Jobs and the Job Market

Top 35. Oct 19, 2004 2:06 PM

» Normxxx - Re: Re: Hiring on the shelf

In response to Re: Hiring on the shelf posted by Kirk:

That is just an admirable explanation of why hiring plans were 11% higher in April.

-- posted by Normxxx

Top 36. Oct 21, 2004 9:41 PM

» Normxxx - 100,000 engineers a year

100,000 engineers a year

By Randy Buss, Der Invest Informant | 21 October 2004

The recent politic-talk show on TV entitled "Hard but Fair" here in Germany had a mix of guests from industry and politics debating the current atmosphere in which the lowly worker finds himself here in Germany. Opel/GM threatening 10.000 jobs, Karstadt threatening 6.000 jobs, etc. etc. Everybody is laying off or threatening to.

What they didn't mention, but which is known to the Der Invest Informant readers, is that this deflationary debate is a truly a global issue. And it is not set to stop anytime soon. One of the guests, representing a global manufacturer of auto parts who has gone offshore to make those parts and no longer employs in Germany, made the following example:
<img Align="Left" src="http://www.321gold.com/editorials/buss/b...">

They manufacture in China now. And all the politicos on the show went wild and said, "You can't do that" or "You can't compare China to Germany" or "You are unpatriotic." Well, he basically answered "Go stuff yourselves people - this is a globalized world and we either do that to compete in a global world or we close shop completely." And, he mentioned, everybody wants a nice, affordable Mercedes Benz to drive. Well, he said, "if we would produce our parts in Germany and sell them to MB, then the price of that new SLK 300 would rise by 25-30% and nobody would buy it and then MB would go out of business." So basically he's saying "People, get real." And then somebody said "Well, you can't compare a German engineer to a Chinese worker." Again, bigotry and wrong. His answer: "Put the raw material in, watch and control the process, out drops the widget and it's packed and freighted." It does not take a rocket scientist to do that! A German, a Chinese or a Mexican can do that. And they are doing it. And just for your info, in China they produce 100,000 engineers a year. That is 10 times the US. And they are better educated. So, please, get real.

The crux is: the politicians who are paid to look ahead and form national policies have been sleeping and missed the reforms which were required years ago. Reforms have a latency period of years, if not decades, before they start to take hold and thus we in the West failed to get on the boat in time and make the necessary changes. We are starting to pay the heavy price of that missed opportunity. Equally, human behaviour is to live in denial. The good times will forever be around. Well, I say, the good times are starting to wane.

And to note: Anybody here speaking half-way passable Chinese seems to have a job for life. LOTS of Chinese here on visits to learn the manufacturing sector... I think it was Lenin who said "The capitalists shall sell the rope from which they hang." Or was it that famous German Karl Marx?

21 October, 2004
Randolph Buss

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.

-- posted by Normxxx

Top 37. Oct 21, 2004 10:46 PM

» birdman69 - Bush afraid of a cotton T-shirt? Re: Where are the jobs?

Mr Bill, I am just going to post what I sent to the local news on this one :
I first contacted your news desk on the afternoon of the 21st to apprise you of the presidential rally being significantly lacking in support for the handicapped that attempted to participate (which happens to include my favorite disabled veteran, my wife). I further found after waiting through the lines and gaining admission that my president seems to either be offended, or threatened by a cotton t-shirt. The imprint on this shirt said exactly " My Job went overseas and all I got was this lousy t-shirt". I was detained by the Secret Service, and un-invited in short order. Had the choice of this shirt been an intentional choice I may have understood the reaction, but realization came much later. I had been up until 7pm. this evening an ardent supporter of president Bush, now I have researched why this shirt caused such consternation, and I find that most likely I will be voting a different way.

-- posted by birdman69

Top 38. Oct 24, 2004 2:13 PM

» Normxxx - Panhandlers find a golden opportunity

Gold rush

Panhandlers find a golden opportunity in trash in Mumbai's jewellery market district

By SUHIT KELKAR | SATURDAY, OCTOBER 23, 2004 01:12:50 AM
The TIMES of INDIA

It may be the dust collected from a lane in Bhuleshwar but Liaqat Shaikh, a sweeper, will give it his unblinking concentration. Not so strange. There is gold to be found. The gold dust released by the polishing of jewellery sticks to artisans' clothes, hair and skin falls on the road as the artisans walk out of the shop. People like Shaikh make a living out of selling this gold dust.

Collecting it is a tedious process. Early morning, the street is swept till a good panful of dirt is collected. Alternatively, a cleaner might scoop dirt from gutters and house gallis to collect the gold dust present in bath water. An hour is spent removing the large bits of trash, and then washing the remainder in a shallow utensil to remove the gravel, nails, staple pins and pieces of glass. The remaining fine dust is washed and swirled, till its golden-coloured portion separates. This stuff is impure, but it is gold and plenty of jewellers will buy it.

A large number of people live off this trash in the city's jewellery markets like Bhuleshwar, Opera House and Zaveri Bazaar. For some, like the 38-year-old Shaikh, this skill is taught by father to son. The line of work was supposedly dominated by people from North Indian towns such as Aligarh, Agra, and Meerut, but in recent years, Tamil speakers such as Murgan Nadiyar (name changed) and Balaji have started it too. Nadiyar got into this because he was jobless. These 'gold scavengers' say that the business is territorial. Streets are common ground but the house gallis are defended from all comers. The work requires little investment -- a shallow, wide-rimmed utensil, a soap, grooms for sweeping the roads and a magnet to separate the nails from the dust. People prefer 'gold scavenging' to 'regular' work because it earns as many as Rs 6,000-7,000 a month ($131.52-$153.44), according to Shaikh. A gold scavenger might collect between 250-500 milligrams gold a day ($2.58-$5.15). Impure gold dust sells at Rs 470 per gram ($10.30).

The work has a downside. The process of gold purification involves pollutants such as acid and mercury. Sundar bruises his hands by glass pieces and nails. People who hunt for gold in a sewage are exposed to an unhygienic environment. Shahid says that he visits a doctor reguarly for anti-tetanus shots and medicines. Yet they love their work.

-- posted by Normxxx

Top 39. Dec 6, 2004 7:26 PM

» Normxxx - What happened to the middle class?

What happened to the middle class?
Retail, auto sales, job numbers suggest tougher times

By Jennifer Waters, CBS.MarketWatch.com | 5:58 PM ET Dec. 4, 2004

CHICAGO (CBS.MW) -- Could it be that people are just tired of buying things on the cheap at Wal-Mart?

The recent spate of sales figures and job numbers underscore an emerging picture for the economy: the gap between the haves and the have-nots is widening amid a draining of the middle-income ranks.

"The longer-term pattern is that the rich are getting richer," said Standard & Poor's Chief Economist David Wyss. "It's not so much that the poor are getting poorer, but there's a hollowing out of the middle class."

As fortunes improve for certain sectors of the population, so too do their tastes for autos, apparel and home furnishings to leisure and hospitality choices, leading to a "buying up" to better and higher-priced merchandise and experiences.

At the same time, the higher prices at the gas pump and for home energy bills are pinching the monthly budgets of lower-end consumers -- and ultimately showing up in receipts at the retailers who cater to them.

"There's definitely a trading up going on," said John Silvia, chief economist at Wachovia Securities. Even in his hometown of Charlotte, N.C., he said he's seeing the upscaling of nearby malls and shopping centers with higher-end retailers, and restaurants that people are standing in lines to get into.

