Yes you heard me.
No not that war. Nope not that one either. Nope not that one. Yes… *that one*! The United States today now employs less people in manufacturing than anytime since 1941. This is even more staggering when you consider there were 132M Americans in the 1940 census… and we have a good bit over 300M today. So more than double the population (and I’d model double the work force), but less of these type of jobs.
An amazing chart in John Mauldin’s weekly letter showing why we are having increasingly jobless recoveries.
Where there once was a massive uptick in employment when the manufacturing economy kicked in (as it has done the past 12 months), now we have the surge in activity and profits to shareholders – but much of the resultant employment pickup is in some distant land. Of course those that remain within our borders are much more productive worker bees as well.
This is either an incredibly debilitating chart (if you are labor) or pleasing (if you are an owner of the means of production – “darn expensive Americans”). Since a lot more Americans are labor than owners of capital you can see the effects on the larger society… one of the many underpinnings of the income inequality chasm that has burst to the scene the past few decades.
Either way, it is jaw dropping. We can see the great sucking sound Ross Perot warned us about in the early 90s really took off in the 2001 recession where 3M plus manufacturing jobs went away… and during the 4-5 year ensuing recovery in the general economy, there was no bounce in mfg jobs as has been the history of the country earlier in the century. Then when this Great Recession began, another 2.5M or so washed away. If the pattern of 2003-2006 repeats, these won’t come back in large number either – they are permanently affixed in a factory town in China. These are the structural changes I often speak of.
Whatever happens long term, America is running the largest economic petri dish ever known to man. In theory the Chinese middle class will rise and demand goods from America (that’s what the ivory tower economists say) and we all live happily ever. But they never quite connect the dots to ask why they would demand goods from us, when the means of goods production is increasingly headed *there*. Or heck, buy from Germany.
Viva la Service Economy, because frankly that’s what we’re hitching the entire (labor) wagon to.
Chart below courtesy of Calculated Risk blog