted again before that. People keep on changing the title.

[Cyber Liberty]

That nasty steam engine has got to go. Power from the people ('s arms and legs).

[Cyber Liberty]

Talk to the source websites' editors. This is a rare case where doing a title search is useless, I guess....

[dr_who_2]

That's not fair. The author of this article has been cross-posting on us. The swine.

[snopercod]

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.

[MonroeDNA]

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!!!

[dr_who_2]

I apologize for leaving off the question mark in the NRO version of the title. Was hoping to annoy some habitual anti-globalism whiners.

[MonroeDNA]

We must tarrif anyone who sells steel below what we can make it for.

This is a matter of union security!

[JoeSchem]

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?

[dr_who_2]

Well, if those uneducated jacklegs in Mexico mess up those machines, the owners of those machines get what's coming to them. Ha-rumph!

[longtermmemmory]

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. :-)

[MonroeDNA]

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).

[dr_who_2]

However, the problem here isn't just the Democrats.

[Bluntpoint]

Flipping hamburgers is not so bad. The job comes with nice benefits like free uniforms!

[lelio]

Someone should email NRO the following email

From: FreeRepublic Admin Moderator
Subject: Please keep original titles
Body: cut it out

[Dog Gone]

Back to the good ol' days of buggies! We've put thousands of stable workers out of a job.

[hole_n_one]

[anniegetyourgun]

And there's no doubt this analysis will do just that.

[Bluntpoint]

And company cars!

[ellery]

bttt

[Servant of the Nine]

This is the same silly whining they have been doing since the mid '50s.

So9

[cmsgop]

and Staff Eats For FREE !!!!!!!!

[dr_who_2]

Rubbish. Driving up the price of steel has only hurt manufacturing, and it hasn't helped the steel industry at all. Furthermore, the costs of keeping an army armed increase when armor and ammo cost more because steel is more expensive.

[dr_who_2]

I might prefer a machine to the sort of people who mind the till at your typical Macdonalds these days. Not that the food's any good either way.

[dr_who_2]

Someone should email NRO the following email

From: FreeRepublic Admin Moderator
Subject: Please keep original titles
Body: cut it out

I can see you're really worked up about this.

[dr_who_2]

So if I say "Free trade! YEAH!!!" three times, does that mean someone somewhere will become a burger flipper?

[dr_who_2]

We must tarrif anyone who sells steel below what we can make it for.

Gotta hate those Chinese, giving us money to make our automobiles, tanks, and aircraft carriers.

[TheFrog]

Re: "human beings are free to stop working" You are free to stop working today, it just does not pay that well!

[Libertarianize the GOP]

http://www.freerepublic.com/perl/bump-list

[Archangelsk]

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.

Ever see a farm auction? That's where the farmer loses his land and has to sell all his equipment and other possessions. Not a pretty sight.

[joesnuffy]

Merc Marine just sent its small outboard manufacturing to China

[dr_who_2]

Ever had to pay $7.00 for a small slab of cheese because of all the subsidies that enables these farmers to remain farmers? Not a pretty sight.

[dr_who_2]

That's nice.

[Archangelsk]

So you're equating having to voluntarily purchase cheese at an inflated price with going bankrupt and possibly destitute? Gee, harden your heart Pharoah.

[Archangelsk]

Oh, and the farmers I saw grew corn and soy, not cows.

[dr_who_2]

What, for Archer Daniels Midland?

[FITZ]

If free trade and globalism were working, the economy by now should be really steaming full blast ---- but not much in the economic news is very optimistic. The proof is in the pudding as they say.

[FITZ]

Actually, the machines are being physically shipped to Mexico and China

Sending maquilas to Mexico only brought millions of Mexicans flooding over the border to come here --- apparently those low wage jobs didn't really do much for them, I imagine in a few years, the Chinese will be coming over by the boatloads.

[Paul C. Jesup]

A Nation of Hamburger Flippers

Actually, soon even those jobs will not and option.

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.

[dr_who_2]

So you're equating having to voluntarily purchase cheese at an inflated price with going bankrupt and possibly destitute? Gee, harden your heart Pharoah.

I call the farmer who doesn't sell his equipment until well after the market forces him out a fool. It isn't like there isn't a trend here. At one point in time, most of the population of the U.S. was involved in farming, BUT THAT WAS OVER A CENTURY AGO. I suggest that you be more sympathetic to the people out there who can barely afford groceries and don't have a farm and lots of farm equipment to sell.

[dr_who_2]

Actually, a great deal of it is. Part of it is referenced in the above article.

[Paul C. Jesup]

A Nation of Hamburger Flippers

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.

[dr_who_2]

Sending maquilas to Mexico only brought millions of Mexicans flooding over the border to come here --- apparently those low wage jobs didn't really do much for them

They were afraid of the machines, so that's what made them flee to the United States?

[My Favorite Headache]

[jern]

bump for tomorrow read.

[dr_who_2]

Well, you can do what any honest, hardworking American should do in these times and go rob a liquor store. Good luck in your new career.

[q_an_a]

There must be a steel man on this board who can explain the steel contract. Several years ago a person with ten years on the job got 4 weeks vacation AND a three month leave. I recall that this was available every fifth year too. Four months off every five years. I have to think that with sick days, other vacations and this little perk 20% of the labor was not on the job, but getting paid. Is that still the case?

[BiffWondercat]

Actually (trademark) is creating just such a machine. Might as well get a replicator...

[B-Chan]

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...

...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...