How Much are Replacement Jobs Helping the Economy?

by Fred Siegmund

America?s high unemployment rate will come down as total spending picks up and the economy recovers.

Some of the unemployment is the result of the recession, but some is the result of long-term trends. Since 2000, manufacturing jobs have fallen by 5.4 million, and when the economy comes back, manufacturing will not recover much ? if at all.

Jobs in other service industries will replace the ones lost in manufacturing, but the new jobs are completely different than the ones we are losing.

How the Food Business Supports American Jobs

The 20-year evolution of America?s eating habits is a good illustration of the differences in the new jobs.

In the production-marketing chain of food, restaurants help to grow jobs ? probably more than most people realize.

If we start on the farm, we begin with farmers, then all the jobs in pesticide, fertilizer and agricultural chemicals, and all of the jobs in agricultural implement manufacturing. Then we add in the jobs at farm supply wholesalers and farm raw material wholesalers.

We can then move on to food manufacturing. Add all the manufacturing jobs: milling, canning, freezing, bottling, refining, slaughtering, baking, brewing, distilling, fermenting and packaging. Add them to grocery store merchant wholesaler jobs and all the jobs at grocery stores, convenience stores, liquor stores and food stores.

The total comes to 6.7 million jobs.

In 2009 ? a recession year — there were 9.3 million jobs in the restaurant business, including fast food outlets, bars, and caterers. During 2007 and 2008, the monthly average was 9.6 million. The total does not include food service workers at school cafeterias, hospitals, retail stores or ballparks, museums and other recreation facilities.

Add them to the total and it comes to almost 11.4 million food service jobs.

But jobs from the farm to the supermarket continue to decline due to productivity growth and imports in the global economy.

Restaurants are the only part of the food chain Americans can count on for more jobs.

Gambling, like restaurants, is another market where Americans spend themselves into jobs as gaming dealers, gaming cage workers, slot key persons, and sports book writers and runners.

Gambling employment reached a high of 426,000 in the private gambling industry in 2007, including casino hotels. These jobs dropped 8% in the recession, after nearly two decades of rapid growth.

Are the New Jobs as Good as the Old Ones?

Work in gambling and restaurants is not the high tech and high wage employment the politicians keep promising for the future, but they are becoming the replacement jobs for manufacturing.

The 5.4 million jobs lost in manufacturing are up to 4% of America?s jobs, but the replacement jobs pay less and drop faster in recessions than the manufacturing jobs they replace.

The politicians expect more spending to bring more jobs and restore full employment, but they are ignoring the trend to a higher percentage of jobs in restaurants, gambling, fitness centers, pet care, landscaping, temp work, security, prisons, business and personal services that take the place of manufacturing employment and support millions of jobs.

Politicians are good at counting jobs, but they act like the new jobs are as good as the old ones.

The next time you hear the unemployment rate went down, remember the trends in replacement jobs and wonder if we are better off.

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at

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