It is no secret that consumers have spent much of the year as a divided bunch. For months now, sales at luxury retailers such as Neiman Marcus (NMG.A: news, chart, profile), Saks Fifth Avenue (SKS: news, chart, profile) and Nordstrom (JWN: news, chart, profile) have far outpaced their cheaper knock-offs such as Lord & Taylor (MAY: news, chart, profile) and Sears Roebuck & Co. (S: news, chart, profile).

And the discount segment -- the recession's savior for consumer spending -- has seen its fortunes swing in recent months to the downside. Wal-Mart Stores (WMT: news, chart, profile) may well have touched a trough last month when sales at stores open longer than a year -- a key industry metric known as same-store sales -- rose an embarrassing 0.7 percent, despite the inclusion of what was supposed to be a post-holiday rush.

On Saturday, Wal-Mart reported another round of results suggesting sluggish sales, a harbinger that the holiday season may be in bigger jeopardy than anyone thought.

Many are quick to point out that what happens in Wal-Mart stays in Wal-Mart -- that Wal-Mart's own admission that it failed miserably on the promotional front in the Thanksgiving week is reason enough for such a shortfall from its own sales targets of a 2 percent to 4 percent gain.

Others suffer, too

Still, it became clear on Thursday when the rest of the discounters released their numbers that though Wal-Mart may be at an operational crossroads, there is something bigger going on out there.

On Thursday, the nation's largest chain stores cumulatively tallied a lackluster 1.7 percent gain in same-store sales -- the worst showing since August. BJ's Wholesale Club (BJ: news, chart, profile), Big Lots (BLI: news, chart, profile), Dollar General (DG: news, chart, profile) -- even Costco Wholesale Clubs (COST: news, chart, profile) -- missed Wall Street expectations for same-store sales for the month, some by very wide margins.

However, Target Corp. (TGT: news, chart, profile), considered a rung or two above Wal-Mart on the discount-store ladder, reported a 3.2 percent increase in year-over-year receipts, in line with projections.

"People are tired of shopping down," said Patty Edwards, retail analyst at Wentworth Hauser & Violich. "Wage growth and employment growth is at the higher end for many people now and they're saying, 'I don't have to shop down anymore.'

"The catch phrase of the year is 'affordable luxury,'" she added.

And there are signs of the great divide elsewhere: Ford Corp.(F: news, chart, profile) and General Motors Corp.(GM: news, chart, profile) both saw sales retract in November -- mostly at the wheels of older designs -- and promptly trimmed production of certain models. At Ford, for example, sales of the Ford Focus plunged 39 percent while the flagship Ford F150 pickup grew almost 3 percent.

Much was the same at GM, which touted Cadillac's sales while pulling the plug on models such as the Chevrolet Blazer and the GMC Jimmy sport utility vehicle.

On a conference call with analysts Thursday, GM's Paul Ballew, head of market and industry analysis, said that "growth in trucks and at the luxury end of the market is coming at the expense of some of the traditional car segments.

"On record pace for luxury vehicle sales, a comment that we've made month in and month out, we are continuing to be very pleased at the growth," he said. "We do anticipate that luxury brands will sell over 1.8 million units in the U.S. market for the first time ever this year and as we look at the results for November, nothing in that performance would dissuade us from that playing out.

"We are looking right now at a pretty healthy month for luxury brands in the U.S. market," Ballew added.

Economists are quick to point out that, of course, the lower-income consumers would pull in their purse strings as the higher energy costs affect their monthly budgets while higher-income consumers barely notice them. But that doesn't explain away the sales shortfalls at department stores like Macy's or Carson Pirie Scott or Hecht's or the slowdown in sales of the Ford Taurus.

What job report shows

The divide even showed up in Friday's disappointing job numbers. For the third straight month, manufacturing -- the bread and butter of the middle- to lower-middle class -- lost jobs, exclusively in the higher-paying computer product and auto production segments.

After significant job gains from February through May, manufacturing employment has not moved, according to the Labor Department.

As disconcerting was the loss of 16,000 retail jobs last month -- a time when retailers are typically staffing up for the holiday shopping period.

But average hourly earnings rose 1 cent to $15.83 in November, making for an annual increase of 2.4 percent, while the average work week dwindled for the first time since August.

"We're seeing a small percentage of the population getting a larger percentage of the income," Northern Trust's Chief Economist Paul Kasriel said. The "real incomes" of the Wal-Mart demographic "are not growing," he said.

John Challenger, whose name is on the door of job specialists Challenger, Gray and Christmas, agreed. "The jobs that are growing are more skilled jobs," he said, such as in health care. "What we've seen is that the unskilled to semi-skilled jobs that used to pay much more money no longer do. For the middle-class, where there were once many jobs for the semi-skilled, they have become few and far between."

Said Wachovia's Silvia: "Those who have jobs are getting the income gains -- wages are moving up and they're spending them."

Jennifer Waters is the Chicago bureau chief for CBS.MarketWatch.com. Shawn Langlois in San Francisco and Rex Nutting in Washington, D.C., contributed to the report.

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

-- posted by Normxxx

Top 40. Dec 7, 2004 9:24 AM

» Normxxx - JOBS-DATA DISTORTIONS

JOBS-DATA DISTORTIONS FRUSTRATE EASY COMPARISONS

By JOHN CRUDELE, NYP | December 7, 2004

BACK in the 1970s, Western economists would chuckle at the way the Soviet Union compiled its economic statistics.

Without fail, for instance, the Kremlin would announce record annual wheat crops even though there were reports nightly on TV about severe food shortages in that country.

That was fraud.

Now consider the U.S., circa 1990 through 2004. I picked those years for a reason — so you won't think either political party is beyond gilding the economy.

There's no obvious fraud involved here.

But changes in the way Washington compiles economic statistics have certainly caused the figures to be misleading. They are numbers on steroids.

At the very least today's official evaluations of the economy may not be comparable to those in the past, rendering useless the historical trends that economists like to follow.

In fact, the chutzpah showed in some of these changes may be causing a disconnect between how Americans feel about the economy — gauged through things like consumer-confidence surveys — and what Washington says is happening.

Even worse, by changing the way it compiles its statistics, Washington could be leading astray economic experts as well as policy makers at the Federal Reserve.

This column, the second in a series about the new tricks of the economics trade, will continue to look at the sleight of hand used in the employment figures.

Last Friday, the U.S. Bureau of Labor Statistics reported that 112,000 jobs were created in November. There's no arguing with the fact that 112,000 was a disappointing amount.

It was far below the 200,000 jobs that the experts had been predicting, and was made worse by a large reduction in October's growth. The 112,000 new jobs aren't even enough to keep up with the increasing population.

Worse, Washington could only come up with those 112,000 jobs by adding 54,000 positions it believes-— but can't prove-— were created by newly formed companies.

Another way to play with the numbers is with the seasonal adjustments. Adjusting for seasonal trends is perfectly legitimate. More jobs are usually created in September, less in January. If you didn't make allowances for the seasons, then all economic statistics would spike and dive.

But like the seasons, these adjustments are intended to come full circle. An increase in one month is supposed to be offset by declines in another. The sum total of the gains and losses — over the full year — should be zero.

The Labor Department, however, started doing things a little differently this year. This government agency — beholden at the top to the president — began making seasonal changes each and every month instead of just two times a year.

This isn't a question of whether the department is right in doing this or whether the jobs figures will be more accurate with monthly seasonals.

And it isn't even about hiding the change from the public since you can — if you know where to look — read about it on the Bureau of Labor Statistics' Web site.

