American Jobs

[via Anish] WSJ has an article by Robert Reich which puts the US jobs scenario in context:

It’s true that U.S. manufacturing employment has been dropping for many years, but that’s not primarily due to foreigners taking these jobs. Factory jobs are vanishing all over the world… What happened to factory jobs? In two words, higher productivity…Manufacturing is following the same trend as agriculture. As productivity rises, employment falls because fewer people are needed.

Want to blame something? Blame new knowledge. Knowledge created the electronic gadgets and software that can now do almost any routine task. This goes well beyond the factory floor. America also used to have lots of elevator operators, telephone operators, bank tellers and service-station attendants. Most have been replaced by technology. Supermarket check-out clerks are being replaced by automatic scanners. The Internet has taken over the routine tasks of travel agents, real-estate brokers, stock brokers and accountants. With digitization, high-speed data networks and improved global bandwidth, a lot of back-office work can now be done more cheaply abroad. Last year, companies headquartered in the U.S. paid workers in India, China and the Philippines almost $10 billion to handle customer service and paperwork.

The problem isn’t the number of jobs in America; it’s the quality of jobs. Look closely at the economy today and you find two growing categories of work — but only the first is commanding better pay and benefits. This category involves identifying and solving new problems. Here, workers do R&D, design and engineering. Or they’re responsible for high-level sales, marketing and advertising. They’re composers, writers and producers. They’re lawyers, bankers, financiers, journalists, doctors and management consultants. I call this “symbolic analytic” work because most of it has to do with analyzing, manipulating and communicating through numbers, shapes, words, ideas. This kind of work usually requires a college degree.

Over the long term, symbolic analysts will do just fine, as long as they stay away from job functions that are becoming routinized. They will continue to benefit from economic change. Computer technology gives them more tools for thinking, creating and communicating. The global market gives them more potential customers for their insights.

The second growing category of work in America involves personal services. Computers and robots can’t do these jobs because they require care or attentiveness. Workers in other nations can’t do them because they must be done in person. Some personal-service workers need education beyond high school — nurses, physical therapists and medical technicians, for example. But most don’t, such as restaurant workers, cabbies, retail workers, security guards and hospital attendants. In contrast to that of symbolic analysts, the pay of most personal-service workers in the U.S. is stagnant or declining. That’s because the supply of personal-service workers is growing quickly, as more and more people who’d otherwise have factory or routine service jobs join their ranks. Legal and undocumented immigrants are also pouring into this sector.

But America’s long-term problem isn’t too few jobs. It’s the widening income gap between personal-service workers and symbolic analysts. The long-term solution is to help spur upward mobility by getting more Americans a good education, including access to college. Unfortunately, just the opposite is occurring. There will be plenty of good jobs to go around. But too few of our citizens are being prepared for them. Rather than fret about “losing jobs” to others, we ought to be fretting about the growing number of our young people who are losing their footing in the emerging economy.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.