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WHERE ARE THE JOBS THE JOB-CREATORS MADE?

June 12, 2012

Yesterday, I was discussing how hard it is for older Americans to gain new employment in today's difficult economy. I touched on the subject of whether the United States was having a jobless recovery. Many are arguing today that business should be unrestrained to do what business does best - create jobs. And no one certainly wants to restrict job recovery. This is particularly true when many, as I discussed yesterday, are older and increasingly health-impaired Americans trying to hold onto economic security.

A few months back, failed GOP presidential candidate, Rick Santorum, suggested ( to an oddly cheering crowd) that the President was a "snob" for encouraging Americans to go to college. As Politifact corrected later, the President encouraged Americans to become skilled workers, either through attending four-year college, a two-year college, or receiving skilled vocational training.

The President was right (as were the governors of almost every state who agreed with him) and Rick Santorum was wrong. An understanding of where the jobs are in the United States economy can better explain why America is becoming a country of skilled workers. For the best analysis of this topic, I recommend the January/February edition of The Atlantic Monthly.

Taking statistical data from the Bureau of Labor Statistics, historical charts show that US manufacturing growth was steady from the end of the Depression until 1999. In the ten years from 1999 until 2009 (and probably today if we had the updated statistics for 2010 and 2011), factories shed workers so fast they almost erased all the gains of the last 70 years. About 6 million US factory jobs have disappeared.

In 1999, President Bill Clinton signed the North American Free Trade Agreement (NAFTA) which opened up a free trade between the US, Canada and Mexico. Importantly, it shifted many manufacturing jobs to Mexico where cheap labor existed. Around the same time, China initiated a second wave of reform which opened up its markets to global trade. Thus, many manufacturing jobs moved to Mexico and China. Textile mills operating in the south were particularly affected by this global development. Simple manufacturing jobs that produced textiles and clothing moved overseas. Thus, many unskilled workers who had relied on these jobs to lift them into the middle class were left unemployed and with little opportunity for re-employment.

Still, America remains the number one manufacturer of goods and products in the world, although China is gaining on us. What has changed is that American factories are shifting to skilled labor and complex products and machinery. Also, computerized technology now does the work that unskilled labor used to perform. Skilled workers are required to do what computers cannot do - exercise human judgment. Thus, today's manufacturing plants do not provide the same job opportunities for those with no training past high school. And that is why it is not snobbery - but survival - that compels Americans to get training past high school.