Making substantial changes like these means there is no way this year's figures can be compared with last year's or those from a decade ago. Most analysts who have been focusing on job growth are looking at two issues — positions that companies are sending overseas and the quality of the jobs being created here.

The latter issue is often given as the explanation for why Americans are in a foul mood about the job market even though employment growth seems modest.

But maybe something else is involved. Perhaps Americans are seeing a reality in the job market not represented by the stats.

Ah, the Soviets would be jealous.

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

-- posted by Normxxx

Top 41. Dec 25, 2004 4:46 PM

» Normxxx - JOBS IN THE NEXT 5 TO 15 YEARS.

JOBS IN THE NEXT 5 TO 15 YEARS.

The long-term outlook for jobs and the workforce will affect you... whether you’re an employee or employer, looking for a new job or content where you are, hanging out a Help Wanted sign or laying off, just starting out or nearing retirement age.

Today’s sluggish job market won’t last. Labor supply will tighten dramatically within just a few years as job numbers grow an average of 2.1 million a year for the next decade. Workforce growth will lag. It’ll average 1.7 million a year, taking into account both immigration and native-borns getting first jobs.

Productivity gains are likely to ease in coming years, so... The economy won’t be able to regain the swift pace of the 1990s. Figure on productivity gains averaging from 2% to 2.3% from now till 2015 or so, then slipping below 2%...about the same increases as in the 1970s. What’s more, inflation and wage hikes will run a little higher than they have in the past decade, dampening rates of real growth.

Adding to the challenge of finding and keeping good workers: A huge wave of retirements as baby boomers begin turning age 65. And less room for labor force participation growth as the share of women working outside the home continues to slip from its 1997 high. And welfare reforms, now fully implemented, won’t yield much more fruit. Much of future job growth will come in a few metro areas... counties with the biggest population hikes over the next 10-25 years. An exception: Older cities, which will lose population but get jobs. Land downtown will be more valuable for commercial use, displacing homes. Similarly, population will grow fastest in outer suburbs, whereas jobs will rise fastest in inner suburbs.

Radial roads, beltways and airports outside cities will add to sprawl and swell the ranks of commuters. The South and Southwest will dominate the biggest-gainer list, according to NPA Data Services Inc., an Arlington, Va., research firm: California, Texas, Florida, Georgia, Virginia, Arizona and Colorado. Metro areas with million-job growth by 2030: Atlanta, Houston, Phoenix-Mesa, Dallas, Washington, D.C., L.A.-Long Beach, San Diego, Seattle-Bellevue-Everett, Chicago, Orange County, Calif., Denver, Tampa-St. Petersburg-Clearwater, Orlando and Boston. Other big gainers include Minneapolis-St. Paul, Las Vegas, Sacramento and Austin-San Marcos.

Areas with the fastest job growth now to 2030 will be in Florida: Punta Gorda, Orlando and Naples. Jobs there are likely to grow nearly 3% per year on average, although from a relatively small base. Also: Myrtle Beach, S.C. Provo-Orem, Utah. Las Vegas, Nevada. In Arizona...Phoenix-Mesa. In Texas...Laredo, Austin-San Marcos and McAllen-Edinburg-Mission. In Colorado...Fort Collins-Loveland. And in Florida...Fort Pierce-Port St. Lucie and Sarasota-Bradenton. All of the 30 fastest growers are states in the South and West. States with above-average population growth now to 2030 straddle the Rocky Mountains, running from Idaho to the Mexican border. Others outpacing the average...Alaska, California, Texas and Florida.

States below the average will be concentrated in the Northeast and North Central regions. Only a few will be outside those areas. The slowest gains will come in New York, Connecticut, Pennsylvania, New Jersey, Illinois, Ohio, Massachusetts, Iowa, West Virginia and Rhode Island. But no state will lose population between now and 2030.

Service industries will generate most of the new jobs. Fastest growth area: Health care... physician assistants, physical therapist aides, health record keepers and home care aides. In addition, computer network systems and communications analysts, software engineers and human services and social service workers. Jobs with the fastest-growing wages will include software publishers, consultants to management, home care aides for the elderly, employment services workers and specialists in career training and ambulatory care. Other top gainers: Child day care workers, Internet service and Internet data processors and experts in the design of computer systems.

There’ll be fewer manufacturing jobs in the next 10 years, but nowhere near the losses of the previous decade. Employment will slip about 1%...not much compared with a nearly 9% drop over the past decade. Productivity gains will keep OUTPUT growing despite the job losses.

That’s one reason unions will try to organize service workers. They have had some success with low-wage workers...janitors, home health care aides, etc. Recruiters will target entry-level workers and minorities, particularly Hispanics, Asians and Pacific Islanders. Unions are embracing structural changes to boost their prospects. They’ll try mergers along industry lines to increase bargaining clout. And they’ll form alliances with other groups that have common interests: Environmentalists, immigrant rights organizations and antipoverty groups. They’ll concentrate on state and local lobbying, pushing hard for higher minimum wages, health care mandates and greater job security. Nevertheless, unions will be lucky to simply hold their own. Their membership ranks have thinned from 20% of the workforce in 1983 to less than 13%. Among nongovernment workers, only 9% have union cards. Employment trends work against a turnaround in union membership: Fewer blue-collar workers, more part-timers and independent contractors.

More Americans will compete directly with overseas workers in a global economy with widespread trade in goods and services. Barriers to trade will diminish under new free-trade pacts and agreements reached at the World Trade Organization. Time and space are shrinking: the result of the communications revolution, which makes possible the quick, low-cost transfer of vast amounts of data around the world. And of storage and transportation innovations, such as automated warehouses, automated intermodal container systems, huge, fast cargo ships, and radical improvements in all modes of land and air transportation. The development of global manufacturers, retailers, and capital markets is integrating the world’s economies.

Winners will include anyone associated with imports or exports: dockworkers, inspectors, warehouse workers, truckers and dispatchers. Experts of all types...specialists who can provide advice and training in developing markets abroad on advertising, franchising, financing, legal services, design, technology, education and much more. And high-tech industries: IT, automation, biotechnology, telecommunications, nanotechnology will expand in the U.S. and find markets elsewhere.

Among the losers will be many labor-intensive manufacturers: Textile and apparel producers, destined to all but disappear, moving mainly to Asia, especially China. There’ll be few survivors: Specialists catering to the high-fashion and industrial fabric market. Furniture makers, suffering a similar fate. Producers in Asia are sure to capture the mass market, leaving only specialists standing (but only briefly), until even the high-end 'specialized' markets are automated. Auto parts manufacturers-- they’ll lose out. And carmakers. Low- and high-end imports will keep gaining market share, at an accelerating pace. Fertilizer and petrochemical makers. Production is moving abroad, prompted by rising costs of raw materials and environmental constraints. Producers of basic steel products...beams, slabs and sheet metal. Mills in China and eastern Europe are grabbing more of that market. U.S. companies will focus on high-end products...specialty steel, etc.-- until that's gone too.

Some farmers and other food producers and food processors will remain; some (very large ones) will even thrive. Commodities such as cotton, tobacco, beef and sugar are declining under rising imports. Farms (and other food producers) continue to integrate into field-to-supermarket production systems that require fewer workers. These 'food production systems' will become increasingly distributed worldwide. But the 'fresh' food industries-- meat packers, the fish industries, fresh produce growers and handlers, and much other food production and processing will still need cheap local labor. That’s sure to sustain steady demand for immigrants and seasonal workers...at least for the foreseeable future.

