Obviously The Economist is right. From a more global perspective however the question remains what countries in the end will be left at the bottom. I don't believe that globalisation leads only to a race to the bottom. It is more like a race to the top. But the race to the top does need countries that stay in the bottom.
As for Chicago, I think there's enough mobility in the US to cover the skill shortage there. And otherwise, there's plenty of foreigners (Indian, Chinese) that will. Although it might get a bit cold in winter...

That doesn't seem like an unusual percentage of workers. Assuming working period between 18-25 (depending on time spent in school) and retirement age begining at 62-65, its about 4o year period. That means on average about 37% of a workforce will retire. A few percent difference, based on say babyboomers.

'The continued growth in manufacturing output shows that the fall in jobs has not been caused by mass substitution of Chinese goods for locally made ones. It has happened because rich-world companies have replaced workers with new technology to boost productivity and shifted production from labour-intensive products such as textiles to higher-tech, higher value-added, sectors such as pharmaceuticals. Within firms, low-skilled jobs have moved offshore. Higher-value R&D, design and marketing have stayed at home....

So all the things that used to be manufactured in the US (textiles, garden implements, tools, cars, sporting equipment, and everything else I can think of) have been replaced by the mechanization of drug production, eh. Say, where can I get some of those good drugs. Also, I believe that the higher skilled jobs are now moving offshore. So just who is going to buy all these high end goods? Boy, where can I get a copy of this cutting edge magazine; I can hardly wait.

Some peopls STILL don't "get" it.

The drop in agricultural employment from
70% to 2% must seem like a "bad" thing to
them.

Think about computers. The chips and
drives and cards and all that other stuff
sure is way cool to connect together.

But without software all that junk is ...
well ... junk.

It's the intellectual stuff that makes
it valuable. The "thought" that went
into the developing the product is the
high-value good. Not the physical
manifestation of the item.

The humble screw is nothing more than
that old machine - the inclined plane -
thought about in a subtly different
way. Outside the box, so to speak.

If people wish to worry about the US
manufacturing decline, they should
concern themselves with the machine
tools industry.

You know, the machines that make the
tools and dies used to make the things
we REALLY need. Without them, not
even the good thoughts or products
our engineers can develop will ever
be brought to market.

One thing that the Economist overlooked (which is surprising, as they have pointed it out several times in the past) is the effect on Man. Employment of outsourcing. Many manufacturing firms have now outsourced alot of the none-manufacturing parts of the operation. (A simple example - in the old days companies would have an in house janotorial staff. Today, they contract with a service provider.)
The article notes that these jobs probably cause an overstatement of the percentage of the population involved in manufacturing, but fails to note that they are also probably disproportionately responsible for the fall in manufacturing jobs as well.

In the US at least, a great chunk of the new employment generated in the last few years has been from real estate related activities: construction, mortgage finance, real estate brokerage etc. How many of these will survive once the bubble bursts ?

Also, while some service jobs are indeed more pleasant and better paying than manufacturing jobs, many are not.

Also, when it comes to manufacturing, if you were to subtract defense manufacturing (still largely done at home), and aerospace, how much is in the US ?

The Tribune article hits the nail over the head. If work disappears then the workers need to be retrained for the new work. The new work in America requires more education. No one is addressing this need for more education top to bottom in our society except in piece meal fashion.

Re: globalization, structural transformation and retraining of labor. Robert Reich (The Work of Nations) was making this argument 13 years ago...

> If work disappears then the workers need to be
> retrained for the new work. The new work in
> America requires more education

That is a very common response from, e.g., academics. Which is to say, highly trained (and trainable) people who like the kind of work (primarily indoors, primarily non-physical) that highly trained/traninable people like to do.

What do you propose for the fairly large percentage of the population who is NOT like that? Who thought that high school was enough classroom schooling, thank you? Who just don't (and probably can't) "get" the concept of staring into a computer screen all day?

