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Friday, September 13, 2013

And The Add-on To the YoY Decline in Production Jobs

A Bloomberg article discussing the slump in US manufacturing with continued outsourcing:
The U.S. industrial comeback, an idea embraced by President Barack Obama and some economists as 12 years of factory-job losses gave way to three annual gains, is now sputtering. Even with nonfarm payrolls up 1.1 percent in 2013 to 136.1 million, manufacturing has stagnated at less than 12 million. ...
Higher taxes and employee benefits boost U.S. manufacturing costs to 9 percent more than the average of the country’s nine-largest trading partners, according to a Sept. 3 report by a team of JPMorgan Chase & Co. analysts.
 Which leaves us with this:

It's true that the Europeans have begun to complain of the US fracking energy advantage, and one can see why, because European industrial production looks much worse than that of the US:
 It's not hard to see why European employment is so bad. I expect that the latest dip was partly due to Germany's floods, but obviously the trend is entirely unencouraging.

However given our problems, our own employment levels still have only recovered to 2006 levels. The best way to describe the current trend in the US is that it has shifted sharply toward that of Europe, and what you see in European IP trends is the likely result in the US.

It is true that manufacturing is becoming globalized, but much of the globalization is focused toward manufacturing more in the country where the goods will be sold. As the net surplus incomes and savings of the populations in the developed countries decline, production will also.

I wonder if industrial production employment has declined as a percent, or per capital or something, of production. Is there a way to see if productivity has increased?
Joseph - those graphs were of industrial production. If industrial production in the EU is far below it was in 2006 and in the US is just about back to where it was in 2006, one would expect employment to follow.

Unless production type remains constant over time, it is generally not meaningful to take the ratio you are speaking of, and if you did, it would not measure productivity.
If you assume (as I do) that all the economic activity that spurred these gains was illusory (due to printed money), it's hard to see where real organic job growth can come.

Your first chart inspired me to zoom in and add a trend line.

Industrial Production Has Gone Parabolic!

It really has gone parabolic. Unfortunately, the parabola is upside down. Sigh.
Mark - thanks for the add-on. Yes, that is where my mind is going. That's why I posted the whole long history on the US curve.

As for parabolas, it appears that the EU is just a tad further along in the trajectory than us.

Why would we not follow the same course? Not exactly, I think, because our curve is somewhat sustained by cheaper energy. But it appears to me that the dynamics are similar, and that the natural curve, if all else continues basically with today's parameters, is for the IP curve to slowly decline over time starting about five years from now.


Not exactly, I think, because our curve is somewhat sustained by cheaper energy.

My concern in this area is how much we sprawled as a country when gasoline was closer to $1 per gallon.

$4+ gasoline imposes serious restrictions on a minimum wage worker's effective maximum employment radius from the burbs. Sigh.
September 3, 2013
Sprawl Is Still Sprawl, Even If It's 'Green'

Does the lead photo with this article look like a good place to put over 1,700 new homes on a little over 600 acres? What if I told you it was working agricultural land in a remote location 45 miles north of San Diego and 61 miles south of San Bernardino, California? What if I added that the developer is doing everything it can to make the project green?

Forehead. Desk. Whack. Whack. Whack.
Most sprawl is due to local politics rather than cheap energy. Meaning it's more of a structural result than an economic result.

One could argue that cheap energy enabled us to create economically idiotic political structures. I would argue that cheap energy PLUS a baby boom that was expected to last forever enabled such political idiocy. But going forward, we will deny any political idiocy and instead continue on with the economically-stupid "othering" that is the bread and butter of politics.

(And yes, I consider "means testing" a form of othering.)
Look, the notion that manufacturing is going to "return" jobs to the USA is beyond retarded.

You can expect it to happen about the same time we regain all those "farm" jobs we've lost in the last 150 years. :-/

The US Manufacturing sector, money wise, is so huge that, if it were an economy by itself, it would be the #3 economy in the world, tied with Germany.

So manufacturing hasn't disappeared, it's just getting done with less people -- as mechanization reduced farm employment to 2-5% from 80% ca. 1870, so, too, can you expect robotics/automation to reduce factory employment to 2-5% of the population.

America is the bleeding edge of the post-industrial, 3rd economy, an "IP & Services Economy", where money comes from creating and selling IP and services.

No, that's not "McJobs", unless all you have to offer is "McSkills" -- which I'll grant may be the case if you expected public schools to teach diddly squat to you or your kids.

But if you use some sense, and have some smarts, you can definitely find jobs that pay far better than flipping burgers or stocking shelves at WalMart. And just as many of the jobs in this IPSE can be expected to be highly paying as in any previous economy, if you're savvy and able to figure out what people want and need.
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