Outsourcing will become an even hotter political issue...as more professional jobs are done overseas. Much of the outsourced work will be routine...reading X-rays, writing computer codes, doing product design, preparing tax returns-- but not all, by a long shot. [Major elective surgery is now being outsourced to such places as 'Medical Centers of Excellence' in India and South Africa.] Most economists contend that the U.S. is a net winner (so far), gaining as much as $1.14 in direct benefits per $1 invested in outsourcing. Outsourcing frees capital for investment by cutting costs for U.S. companies. That allows for business expansion and new jobs. Consumers pay less for goods and services, increasing buying power. And jobs abroad provide opportunities for U.S. firms to sell exports.

Between 1983 and 2003, outsourced jobs have increased to 10 million from 6 1/2 million, according to the U.S. Bureau of Labor Statistics. Jobs insourcing, however, as a result of strong foreign-direct investment in the U.S., has grown to 6 1/2 million from 2 1/2 million in this same time period. The net outsourced jobs figure peaked in the early '80s at nearly 4 million, then declined to a trough of roughly 2 million in the early '90s, before its recent gradual rise to just under 3 1/2 million. (The latest data is for 2001.) Expressed as a share of all U.S. private-sector employment, over the last 15 years insourcing employment has risen from just 3.0 percent to 4.8 percent. Since the insourced jobs are higher paying than outsourced jobs, the net labor income gained/lost tends to be a wash.

U.S. OPERATIONS AS A GLOBAL PLATFORM: Case Study. Philips Medical Systems Locations: Andover, Massachusetts

In 2002, Philips Electronics, headquartered in the Netherlands, made the unique decision to move its worldwide medical systems business to a new global headquarters in Andover, MA. Why?

Philips Medical Systems (PMS) is the world's second largest manufacturer of diagnostic-imaging and patient-monitoring equipment. The large U.S. market for medical equipment is among the world's most dynamic and competitive. Accordingly, for many years PMS had invested heavily in its U.S. manufacturing and R&D operations. The decision to move the global headquarters to the United States was based on proximity, both to its best customers and also to the bulk of its capacity and employees. Today, PMS global business is successfully run from the United States. All country organizations and business lines report to Andover. All senior management, including the division CEO, is located there. Over 10,000 Americans work for PMS in a wide range of skilled jobs such as engineers, technical sales and service, and marketing. Beyond its U.S. customers, PMS U.S. manufacturing facilities export over a billion dollars of production to regions all over the world. And since locating its global headquarters in the United States, PMS has developed new R&D partnerships with several universities and the Cleveland Clinic.

In the last ten years — a period which included NAFTA, the emergence of China, and the high-tech revolution — 18 million new jobs were created, even with the 2000-02 economic downturn. Yet behind those 18 million new jobs, the economy actually wiped out a staggering 339 million old jobs while creating an astonishing 357 million new jobs.

The most striking way to identify this relative success is to compare Europe and the US over the last 25 years. At the beginning of this period the employment rate was higher in Europe than in the US, sitting at 63-64 per cent. At the end of the period employment was 74 per cent in the US, around 60 in Europe. If Europe had performed as well as the US, they would have created about 35 million more jobs. A huge realized US advantage for economic growth and social progress.

But more outsourcing will hurt individual workers. Hardest hit: People who are in low-profit manufacturing and low-skill service jobs that can be done anywhere. Many displaced workers will find new jobs in growing industries that offer greater opportunity and higher pay... part of roughly 2 million U.S. job changes taking place every month.

The overall U.S. labor supply will tighten gradually at first. Job growth in the current recovery has been slow...much slower than in a typical rebound. The unemployment rate is not likely to slip below 5% for at least a year, keeping wage pressures from increasing. But the culprit has not been outsourcing; rather, it has been the rapid growth of automation and the application of the systems approach, resulting in markedly higher productivity in areas hitherto relatively impervious to change. Next on the agenda: the medical profession-- from top to bottom (something doctors have been running scared of for years). After that, education. Who knows? Maybe even Government!

By 2011...a huge shift in the picture as the oldest baby boomers hit 65. The 78 million Americans born in the 18-year span of 1946 to 1964 will be hard to replace. One reason: Only 90 million Americans were born in the 25 years that followed...not enough to fill baby boomers’ shoes AND handle job growth, including 20 million white-collar jobs by 2013. Immigrants will help make up the difference, accounting for 20% of new workers and coming mostly from Mexico, Central America and Asia. Many employers will have to provide on-the-job English-language programs and make other accommodations for workers who aren’t fluent in English.

The percentage of college grads won’t grow much, despite the need for workers with advanced skills, particularly in math and science. By 2020, about 33% of workers are likely to have a college degree. That’s a gain of only three points and a leveling off from earlier gains. Take a look at the age profile of the workforce in 2012. Older employees will rise nearly 50%...those age 55 and older. Their numbers will total 31 million, up by about 10 million from now. Prime-age workers will grow only about 5%...those ages 25 to 54. That will be an increase of about 5 million, for a total of 106 million. Entry-level workers will increase about 9%...ages 16 to 24. There will be 24 million of them in the workforce, a gain of 2 million.

Changes in the workforce will drive changes in job benefits: More options for older employees to keep them from retiring... part-time work, job sharing, flextime and telecommuting, for example. Same for parents with young children. Plus day care benefits. Employers will be more involved in education by hiring interns, promoting higher K-12 standards and working more closely with K-12 and college programs. Better training will be a must to improve skills and stay competitive. Workers will assume more responsibility for quality and quantity of output rather than just time-on-the-job. Employers will need to better identify and define work tasks and measureable outcomes.

Overall, workers will also take more responsibility for benefits... a change already being pushed by employers who are facing soaring costs. More of the expense of health care will fall to employees as companies are compelled to ratchet up copayments and deductibles. There’ll be more opportunities to save in tax-favored savings accounts. In 1960 out-of-pocket payments covered 55% of total medical costs, but in 2001 only 17%. Meanwhile health insurance payouts, mostly employer-provided, are up from 21% to 35% of the total while government's share jumped from 21% to 43%. Employer health insurance payout percentages are likely to slow or remain about the same, government's share is likely to increase, but at a slower pace, and out-of-pocket payments are likely to substantially increase, but the percentage of coverage will only increase slowly (i.e., medical costs will continue to increase at much more than the rate of inflation).

Defined-benefit retirement plans will all but disappear, replaced by 401(k)s and other forms of defined-contribution plans. Workers will face decisions on how much to save and where to invest. Social Security and Medicare will be revised to assure funding for today’s 40-year-olds. A hike in the Social Security retirement age for people who are just entering the workforce is one likely change.

Some trends that weren't predicted in 1900 had a BIG impact on jobs.

Here are a few examples of trends that forecasters didn't predict back in 1900, according to futurist Robert H. Cartmill in his book The Next Hundred Years—Then and Now:

Airplanes replace trains & ships for long distance travel

Although futurists were predicting that man would take to the skies in the 20th century (and the Wright brothers, in fact, began flying gliders in 1900) no one predicted that airplanes would play the role they now do in travel. In 2000, almost 9,000,000 airplanes took off from American airports, according to the Bureau of Transportation Statistics. Airplane travel has led to all sorts of new jobs in formerly unheard of industries, including jobs as aeronautical engineers, airplane manufacturers and mechanics, flight attendants, ticket and gate agents, and even chefs in charge of preparing pre-cooked airplane meals. New jobs also sprouted as a result of a surge in tourism, including jobs as tour organizers and travel agents.

Movies take over from vaudeville as a major form of entertainment

With the advent of silent film and then the talkies, motion pictures became a new art form, calling for actors, directors, cinematographers, script writers, gaffers, and grips. New job opportunities opened up in managing and tending to movie theatres as well.

