The winners and losers in the current economy
The Heritage Foundation’s Alison Fraser and Rea S. Hederman, Jr have a concise summary of who’s benefiting and who’s not in the current American economy. The key section: So why has job growth been so slow? One factor may be that certain structures of the economy are changing. The sectors that have failed to rebound ...
The Heritage Foundation's Alison Fraser and Rea S. Hederman, Jr have a concise summary of who's benefiting and who's not in the current American economy. The key section:
The Heritage Foundation’s Alison Fraser and Rea S. Hederman, Jr have a concise summary of who’s benefiting and who’s not in the current American economy. The key section:
So why has job growth been so slow? One factor may be that certain structures of the economy are changing. The sectors that have failed to rebound are in a period of a transition. For example, despite strong growth in manufacturing output, that sector will never employ the numbers that it once did. Strong productivity growth for several quarters is evidence of this fundamental shift. Still, this news is positive for most workers in America. The increase in productivity means lower prices and greater value for consumers; in other words, workers have greater purchasing power than in the past. Higher productivity often leads to higher wages, which have already increased by almost 1 percent since December. And because inflation is low, these gains are not nominal — workers really are better off. Reflecting these changes, the nature of unemployment has shifted, as well. Fewer workers are unemployed due to layoffs or downsizing. Most unemployed now are new entrants to the labor force and reentrants who have been out of the workforce for some time. It is also telling that the number of workers working part-time for “economic reasons,” as the BLS puts it (that is, they are unable to find full-time work), has fallen by nearly 400,000 since November. While it may be tough for the unemployed to find new work, those working are less likely than before to lose their jobs and more likely to see their wages or hours increase. (emphasis added)
In other words, those who claim that offshore outsourcing is causing people to lose their jobs are pretty much wrong. Virginia Postrel has more links and commentary on the subject here and here. Kash chips in with a post on patterns within the employment data (link via Brad DeLong). The two sectors generating job growth?:
For obvious reasons, education and health has seen the least replacement of labor with IT, and so seeing lots of job growth in those industries is not surprising. Somewhat less obviously (at least to me), professional and business services (this category includes things like legal, engineering, administrative, advertising, management, consulting, IT and accounting services for businesses) has also been adding jobs at a rapid rate. I guess the workers in those industries also tend to be difficult to replace with IT.
So the sector that is supposedly most vulnerable to job loss from offshore outsourcing has actually created a significant number of jobs over the past year, when outsourcing was supposedly at its worst. Funny that.
Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner
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