"Only dull people are brilliant at breakfast" -Oscar Wilde |
"The liberal soul shall be made fat, and he that watereth, shall be watered also himself." -- Proverbs 11:25 |
From 2001-2002, the US economy lost a large number of jobs that either make things or require technical knowledge. Notice, how new jobs do not involve new products or technologies. This information is from the Bureau of Economic Analysis.
Manufacturing - 1.1 million jobs
The information industry - 225,000 jobs,
Professional, scientific, and technical services - 225,000 jobs,
Computer systems and design - 140,000 jobs
Wholesale Trade - 120,000
And what areas of the economy increased their number of employees from 2002-2003?
Finance and insurance + 22,000
Health Care and Social Assistance + 442,000
Food Service and drinking + 153,000
Education + 93,000
Government + 373,000
Let's move forward 1 year, from 2002-2003, the last full year of information in the BEA's database. The following industries lost jobs.
Manufacturing - 740,000
Information - 185,000
Computer and Electronic Products - 145,000
Professional, scientific and technical -15,000
And the following industries added jobs
Food Service and Drinking Places 151,000
Government + 85,000
Education + 64,000
Health Care and Social Assistance + 345,000
Why does an economy have to make new products to grow? Because in the natural chain of economic events one product naturally leads to new products. Let me use computers as an example. First, there is the actual computer that has to be assembled. This requires parts and labor, creating one group of jobs. The computer needs software, which requires programmers - more jobs. The computers have to be sold, which requires wholesalers, retail outlets and sales people yet more jobs. And lets not forget all of the ancillary products that resulted from computers - networks and the internet.
New products sustain the middle class by providing high-paying jobs. Detroit led the way n the 1950s. The high-tech industry employed millions of workers in the 1990s who benefited from high wages. The information jobs from the 1990s are going away, and we are not replacing them with the next wave of technologically innovative products.
By not creating new products and technologies or products the US is resting on its economic laurels, letting other countries make the products for us. As a result, new jobs on the cutting edge of whatever market are not benefiting the US. Instead, we are importing products we use to make on credit instead of the wages that should result from the "next big thing."
[snip]
Economists generally agree the economy needs to create 150,000/month to keep up with population changes, lost jobs etc.... According to the Bureau of Labor Services, since 2001, there are only 5 months when the economy created more than 150,000 jobs - March, April, May and October 2004 and February 2005. In other words, we are not creating jobs fast enough to absorb new and displaced workers.
This has lead to an increasingly smaller percentage of the population being employed. In 2000, 64.4% of the population was employed. That percentage has dropped to 62.3% in 2004. In other words, the number of people working as a percentage of the total US population is decreasing.
This leads to poor wage growth because employers can essentially say to prospective employees, "I can get someone who will do the job for lower wages." Wages grew 3.1% in 2002, 1.7% in 2003 and 2.3% in 2004. Compare this wage growth to inflation, which increased 1.9% in 2002, 2% in 2003 and 2.3% in 2004. In other words, wages rose below the rate on inflation for the past 2 years. In other words, the average worker is making less money for the last 2 years.