Radio & TV become the main sources of news and entertainment

While some prognosticators may have been wise to the fact that radio would soon follow the wireless telegraph and the telephone, (and John Watkins actually predicted the development of the television) no one foresaw the sweeping significance of these inventions in the 20th century. Radio and television changed our lives completely and created new jobs in broadcasting, acting, script writing, producing, directing, and advertising, not to mention radio and television repair. It also reduced our participation in other forms of entertainment, cutting jobs in other sectors.

Small motors revolutionize life at home

Although small motors existed in 1900, it was the large engines that most people knew; huge engines that drove railroads, steamboats and large factories. No one predicted how the small motor would be adapted to a million different uses at home, leading to common household appliances such as washers, dryers, refrigerators, freezers, vacuum cleaners, blenders, lawnmowers, electric drills and hedge trimmers, to name a few. These new items created many jobs not only in manufacturing, but in appliance sales and repair. Timesaving devices at home also eliminated the need for household servants and freed women up to join the labor force, further reshaping the job market.

[Normxxx Here: Today, this revolution is being repeated with the computer-on-a-chip. These chips are increasingly being found in every product imaginable in order to make 'things' more 'user friendly.' This will increasingly enable people to dispense with the need to hire skilled workmen for many routine tasks. ]

Long-playing records come into vogue to be replaced by tapes & CDs

Even though the phonograph was invented in the late 1870s, it was still regarded as a novelty in 1900. People depended on instruments played at home for their music. No one predicted that the phonograph would lead to widespread use of commercial recordings and a thriving music industry employing musicians, recording technicians and even record store owners and managers.

Consumer credit changes our buying and spending habits

Back in 1900, you didn't buy anything unless you could pay for it. But in the 20th century consumer credit would evolve to include lay-away programs, purchases on credit, mortgages, credit cards, and a vast array of financing programs. A new financial services industry arose, along with occupations such as loan officers and credit counselors.

Computers transform our lives at home and at work

Although the government and business used sophisticated tabulating machines in 1900, no prognosticators predicted anything like the computer, which would dominate both our work and home life by the end of the 20th century. The computer, and later the internet, spawned an array of new occupations, including hardware and software engineers, programmers, computer support specialists, network administrators, systems analysts and web designers.

Predictions of 1900 that didn't pan out:

Mail delivery by pneumatic tube.

Communication with the inhabitants of other planets and Sunday trips to the moon.

Doctors would prescribe no more than a third of the medicines they were prescribing back in 1900.

Mosquitoes, cockroaches and flies would be eliminated.

People would walk 10 miles a day for exercise.

Free college education for every citizen.

Work days of four or five hours. (On the other hand, at the end of the 19^th century, the average workweek consists of ten-hour days, six days a week.)

Taxes only on land and water.

-- posted by Normxxx

Top 42. Dec 31, 2004 7:25 PM

» Normxxx - $17 AN HOUR : The Future

$17 AN HOUR : The Future
Average-Wage Earners Fall Behind
New Job Market Makes More Demands but Fewer Promises

By Jonathan Krim and Griff Witte | Friday, December 31
Washington Post

ST. CHARLES, Mo. -- Teresa Geerling is living the future of life in the middle of the American workforce.

After years cleaning the insides of airplanes and polishing their outsides, Geerling was laid off from American Airlines last year. The job was physically taxing for Geerling, 50, but the nearly $32,000 annual pay and health-care coverage helped provide a typical middle-class life in this small midwestern community.

Bernie and Teresa Geerling of St. Charles, Mo., are feeling the pinch of today's changing job market. (Mary Butkus For The Washington Post)

17 AN HOUR: the future
About This Series: This is the last of a series of articles about changes in the middle of the U.S. workforce -- the disappearance of jobs near the national average of $17 an hour, with such benefits as health care and pensions. Previous articles addressed topics such as the growth in itinerant workers, the tough decisions faced by businesses trying to preserve jobs, and the effects on black workers. To read the other stories, go to http://www.washingtonpost.com/business

Now, she works the overnight shift at a local hospital as a nurse's aide while completing course work to be certified as a medical assistant. That would seem to be a smart move, because unlike airlines, which are contracting, health care is one of the industries that many economists believe could generate millions more jobs in the decades to come.

Yet rarely has Geerling's work life been so precarious.

If she can't stay on her husband's health plan, her costs for health insurance offered by the hospital will be $200 a month, more than five times as much as at the airline. There are no pension benefits beyond the option for a 401(k) savings plan and few job protections. She makes $2 an hour less than before; to have a chance at higher pay, she will need to continually train herself in new areas.

Geerling is at the leading edge of changes that herald a new era for millions of people earning around the national average, $17 an hour.

This new era requires that workers shoulder more responsibility and risk on the way to financial security, economists say. It also demands that they be nimble in an increasingly fluid job market. Those who don't obtain some combination of specialized skills, higher education and professional status that can be constantly adapted will be in danger of sliding down the economic ladder to low-paying service jobs, usually without benefits.

Meanwhile, those who secure the middle-class jobs of the 21st century will have to make $17 an hour stretch further than ever as they pay more for health care or risk doing without insurance and assume much or all of the burden for their retirement.

In the lively debate about the future of U.S. jobs, many economists and scholars acknowledge that the changes wrought by technology and global economic forces will be painful at first. But they say the new structure ultimately will create many kinds of jobs as yet unimagined, in fields such as education, health care and science.

"You have to take the leap of faith that the economy will evolve and there will be this innovation economy that comes," said John C. McCarthy, a Forrester Research analyst who wrote a report on U.S. jobs going overseas.

Yet many observers also say that the present economic restructuring may be more rocky than similar transitions in the past and that society should take additional measures to ease the struggles of those caught in the middle, especially the three-quarters of Americans who lack a college degree.

In some ways, Geerling is one of the lucky ones, even though she didn't go to college. At the time she was let go, American Airlines provided training grants as part of the layoff package. The program, which no longer exists, gave her a way to learn new skills in the health care industry, where she had once worked.

Analysts say retraining will be key because tomorrow's middle-class jobs are likely to be enhanced variations of today's lower-wage jobs. Clerical positions keeping medical records, for instance, are being transformed into higher-paying technician jobs that are structured to involve both computer skills and the ability to talk to doctors and nurses.

"You can't be some kid who is good with a computer and get that job anymore," said Anthony Carnevale, senior fellow at the National Center on Education and the Economy. The successful job seeker will be "someone who can do the computer stuff but also knows the business."

It is that combination of technology savvy, analytical thinking and interpersonal skills that could be the magic formula for U.S. workers -- whether the jobs are in health care, education, financial services or any other field. Jobs that involve all three qualities, said Thomas A. Kochan, an MIT management professor, are hard to duplicate with machines or with low-wage workers from abroad, putting the Americans who fill them in a strong position to demand not just good wages, but benefits, too.

"For workers who are performing services for people that can't be made impersonal or sent offshore, those jobs could become much more attractive," he said.

Shrinking Benefits

Still, most workplace experts are skeptical that the jobs of the future are likely to come with the same kinds of benefits as the jobs of the past.

"It's not clear how the work will change," said Peter Cappelli, a management professor at the Wharton business school at the University of Pennsylvania. "But any kind of security will go away."

Over the past two decades, companies have moved en masse away from traditional pensions in which employers pay the cost and employees get a set amount after retiring. Employer-based health care coverage has fallen as well, not just for workers in low-wage jobs, but increasingly for those in middle-class jobs. One analysis estimates that there were 5 million fewer jobs providing health insurance in 2004 than there were just three years earlier. Overall, nearly 1 in 5 full-time workers today goes without health insurance; among part-time workers, it's 1 in 4.

