SMOKINCHOICES (and other musings)

May 7, 2013

Shift from mfg to service, slowed all

(With regard to the economic recovery and the prospects for employment, I am running a few related posts which have to do with this vitally relevant topic.  Jan)

Latest study

Shift to service economy delaying recovery in jobs

By Jim Tankersley THE WASHINGTON POST

WASHINGTON — It feels as if it’s taking forever for the U.S. economy to regain jobs lost in the Great Recession. In historical terms, that’s true, and new research suggests it’s partly because of a half-century shift from manufacturing to services as the engine of the economy.

New research by economists Martha Olney, at the University of California at Berkeley, and Aaron Pacitti, at Siena College, suggests that the economy is slower to recover jobs today because it has grown far more dependent on people doing things as opposed to making things.

  • Goods production supplied about three-fifths of economic output in 1950 and about half of all jobs. But by 2010, growth in the service sector accounted for two-thirds of output and 70 percent of jobs.

Olney and Pacitti estimate that because of that shift, the march back to pre-recession employment levels will last about a year longer than it would have a half-century ago. They base their analysis on a study of 50 years of U.S. recessions, along with 30 years of data on how states rebounded from their own recessions.

To understand why a service-oriented economy recovers more slowly than a production-oriented one, it helps to think about the psychology of recessions.

Olney has been telling her beginning economics students at Berkeley for 30 years: There comes a point, after an economy has been contracting, when factory owners start to anticipate that better times are around the corner. So they ramp up output, which puts people back to work, pumps more money into the economy and creates a virtuous cycle of output, employment and growth.

It’s a different story for service providers. They don’t anticipate new demand; they wait for it to appear and then hire workers to handle it. Think of an ice cream shop owner: “They don’t want to scoop the ice cream and leave it there, hoping that you’ll walk in the door,” Olney said in an interview. “If you don’t walk in the door, it will melt.”

Manufacturers don’t run the same risk, Pacitti said. “Microwaves don’t melt on the store shelf.”

Jobs in transition

Changes in employment by category from March to April:

• Professional and business services, up 73,000
• Leisure and hospitality, up 43,000
• Temporary help services, up 30,800
• Retail, up 29,300
• Health care, up 19,000
• Financial services, up 9,900
• Transportation and warehousing, up 4,200
• Manufacturing, unchanged
• Construction, down 6,000
• Government, down 11,000

Sources: Bureau of Labor Statistics, McClatchy Newspapers

(Jan’s Comment: 

While I do not bemoan the strong emphasis on “head-oriented,”  cerebral  business activity,  I DO feel the loss of “manufacturing” to be a great misery for this country.  We invented building things in America. It’s part of who we are and what we do.  Creative, inventive yes – – but,  also extremely rewarding.  Imagine how Henry Ford felt as he built his first cars and company.   Those factory jobs were so much a part of our life.  Not all of us want to work at desk jobs or be confined indoors or work on computers.   And yet,  many of us couldn’t imagine doing without these activities. 

We are all so different, and thank God for those differences. 

When our laws changed so that corporations were allowed to ship their manufacturing overseas (carrying all the jobs with them) it is beyond me to understand what was in anybody’s mind.  What did the “ins” expect was going to happen?   Come on, I’ve heard the bull-crap about lifting all boats – – well, it didn’t happen did it?   It sank our American middle-class boats.  No question the corporate world was ecstatic, for costs were slashed and profits were beyond wildest dreams.    But the heart and soul of this country – the workers who keep things humming were devastated.  People losing everything by the hundreds of thousands.  All those profits, most of it not even taxed, because it’s off-shore.  Some plot, eh?   While the rich get richer and the poor keep falling  through the cracks.    Gold standard is Okay, but what we need in our country is  THE GOLDEN RULE changed to the “standard rule”. 

We need those laws to be adjusted to bring back equity to the people of this country.  At present, all is set to go one way to corporate dominion. . even, the highest court.   One wonders where sanity has gone.  One wonders what is expected of our youth who want a shot at a life.  They are sacrificing to get an education, mounting huge debts, having to settle for jobs,  for which they didn’t even need those degrees.  It isn’t enough to state that this is shameful,  . . . .it is criminal. 

We need a whole lot of change. And we need it now.  It’s disgraceful that our planet is being so polluted and it is being done primarily because of corporate greed.   If this is allowed to continue so that our very souls also have become as polluted, then there is no point in trying to save any of us. 

We must care about one another and regain our perspective that profit and greed are only part of the mirage;   the big lie.. . . it is all illusion.   We need our dreams and desires and it is fine to want what you want,  just keep perspective and realize that we are all in this boat together.  If it goes down, we all go down.  Where there is love and respect and concern for one another, we will have a chance.    Jan.)

1 Comment »

  1. I’m now not sure where you are getting your information, but great topic. I must spend a while finding out much more or understanding more. Thanks for great info I used to be looking for this info for my mission.

    Comment by Mariana — May 12, 2013 @ 11:26 am | Reply


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