Who, in times past, have been solid middle-class citizens with jobs in steel mills, machine shops, etc, but who now see any hope of meaningful work floating away on the 'global economy'? Please don't tell me, "they will have to get with the program"; that is the way revolutions start.

Cranky

More than half of the engineers I work with are outside the US today, and that's just in my immediate group. More education is just the barrier to entry. If the US is going to keep any jobs, it will be soley on the ability to actually *do* something that other folks cannot figure out how to do.
It's called competition, and it isn't going to be pretty.

More education is always the answer of an educator, but the largest number of jobs will be skilled hands on jobs where experience is more important than education and where physical presence prevents offshoring. Healthcare, cleaning, sales, service, repair, installation, construction, etc. The trades should do well. A few fields such as biotech will need educated workers, but these will be few in number and will probably bust after 20 years. Most educated areas will see reduced need as most are easily offshored.

"Some people STILL don't "get" it."

And YOU are one of those people.
The fact is that re-training only works if there are jobs to be re-trained for. There aren't.

All this blather about education ignores the fact that it isn't about skills anymore. It is about about proximity: if the job requires proximity, it won't be outsourced. If it doesn't bye, bye.

That means, for example, that it is critical for hotel maid jobs to be unionized and to have health benefits and good wages. Those kind of jobs are the new foundation of our formerly middle-class economy. We need to stop thinking about rewarding people for professional training. In this new world, that doesn't cut it. Workers need to grab whatever they can, whenever they've got employers over a barrel due to proximity.

Don't yah love this brave new world you've wrought, all you economisties?

Camille, your points are well taken. Firms like Walmart that don't pay a living wage need to be unionized.

Dan- Offtopic, but I really hope you can answer a question for me. How many people are going to be unable to make the new minimum payments on their credit cards in December? That is when the doubled payment law comes into effect raising the minimum payment on credit card debt from 2 to 4 percent. Are millions of people going to be insolvent? Hundreds of thousands? Tens of thousands? Ballpark it for me please.

Retrained for what?

Selling paint at the Home Depot?

Inherent in the mad rush to destroy manufacturing jobs is an insidious age discrimination, the 52 year-old former assembly worker is not going to splitting genomes or splicing DNA.

Much of this is about the white collar elite being willing to destroy the standard of living of the blue collar workforce.

Change will occur. Some of it will have to be painful. How the richest country in the world manages the change will be our pride or our shame.

So far it is shame.

Within firms, low-skilled jobs have moved offshore. Higher-value R&D, design and marketing have stayed at home....

And here we have the fundamental error. The heart of the myth...

Guess what people, the "higher value" jobs are leaving also, and where that isn't happening they are the targets of constant examination for elimination.

The only way this model is sustainable is if 80% of the workforce becomes private business owners.

> Guess what people, the "higher value" jobs are
> leaving also, and where that isn't happening they
> are the targets of constant examination for
> elimination.

The funny thing is that US academics think they are immune, presumably as a result of the large number of foreign students who attended US colleges in the 1980-2000 time period. But if I read the numbers correctly, the rate of enrollment of foreign students dropped drastically after spring 2002 (which corresponds with the draconian changes in US culture post-9/11). If the US is no longer the preferred place for the world to study, then academics are in for a BIG shock fairly soon.

Cranky

Cranky
Let's assume you are correct that people do not want education. What is your plan or better yet their's to improve their lives?
When I talk of education I am not thinking of providing a direct skill training to job situation. I am thinking of providng a education that is broad enough such that people can go make their own choices for work.

As I understand it, Cranky's argument is not that people don't want more education, but that many people have great difficulty with it and would not do well at the kind of jobs that highly educated people tend to get now.

Of course, three hundred years ago many people were subsistence farmers with no education at all, and there are hardly any US jobs for people like that today. On the other hand, there were quite a number of people at my high school who weren't very good at academics and would have a great deal of difficulty if they were all required to go earn graduate degrees.

Then, of course, there's the matter of money. Most good jobs these days expect you to have at least a bachelor's degree as a matter of course, and as a result a lot of young people are entering the work force with huge debt loads. Absent some kind of massive government program to pay for everyone's education, I don't think making a Master's degree the new minimum standard is going to help this situation much.