Those who manage to keep their benefits often must pick up their share of the higher cost. Employee contributions for family coverage were 49 percent higher in 2004 than they were in 2001, and contributions for individual coverage were 57 percent higher, according to the Kaiser Family Foundation.

Jobs that provide both a middle-class wage and benefits, even for workers without advanced degrees, still exist, often in union environments. But they're getting harder to find.

As technology has made global competition a reality, American workers -- particularly those who are lower-skilled -- have found themselves competing in a far broader marketplace. Their rivals overseas often don't receive benefits at all, or don't expect them from their employers. That puts American companies at a competitive disadvantage.

"It's not helping employers to not be able to offer benefits," said Jennifer Schramm, manager of workplace trends and forecasting at the Society for Human Resource Management. But cutting back on benefits "is something they feel they have to do for economic reasons."

Shifts in the composition of the workforce have contributed as well. Jobs in manufacturing are more likely to come with benefits than are jobs in the service sector.

But in the 1980s, the number of manufacturing jobs began a decline that continues today, and factory workers were forced to look elsewhere for a middle-class living. Many retrained and traded their spot on the assembly line for a seat behind a desk, finding work in business services such as sales, information technology and accounting.

Within the past decade, however, most large service firms have decided that to succeed in a cutthroat, globalized market, they need to focus on their core functions and leave more peripheral tasks to others.

Recently, many such tasks have been shifted to workers abroad or have been picked up by smaller, more specialized outsourcing firms in the United States. For those firms, providing benefits such as health care can be difficult because they lack the necessary economies of scale, said Harvard public health professor Katherine Swartz. In firms with 1,000 or more employees, just 1 in 10 workers lacks insurance. In companies with fewer than 10 employees, nearly one-third lack coverage.

Even businesses that are expected to grow -- in industries such as health care and education -- have begun to pare back the pool of workers eligible for full benefits.

Hospitals, for instance, have responded to shifting staffing needs by hiring itinerant care workers who travel where they're needed but often don't have access to the same benefits as full-time nurses and therapists who stay in one place.

Reworking America

In the political world, debate over labor market restructuring has been dominated by finger-pointing about free trade or the ethics of offshoring, rather than by discussion of possible solutions. But as displaced workers fail to make the transition into new jobs that afford them the same kind of lifestyle as their old ones, economists say that politicians ignore the issue at their own peril.

On Capitol Hill, lawmakers have discussed the need to control health care costs and to make sure large numbers of workers are not priced out of coverage, but no comprehensive proposals have moved to the top of the legislative agenda.

The White House has promoted the notion of personal reemployment accounts, a stipend of up to $3,000 for unemployed Americans to use for retraining, child care, moving costs or other expenses associated with locating new work. Those who find a job within 13 weeks could keep the leftover funds.

Another idea, championed by Brookings Institution economist Robert E. Litan, would provide wage insurance for workers whose jobs were eliminated. Under such a program, displaced workers who found jobs at lower salaries would have the difference made up, for a maximum of two years.

Last year, the Labor Department launched a pilot wage insurance program that would provide workers age 50 or older with half the difference between their old salary and their new salary when they're forced to take lower-paying positions following a layoff. Workers would also get a tax credit for 65 percent of their health insurance premiums. But the eligibility requirements are many -- the layoff, for instance, must come because of competition from abroad. As of August, only 715 workers nationwide had enrolled.

Some contend that such ideas only touch the edges of a looming crisis. While they may help individual workers in the short term, they don't address the larger difficulties faced by the workforce in adapting to the demands of 21st century jobs. For that, these labor market experts say, the educational system will have to continue to raise its quality and reach a broader population.

Thomas Bradtke, a manager at Boston Consulting Group, said that for the United States to retain its technological leadership and create new job-producing industries, it will have to keep coming up with a large share of the world's innovative ideas. At a time when other countries' students are routinely testing higher than American children in science and math, that's not a given.

"Education systems compete against each other in the long run," he said. "Right now the U.S. is still at the leading edge of innovation, but what if five or 10 years down the road, India has built up world-class universities?"

Carnevale, who was a member of the White House advisory committee on technology and adult education in the Clinton administration, argues that the country needs the equivalent of an industrial policy focused both on getting more people through college and on retraining them for new jobs.

Otherwise, "we could have a permanent working poor," he said. "They don't live in America; they kind of live under it."

The Geerlings are determined to avoid that fate. Teresa Geerling said she plans to work "as long as I have two arms and two legs."

Life for the couple has recently become more complicated, however. Until now, she could do without the health insurance at her new job because she was included in her husband's plan, which covers them both for $37 per month.

But Bernie Geerling, who still works at American Airlines as a baggage-handling supervisor, just got notice that he is scheduled to be laid off next month. He is hoping he can transfer to another slot at the airline somewhere else in the country, but union and company rules for such moves are complex. "With a little hope and a little prayer here and there, things will work out," Bernie Geerling said.

In the meantime, the Geerlings had to refinance their house after Teresa's layoff and have "gotten in a little over our heads" with credit card debt, she said. New carpeting and other major home-remodeling projects are on hold.

If her husband does not get a transfer, Teresa said, they will probably stay in the area but sell their well-tended house in a quiet residential neighborhood and move to something smaller.

"Scary's not the word for it," she said, reflecting on the growing number of workers she knows facing similar predicaments.

-- posted by Normxxx

Top 43. Jan 9, 2005 9:14 AM

» Bill_Duffy - State of the Union : Shaken and Stirred

This is a long but insightful essay. The changes that are now happening in the jobs market will have a major impact on society.

Bill D

The Atlantic Monthly | January/February 2005

The United States is about to experience economic upheaval on a scale unseen for generations. Will social harmony be a casualty?
by Stephen S. Cohen & J. Bradford DeLong

Stephen S. Cohen is a co-director of the Berkeley Roundtable on the International Economy at UC Berkeley. J. Bradford DeLong is a professor of economics at UC Berkeley.

.....

It has become conventional wisdom that class politics has no legs in the United States today—and for good reason. Regardless of actual circumstance, an overwhelming majority of Americans view themselves as middle-class. Very few have any bone to pick with the rich, perhaps because most believe they will become rich—or at least richer—someday. To be sure, the issues of jobs and wages inevitably make their way into our political campaigns—to a greater or lesser extent depending on where we are in the business cycle. But they seldom divide us as much as simply circle in and out of our political life. Lately anxiety about the economy has been palpable, but for the most part it has not evolved into anger or found specific scapegoats.

Economic insecurity could well divide us in the future, however. We are on the cusp of an economic era whose challenges will be unfamiliar to most Americans of working age. It is likely to erode the psychological pillars on which class unity has rested in this country: personal economic stability for the middle class, and the promise of at least some upward mobility for most Americans. The most likely division—besides that between the truly rich and the truly poor—will be between those in the middle class who are able (through agility or luck) to manage economic risk and those who find themselves helpless before the economic pressures of a new age.

nce upon a time, or so it is said, America was a place with lots of upward but little downward mobility. In the really old, pre—Civil War days you could start out splitting rails, head west, make a success of yourself on the frontier, and perhaps even wind up as president. In the relatively recent, post—World War II expansion you could do well by landing a blue-collar job in a unionized manufacturing industry or a white-collar job at a large, stable American corporation such as IBM, AT&T, or General Electric—which offered job security, high salaries, and long, steady career ladders.

