Archive for category Economy
China’s manual labor force is rapidly declining as the population ages and more people go to school. That trend, and government programs, are pushing up wages. In order to remain competitive, the country is going to have to invest an incredible amount in modernizing its industries.
The size of China, and the fact that it is only now beginning to ramp up its transformation means that there is enormous room for growth.
The great infrastructure boom in China might be slowing, but the automation boom is just starting.
In the late twentieth century, America underwent its big switch — the transformation from a broadly middle class, manufacturing-based economy, to a financially polarized, services-based economy. Union rolls plummeted as Wall Streets profits surged, and the demand for factory workers were supplanted by the need for healthcare professionals, teachers, and computer engineers.
This is a narrative that, by now, is probably familiar to you. But it’s also abstract.
The two graphs below, adapted from a new working paper by University of Pennsylvania economist Jeremy Greenwood and the Census Bureau’s Emin Dinlersoz on the rise and fall of U.S. labor unions, tell the tale more concretely. They track the fastest-declining and fastest-growing occupations between 1983 and 2002. I’ve organized them by color. Occupations that were less than 20 percent unionized are in BLUE; between 20 and 40 percent unionized are in GREEN; and more than 40 percent unionized are in RED.
THE American economy is experiencing a crisis in long-term unemployment that has enormous human and economic costs.
In 2007, before the Great Recession, people who were looking for work for more than six months — the definition of long-term unemployment — accounted for just 0.8 percent of the labor force. The recession has radically changed this picture. In 2010, the long-term unemployed accounted for 4.2 percent of the work force. That figure would be 50 percent higher if we added the people who gave up looking for work.
Long-term unemployment is experienced disproportionately by the young, the old, the less educated, and African-American and Latino workers.
While older workers are less likely to be laid off than younger workers, they are about half as likely to be rehired. One result is that older workers have seen the largest proportionate increase in unemployment in this downturn. The number of unemployed people between ages 50 and 65 has more than doubled.
We’ve moved from an agrarian through the industrial to the new information economy
Three hundred years ago the world’s wealthiest people owned land. For centuries wars were fought to control land. Kings owned land, and by controlling it captured the value of everything produced on that land. As governments developed, reducing the role of kings, land barons became the wealthiest people in the world. In an agrarian economy, where most human resources (and pretty much all others for that matter) were deployed in food and shelter production owning land was the most valuable thing on the planet.
But then some 120 years ago along came the industrial revolution. Suddenly, productivity rose dramatically by applying new machines to jobs formerly performed by humans. With this shift, value changed. The great industrialists were able to capture the value of greater productivity – making people like Cyrus McCormick, Henry Ford and Andrew Carnegie the wealthiest of the wealthy. Worth more than kings, government leaders, most states and many foreign countries.
The age of manufacturing was based upon the productivity of machines and the application of industrial processes to what formerly was hand labor. Creating tools – from engines to automobiles to airplanes – created great wealth. Knowing how to make these machines, and making them, created enormous value. And companies like General Motors, General Dynamics and General Electric were worth much more than the land upon which food was produced.
I’M reading a fascinating new book called “Why Nations Fail.” The more you read it, the more you appreciate what a fool’s errand we’re on in Afghanistan and how much we need to totally revamp our whole foreign aid strategy. But most intriguing are the warning flares the authors put up about both America and China.
How has our economy evolved in the past five years? Which industries are shrinking or growing through these challenging economic times? These are some of the questions that the Council of Economic Advisors (CEA) delves into each February in the “Economic Report of the President” (ERP). This year, the CEA worked with us to glean further insights into industry trends both during the recent recession and after its end in June 2009 .
With the data and methodology  in hand, we calculated the growth rates in industry size between 2007 and 2011. Here’s what we found: