Jobs Destroyed and Created

by Don Boudreaux on January 11, 2011

in Complexity & Emergence, Trade

Here’s a letter to a very good-natured gentleman (one on my e-mail list) who e-mailed me about an hour ago:

Dear Mr. Y_______:

Thanks for your e-mail, and for its gracious tone.

You write: “OK, the US gets other jobs when manufacturing jobs go overseas.  A majority of these other jobs, however, are in the service sector which pays less than manufacturing.  We cannot keep this up.”

First, manufacturing jobs are ‘lost’ not only to imports from overseas but also to mechanization.

Second and more to your point, the service-sector jobs that have replaced manufacturing jobs do not typically pay less than manufacturing.  Using data from the U.S. Bureau of Labor Statistics, the Cato Institute’s Dan Griswold calculated – as he reports on page 38 of his superb 2009 book Mad About Trade – that “For every one job lost in manufacturing since 1991, our economy has created five in better-paying service sectors, three in less well-paying sectors, and one in government.  That pattern was not just a phenomenon of the 1990s.  During the Bush years of 2001-2008, two-thirds of the net new jobs were also created in sectors that paid more than manufacturing.”

I don’t know how old you are, Mr. Y______, or if you have children.  But if you do have children, do you ever tell them that you want them to grow up to work in a factory?  Do they ever express such a yearning to you?  My guess is that you want your children to become doctors or lawyers or architects or research scientists, and that they, too, have such aspirations – that is, aspirations to work, not in manufacturing jobs, but in service-sector jobs.

I do not disparage manufacturing jobs; my father was a pipefitter in a shipyard and I’m damn proud of who he was.  But he would have thought me daffy had I aspired to follow in his difficult and relatively low-paid footsteps.

Sincerely,
Donald J. Boudreaux

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