There was always as much mythology as truth to this image of America. Lighting out for the West was expensive; covered wagons did not come cheap. More generally, although many terms could be used to describe economic life in the nineteenth and early twentieth centuries, "stable" and "secure" are not among them.

But there was considerable truth to the image as well, particularly after World War II. Regardless of education level or family background, many Americans who valued stability and security really did have the chance to grasp it; jobs with "a future"—that is, with steadily rising wages and solid retirement plans—were plentiful. And even for many of those who were fired, the economic risks were fairly low: the unemployment rate for married men during the 1960s averaged 2.7 percent, and finding a new job was a relatively simple matter. During the first decades following World War II, to the astonishment of interviewing sociologists, a majority of Americans began to define themselves as middle-class.

This post—World War II period stands as a reference point in our popular economic history—a gold standard for rapid growth and shared prosperity. It lingers in our national memory, and remains an important source of confidence in the unity of our culture and the awesome power of our economy. But although it engendered our current economic expectations, our sense of "the way things ought to be," in reality the postwar era was probably an aberration, a confluence of events never before seen in our history and unlikely to be seen again.

Most obviously, it was an era defined by the isolation of America's continental market from the devastation of World War II. In the early postwar decades foreign competition exerted virtually no pressure on our economy. (In 1965, for example, imports of automobiles and auto parts came to less than $1 billion—about a fortieth of what they are today, after adjusting for inflation.) At the same time, domestic manufacturers benefited from an enormous pent-up demand for mass-produced goods: cars, washing machines, commercial aircraft, refrigerators, lawn mowers, television sets, and so on. New highways gave rise to new suburbs, and to a resulting construction boom.

These economic conditions, along with successful federal efforts to maintain full employment through loose monetary policy, created an environment exceptionally friendly to workers. With little foreign competition on the one hand and a very tight labor market on the other, American firms were willing and able to offer workers strong incentives—such as pensions and first-rate health insurance—in order to attract and retain them. (Generous tax breaks from the federal government encouraged the roll-out of these benefits.)

Meanwhile, the Great Depression had given rise to a system of government programs and policies that came into full force and maturity only after World War II—among them Social Security, unemployment insurance, welfare, and high marginal tax rates. The rise of communism abroad could only have strengthened commitment to workers' welfare, as a means of demonstrating that the American capitalist system offered a humane alternative.

Thus favorable macroeconomic circumstances, the absence of foreign competition, and a historically unique political dynamic all combined to allow postwar America many of the benefits of social democracy without the costs. The economy did not stagger under the weight of ample benefits and high taxes. Americans—at least white male Americans—did not have to worry about tradeoffs between security and opportunity, because the United States offered both. And it seemed that this was the natural order of things.

he threat of downward mobility first hit America in a big way in the 1980s, when the old-line, unionized midwestern manufacturing companies found themselves under enormous pressure from foreign competition, in particular from export-oriented Japanese companies such as Honda, Toyota, and Komatsu. The result was a hemorrhaging of unionized manufacturing jobs and the emergence of the Rust Belt.

In addition, new technologies and consumption patterns were shifting the U.S. economy's center of gravity from skilled, unionized, mass-production industry—which fashions products from expensive materials and capital-intensive machinery—to services and retailing, where barriers to the entry of competitors are lower, labor costs more significant, and competitive advantage more reliant on squeezing those labor costs. The nation's largest private-sector employer today, of course, is not General Motors or Ford but Wal-Mart. Wal-Mart is in many ways a fine company, but its strategic goals and constraints are quite different from those of the manufacturers of the 1960s. Between them the automakers and the UAW offered workers a fairly robust "social contract": pensions, good health care, high wages, long-term job security. Wal-Mart makes no such offer.

By the early 1990s the nature of unemployment had changed as well. As Erica Groshen and Simon Potter, of the New York Federal Reserve, point out, temporary layoffs have become less common. Instead companies under constant competitive pressure are more frequently making layoffs permanent—using advances in technology to eliminate some types of jobs altogether.

At the same time, the rising cost of health care and the falling rate of health insurance have left families much more economically vulnerable in the event of a serious accident or illness. Many Americans today are one lost job and one medical emergency away from bankruptcy.

We do not want to overstate how bad things are. Not even white males would be better off in the economy of the 1960s, when median real household incomes were only about two thirds of what they are today, and much of the medical care that we now fear we cannot afford was unavailable at any price. In a sense we've merely returned to a more natural economic state, in which jobs are not always secure and progress is not always assured. And we've done so while improving the opportunities and lifestyles available to most Americans. So far, in other words, we've adapted reasonably well to increased risk and reduced security. But we're not at the end of economic history—and the history that will be made in the coming decades is likely to be substantially more turbulent than what we've seen in recent years.

lthough the impact of globalization on American jobs has been overhyped in the past, its impact in the future will be hard to exaggerate. Last spring saw a short political boomlet of worry over the offshoring of white-collar jobs to India, China, and elsewhere. In the next few years these issues will be raised at the political level once again—and loudly.

The basic storyline is simple enough: what formerly could not be imported now can be. A compelling parallel can be drawn to the latter half of the nineteenth century, when the steel-hulled oceangoing steamship and the submarine telegraph cable revolutionized international trade. Companies could now use the telegraph to tell their agents in distant ports what goods to ship; moreover, powerful steamships made it practical to export not only precious goods (such as rare porcelains, spices, and tobacco) but also staple agricultural and manufactured products: grain, hides, meat, wool, furniture, and machines (which would eventually include motor vehicles, computers, and consumer electronics). First in a great rush, and then at a somewhat more measured pace, industrial and agricultural workers the world over began to lose their jobs to more-efficient foreign competitors. Illinois could grow wheat more cheaply than Prussia could grow rye. Malaysia could grow rubber more cheaply than Brazil. Of course, displaced workers could generally find new jobs, sometimes better ones. And consumers benefited greatly from lower prices. But that did little to dim the spectacle of immediate dislocation. The expansion of international trade ushered in a century-long storm—though many Americans (perhaps owing to the anomalous calm following World War II) seem to remember only the recent gusts that have buffeted our heavy industries.

The transformation taking place today will have just as great an effect on the world economy. The transoceanic fiber-optic cable, the communications satellite, and the Internet are making much white-collar service work as tradable as anything else. Broadband cables and satellites can connect India or China or Bulgaria to the United States instantly, seamlessly—and almost without cost. A huge new swath of American jobs is beginning to become vulnerable to foreign competition.

When the offshoring of services truly hits (and it will stretch out over several decades), it is likely to deliver a much greater shock to the U.S. economy than the offshoring of manufacturing did. There are several reasons for this. First, in the 1970s Americans' incomes exceeded those of the Japanese by a ratio of about two to one. The ratio of American to Indian incomes today is more than ten to one. Economists will point out that the gains from trade will thereby be that much greater for the U.S. economy as a whole—and they'll be right. Indeed, more and greater openness will expand opportunities and raise incomes for some Americans, producing many highly visible winners. At the same time, the potential pay cuts for workers who lose out in rich countries will also be that much greater.

Second, the coming global trade in services will potentially affect a much larger proportion of the U.S. labor force. Even at its height manufacturing constituted only 28 percent of all non-farm employment, and large sectors of manufacturing (food processing, for example) are closely tied to sources of supply and thus immovable. Service jobs constitute 83 percent of non-farm employment in the U.S. economy today, and every job that is (or could be) defined largely by the use of computers and telephones will be vulnerable.

