Where Will You Work?

by Fred Siegmund

President Lyndon Johnson noticed the long-term decline of manufacturing jobs back in 1964, when he predicted that the nation would be capable of maintaining its present levels of production in 1975 with 20 million fewer workers*.

He made the prediction during a period when automation was getting lots of attention. Calculating inflation adjusted GDP dollars per establishment job in 1964 and again for 1975 allows the comparison he was suggesting.  He was off in the count; it was 4.5 million fewer workers to produce 1964 production in 1975.

When President Johnson made his prediction, manufacturing was 27% of America’s establishment jobs, which was down from a high of 39% in 1943. By 1975, it was 22 percent; now it is 8.9%. The declining share of America’s jobs in manufacturing reflects part of a long-term trend that has advanced far enough since Johnson’s day to threaten America’s ability to maintain self-supporting work.

Advancing computer technologies have also raised productivity in many service industries, which inevitably leads to a smaller share of establishment jobs. The retail sector was the biggest service sector to lose share to higher labor productivity. Other service sectors losing percentage share of establishment jobs include wholesale trade, utilities, newspaper, book and periodical publishers, radio and television broadcasting, land line and cell phone communications, banking and financial services.

The government’s share of America’s employment gyrates, although typically only a half percent up or down. From 1990 to 2009 and 1990 to 2010, government jobs gained share, but from 1990 to 2008 and from 1990 to 2011 government jobs lost share. For the years from 1990 to 2011, government employment, excluding education and hospitals, lost a .6% share total establishment employment.

Declining service sectors and manufacturing, construction and mining defined by the Bureau of Labor Statistics had 49.1% of jobs in 1990, but only 38.6% by 2011, a drop of 10.5% of America’s jobs from 1990 to 2011. Combine the private sector job decline with the government for an 11.1% loss in the share of jobs in America’s declining sectors in the 21 years up to 2011.

Percents must add to a hundred, which guarantees that other parts of the economy make up for the declining sectors with an equal percent of replacement jobs. The biggest share of expanding service jobs came in health care, which added enough jobs to make up for 4% of the 11.1% loss. Combined public and private education was next, with almost 1.8% additional share of jobs to replace declining sectors.

Another important sector for expanding jobs came in a mix of professional services, which combined gained almost 1.9% of America’s jobs. Almost 70% of the professional gains came in two professional services: computer design and related services and management and technical consulting. Veterinary medicine was third and accounting and engineering rounded out the professional gains.

The remaining 3.4% gain in new jobs were in low productivity services, like restaurants, gambling, fitness centers, pet care, landscaping, temp work, security, prisons, business support and personal services.

Health care, education, and professional services must continue to supply self-supporting replacement jobs if Americans expect to have jobs for those who need them. These are the sectors with hope. The Patient Protection and Affordable Care Act passed in 2010 gives hope because it will create even more health care jobs. Growing pressure on the medical establishment to increase medical school admissions will also help if it is successful.

Education is turning into a worry. It relies on public funding, which has come under political attack. For the first time in more than twenty years, local- and state-funded jobs for education in 2011 declined and declined enough to lower its share of total establishment employment from 2010 to 2011. It is cause for worry on jobs.

The rapid growth of computer design and consulting in the rough and tumble of global competition gives cause for hope that it will continue to generate new jobs. Enough well-educated people available to do the work assure it can continue but a realistic look at services produced and delivered solely by electronic means anywhere in the world gives cause for worry. The growing importance of foreign nationals returning home to expanding technology companies makes these jobs vulnerable in United States employment.

If health care, education and professional services fail to increase fast enough to be a bigger share of America’s jobs, there are few sectors left with hope. Otherwise more jobs will be in low paid, low productivity services because virtually no hope remains that high productivity service sectors will be an increasing share of America’s jobs. Manufacturing has dropped to historic lows as a percentage of America’s jobs, but manufacturing has more hope to increase its share of America’s jobs than the declining service sectors.

Where will we work in the free-for-all of American jobs? It’s a question politicians avoid with generalities, but more of us will have to answer, and it will get tougher.

*Foster Rhea Dulles, Labor in America: A history, (NY: Thomas K. Crowell Co. 1966) p. 403.

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 www.americanjobmarket.blogspot.com

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