I would like to see the decline of manufacturing jobs in the US analyzed in light of US Security interests.

That brings up a good point Mathias.

I think the current direction and ethic of our domestic job situation can be summed up as:

"Lost your job? Join the Legion!"

I maybe have a real old-fashioned attitude about this, but it seems to me that a society that has traded its ability to make basic things like tools, cloth, industrial equipment, medical equipment, and so on, in favor of ephemerae like "services and marketing" is the very definition of "decadent."

It's like the aristocrats of Europe, or anywhere for that matter, who could write one heckuva poem, or throw one heckuva fancy dress ball, but were incapable of dressing and feeding themselves.

As I am still out of work since the IT bust, it is clear to me that design-level jobs are going overseas as well as manufacturing jobs. The economic theory that says investment will move to work that creates higher value service immediately shows itself to be false in light of the jobless recovery.

The current retail and housing boom is artificial. As soon as the tax cut effects end, so will this boom and we will find ourselves overbuilt. Not only are we paying for things today with tomorrow's money, we are working tomorrow's jobs as well.

The intent of the right is to drive our country into a second great depression, so that wages and prices will fall under that of India, so that we will once again be competitive. Of course, that is a cheap competitiveness that has no reality and certainly no value creation.

CEO's treat businesses as storage batteries of money to be shiponed off to no good end.

Regeanomics was demonstratively false, so why are we doing it again. In the face of so many alternatives, why would the wealthy of this country invest to create jobs here?

The unskilled worker still needs work. And, we still need the poor. No economic theory will change these realities.

Over the last 40 years industrial production of high tech goods has grown at an average annual rate of close to 25% while the average growth rate of traditional industrial production -- all other --has been more like 2.5%. The concern about manufacturing employment is really masking a massive change in the composition of manufacturing and that is probably the really important story.

Similiarly, average hourly earnings in manufacturing is now barely different from total average hourly earnings. The high paying areas are construction, information technology, legal,
financial, education and health care. In all of these areas average hourly earnings are significantly higher then in manufacturing -- implying that the level of worker productivity is higher in those sectors as well. Moveorer, most of these areas are growing faster then manufacturing.

So what is the problem if we shift workers from manufacturing where wages are $16 to finance where wages are $18? Or, if we let the textile manufacturing industry migrate abroad while communication equipment production soars?

> So what is the problem if we shift workers from
> manufacturing where wages are $16 to finance where
> wages are $18?

Two points: there is no special "work of the mind" that Citizens of the United States are uniquely capable of performing. Finance work can be done in Hydrabad for $3/hr just as easily as Chicago for $18, and it in fact is starting to move in that direction. See my previous post about there being no exemption for academics in this regard, either.

Second, what percentage of US Citizens have a Bachelor's degree? A Master's? About 40 and 10 respectively IIRC. Is the obligation of the United States to maximize some economist's dreams of the global utility function, or to create a society and economy which provides the possibility of reasonable, productive, and fulfilling employement for all citizens? Including those citizens who have no ability or desire to do academic, staring-into-a-computer-all-day type work?

Just what do you guys think is going to happen when the last IT and financial services jobs move to India, or to China? What is going to maintain the economy of the US at that point? We'll keep building McMansions for one another even though we have no productive work to pay for them?

Cranky

spencer says:

> Or, if we let the textile manufacturing
> industry migrate abroad while
> communication equipment production soars?

Communication equipment production?
Design and production is already global.
I can only conclude that you are an
eternal optimist....and not plugged
into the real world.

From a newspaper article:

"It is a myth that when some jobs are gone, people will just move up that [economic] ladder to another job. That is not always the case," said Peter Thomas, executive director of the Western Maryland Consortium, the state agency where GST's and other laid-off workers in the area turned when looking for new employment and training.

http://www.washtimes.com/functions/print.php?StoryID=20050917-104940-2061r