Third, the impact of foreign competition will be borne much more directly by American workers than by their employers. In the 1970s and 1980s foreign imports threatened U.S. companies and workers equally. The CEOs at GM and Ford were on the same "side" as the men and women who worked on the factory floor. The coming wave of economic dislocation will look very different: it will be something that American CEOs do to their own workers.

Not that they'll necessarily have much choice; offshoring will in many cases be necessary if American businesses are to remain competitive. Remember H. Ross Perot's "giant sucking sound"? In the early 1990s no one spoke out more strongly against the prospect of job loss caused by foreign competition. Yet on February 7 of last year the Times of India reported that Perot Systems was going to double its employment in Asia from 3,500 to 7,000—nearly half its total worldwide employment. If the economic logic of foreign outsourcing is so overwhelming that Ross Perot can't resist it, what American CEO will be able to?

one of this is to say that we face a future of permanent widespread unemployment. It is a truth universally acknowledged (except in campaign seasons) that the rate of employment in the United States is set not by levels of imports and exports but, primarily, by whether the Federal Reserve's monetary policy manages to settle aggregate demand in that sweet spot where neither unemployment nor inflation is too high.

Moreover, during the course of any single year or business cycle the effects of globalization on the U.S. labor market are small. Forrester Research has estimated that by 2018 some 3.3 million jobs in business processes are likely to go offshore. That's a little more than 18,000 a month—not a huge number in an economy of 140 million jobs.

But—and this is a very big "but"—even though imports and offshoring do not determine the number of U.S. jobs over time, they do powerfully influence the long-run level and distribution of real wages. Eventually the offshoring of service jobs will exert a strong downward pressure on wages and benefits in jobs that stay onshore, just as the offshoring of manufacturing jobs did in the 1980s. Essentially, the pool of workers competing for many service jobs will be increased by, say, several million English-speaking college graduates in India, who will work for a tenth to a fifth of a typical American salary.

In many cases the jobs in question are held by Americans unaccustomed to layoffs or reduced incomes. Often they are high-paying white-collar jobs. The people who hold them may believe that they are on top because they deserve to be: they are smart and industrious; they worked hard in school while others screwed around; they have been diligent and successful in their careers. These people are likely to become very angry when unexpectedly threatened by substantial downward mobility.

How will the country respond when a broad new array of classes and professions are exposed to downward mobility—particularly as others benefit from new opportunities? Will existing class fissures be exacerbated? What new ones might be created?

Winners and losers are unlikely to sort cleanly. People of similar background and training may see their fortunes diverge greatly depending on subspecialty, or on the presence or absence of some idiosyncratic ability that is hard to replicate. But one can make a few predictions. First, the new environment is likely to pit those who are most flexible—most able to shift jobs or careers, most able to absorb unexpected blows, best positioned to benefit from unforeseen opportunities—against those who are less so. The contours of such a divide seem predictable: young versus old, generalist versus specialist, people with savings versus those who depend on their next paycheck.

A second (and overlapping) split might open between those who are highly educated and possess complex skills and those who are merely well educated and skilled. An MIT education may still be hard to imitate abroad. Can the same be said of a finance degree from a state college?

Third, a divide may occur between those—whatever their education or income level—who by disposition can tolerate unexpected income swings across a lifetime and those who abhor uncertainty.

The last group is probably large. The dissatisfaction resulting from falling wages is usually greater than the satisfaction resulting from rising wages. People are not wrong to be risk-averse; for middle-class Americans, just as for portfolio managers, life consists largely of trying to manage risk. This, the Yale political scientist Jacob Hacker thinks, is the source of middle-class Americans' unease with the current state of the economy—perhaps the primordial form of a sharper discontent to come. "Voters say the economy isn't getting better because, as far as they're concerned, it's not," Hacker writes. "And perhaps the best explanation for this perception is that Americans are facing rising economic insecurity even as basic economic statistics improve."

The median annual household income twenty years ago was about $38,000 in today's dollars. Today it is about $43,000—13 percent higher. Yet, at least in Hacker's analysis, Americans typically feel that increasing risk and rising inequality have hurt them at least as much as increasing income has helped. Yes, if they are middle-class, they have higher real incomes and living standards than their parents; but the incomes are known to be insecure, and the prosperity is felt to be fragile.

rom one viewpoint, economic risk is the flip side of flexibility, entrepreneurship, and innovation—the very things America does best. In the 1980s, when Americans worried about whether the social organization in Japan's export-manufacturing sector (morning calisthenics, the company song, consensus, lifetime employment, and so on) might offer a better way of doing business, The Atlantic's national correspondent James Fallows answered with a resounding no. What Americans needed, he argued, was to become "more like us" (the title of his book on the subject), not more like them: America's competitive advantage was rooted in disorder, constant change, flexibility, mobility, and entrepreneurial zeal. In 1991 Robert Reich, about to become Bill Clinton's first secretary of labor, looked at the tremendous expansion of manufacturing and other export-related employment elsewhere in the world and came to a similar conclusion. How, he wondered in his book The Work of Nations, could Americans preserve and accelerate economic growth if the market position and efficiency advantages of America's largest firms came under threat? He, too, concluded that we needed to shift our focus away from old-style stable mass-production employment to high-knowledge, high-tech, high-entrepreneurship fields. Workers, he argued, should expect to go back to school to learn new skills for new industries.

But embracing change and uncertainty in this way does not come naturally, in the United States or anywhere else, and the pollsters and media-affairs people of the Clinton administration soon told Robert Reich to be quiet: people did not like to hear their government telling them that their jobs were going to vanish.

Economists rightly say that the rising wave of trade-driven service globalization will, like the last waves of trade-driven manufacturing globalization, benefit Americans and foreigners alike. At home more will be won than lost. Fears that expanding trade will destroy jobs and disrupt the economy also need to be counterbalanced by the knowledge that reducing trade—or even failing to expand it—would reduce national wealth potential, destroy future jobs, and ultimately disrupt the economy even more. The social problems of a stagnant economy are far greater than those of a dynamic one.

But economists too readily dismiss concerns about those who lose out, saying merely that they can be compensated. In practice they seldom are. The United States simply does not make the investments needed to turn economic change into a win-win process—investments in retraining and rebuilding that would transfer some of the gains from the winners to the losers (who've done nothing personally to merit their loss). In the late 1970s and the 1980s little money was spent on Flint and Detroit in particular, and Michigan in general, to cushion the economic impact as Toyotas and Hondas came to America's shores. Producers in Japan and car buyers in Boston and San Francisco pocketed the gains, while producers in the Midwest absorbed the losses. As the Princeton economist and New York Times columnist Paul Krugman puts it, free trade is a salable policy only if accompanied by a well-built social safety net and confidence in full employment. But our safety net is full of holes.

Some companies have traditionally provided many of our social services, particularly in the form of health insurance and retirement support. Those companies will not continue to sustain that burden in the future. At the same time, our limited system of government benefits will not be adequate to the changes that we'll face—leaving aside the possibility that it may be weakened or removed completely, as some politicians propose. That system was designed to protect the poor and the aged, and to tide the rest of us over in case of (temporary) job loss. What we need now is far more career-transition assistance for the middle class, and perhaps more government funding and (surely) portability for the benefits—notably health care—that the private sector increasingly fails to provide. America's economy will need flexibility in order to compete, but we can provide this protection without sacrificing our flexibility.

Because we are facing an economic transformation that will hit not over the course of a few years but over the course of the next generation, we have time to do what needs to be done. We will need all this time, because the approaching economic shock will be greater in magnitude than anything in recent historical memory.

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-- posted by Bill_Duffy