Mr. Moderate

Before World War II (1939-1940), about 31% of all jobs were manufacturing jobs. Recently (March, 2007), manufacturing jobs represented only about 10.2% of all jobs. (All numbers quoted in this report are either extracted from the Bureau of Labor Statistics web site or are computed directly from those numbers.) As recently as 1956, we still had 30% of the workforce employed in manufacturing, which was about 15.9 million jobs. In terms of absolute numbers of jobs, the peak was reached in 1979, with about 19.4 million manufacturing jobs. Ever since then, the number of manufacturing jobs has been declining on an absolute basis, and it has been declining even faster in terms of a percentage of the total workforce. We are no longer a nation of factories that manufacture things.

Since it takes a significant amount of time for policy changes to show up in economic statistics, I’m going to adopt the procedure of looking at statistics at the end of some President’s first year in office to establish the benchmark for the previous administration, and then carry that policy forward, administration by administration.

At the end of 1977, which was the first year in office for Jimmy Carter, there were about 18.2 million manufacturing jobs. And, as stated above, the all-time peak for manufacturing jobs was reached two years into the Carter administration, with 19.4 million manufacturing jobs. By the end of Ronald Reagan’s first year in office (1981), the United States was down to 18.6 million manufacturing jobs (still 400,000 jobs better than at the beginning of the Carter administration) and its been downhill ever since then. In 1993, at the end of Bill Clinton’s first year, after 12 years of the Reagan/Bush administration, we had about 16.8 million manufacturing jobs, down 1.8 million manufacturing jobs during that timeframe. At the end of the first year of office for our current President (2001) we still had 16.4 million manufacturing jobs, down only 400,000 manufacturing jobs during the eight years of Bill Clinton. But in just the first five years of his watch, George W. Bush has lowered the number of manufacturing jobs in the United States to about 14.2 million (2006 year end average). That is about 2.2 million people who have been forced out of good-paying manufacturing jobs and into lower-paying service industry jobs.

The other major goods-producing industry is construction. In 1977, there were 3.9 million construction jobs. At the end of 1981, there were 4.3 million construction jobs, reflecting reasonable growth of about 400,000 construction jobs during the four Carter years. The total grew slightly to about 4.8 million 12 years later, at the end of Bill Clinton’s first year (1993), reflecting growth of about 500,000 construction jobs during the Reagan/Bush years. (In other words, 12 years of Reagan/Bush only grew construction jobs a little more than four years of Jimmy Carter.) By the end of 2001, there were 6.8 million construction jobs, reflecting strong growth of about 3 million construction jobs during the Clinton years. By the end of 2006, five years later, this is up to 7.7 million construction jobs, or about 900,000 jobs ahead in five years of G. W. Bush. That is certainly better than the growth during the Reagan/Bush administration, but nothing at all comparable to the Clinton administration. After 5 years of Clinton’s policies, construction jobs stood at 6.1 million, which meant that there were 1.3 million new construction jobs during the comparable Clinton period, a rate that is over 40% higher for job creation.

Now, on the one hand, construction jobs are generally also good paying jobs, like manufacturing jobs. However, on the other hand, it is my opinion that there has been a lot more use of lower-paid illegal workers in the construction industry than there has been in the manufacturing industry. After all, construction job sites are fairly transient locations for any given segment of the construction workforce, so it is a lot easier for illegal workers to maneuver around opportunities to catch them if they have construction jobs.

We can contrast the above with retail services jobs, which have been a model of stability in terms of the percentage of total jobs in our economy. In 1939, retail was 10.3% of all jobs. There was a downturn during World War II (when the emphasis was on making things to support the war effort), but it was back to 10.3% again for 1949. In 1959, it was 10.2% and in 1969, it was 10.3% again. There was an uptick to 11.3% for 1979, and another uptick to 12.1% for 1989. However, by 1999 it was back down to 11.6% and the current number is 11.2% for 2006. It would seem that, in spite of economic changes, we need a fairly stable percentage of the workforce to work in retail services jobs. And other types of services, not discussed below, have also held reasonably steady, representing 21.7% in 1939, 21.1% in 1949, 20.2% in 1959, 19.5% in 1969, 20.0% in 1979, 21.0% in 1989, 20.9% in 1999, and 20.4% for the most recent year-end number, 2006.

One growth area in services is the category titled Professional and Business Services, which was about 6.4% of all jobs back in 1939, and which has grown to about 12.9% of all jobs in 2006. Just skimming the names of the 94 sub-categories which fall within this category seems to explain a large part of this growth. They are new categories of jobs that by and large did not exist back in 1939, such as several categories of computer-related jobs. Other sub-categories include lawyers, accountants, engineers, scientists, advertising agencies, telemarketing firms, employment agencies, and many others.

But that is nothing compared to the growth rate for education and health services. In 1939, that was about 4.6% of all jobs, but by 2006 it had grown to about 13.1% of all jobs. Is it any wonder that the costs of higher education and health care have soared to ridiculous heights? And yet, for all of the people working in those industries, and for all the money that this costs, we still have many reasons to complain about the poor quality of education and health services in this country. Just throwing money at the problem is clearly no solution!

It is common to hear about “bloated government,” but the figures demonstrate that “bloat” has now been largely removed from our governmental workforce. Government jobs were 13.2% of the total workforce in 1939, and had grown to 13.6% by 1949. Near the end of the Eisenhower administration, government jobs had grown to 15.3% for 1959. At the end of Nixon’s first year (1969), government jobs had grown to 17.5% of the workforce, presumably as a consequence of Lyndon Johnson’s “Great Society” programs. And by 1979, nearing the end of the Carter administration, government jobs had grown to about 17.9% of the workforce. For all of Reagan’s emphasis on reducing government jobs, by 1989 the number was only down to 16.6% of the total workforce. And the Republican Congress elected in 1994 pushed it down further to about 15.7% as of 1999. By the end of 2001, it had crept back up to 16.0% and our current President has caused another small increase to about 16.1% as of 2006. But given the huge increase in government programs since 1939 (Medicare, Medicaid, housing programs, etc.), it is truly amazing that government now takes up only about 3% more of the total workforce as compared to 1939, and only about a 0.8% increase since 1959, which was the end of the Eisenhower administration. You really can’t blame the Great Society for any really huge increase in government jobs since 1959. It hasn’t been all that much of a percentage increase!

But the real point here is that we are no longer a nation of factories. While we consume more, we manufacture less, and the difference is being made up with imported goods that are manufactured in other countries. And the above numbers make clear that over the past three decades Democrat Presidents have been “job friendly” while Republican Presidents have been the enemies of those who want good paying goods-producing jobs. Think about this the next time you are anywhere near a voting location.