

“...just as the Great Depression was part of the transition of the economy from agriculture to manufacturing, the Great Recession is part of the transition from manufacturing to a service-sector economy. Growth in productivity, plus changing comparative advantage, made a decline in manufacturing employment inevitable. Markets on their own do not manage such dramatic economic transformations well.”



Joseph Stiglitz, Nobel-prize winning economist, in Shambles of the US Labor Market





One may quibble with Stiglitz about the details of de-industrialization in the US economy. For example, economists at the Bureau of Economic Analysis and the Bureau of Labor Statistics have been laboring at the very difficult task of disentangling the relative US manufacturing declines due to productivity improvements (automation) vs those caused simply by runaways and outsourcing to low-wage, high-labor-intensity, and lower than US productivity environments in China, India and other areas of the developing world. However there can be no denying the fundamental trend at work for over 60 years as combined automation and globalization forces have steadily restructured the division of labor -- in other words the occupations, in the US economy from manufacturing to service-oriented jobs.



Below is a helpful USA table (using BLS data) detailing the changes since 1950:





Percentage of non-farm workers employed in manufacturing and service jobs (All 2002 figures are to date): Manufacturing jobs 1950 * 34% 2002 * 13% Service jobs 1950 * 59% 2002 * 82%













Examples of manufacturing job losses. Number employed in thousands: Textiles 1960 * 924 2002 * 433 Apparel 1960 * 1,233 2002 * 522 Metal1 1960 * 1,185 2002 * 593





Examples of service job gains. Number employed in thousands: Educational2 1960 * 616 2002 * 2,510 Business services3 1960 * 656 2002 * 9,301 Health 1960 * 1,548 2002 * 10,661 1- primary metal industries such as steel; 2 - private education institutions; 3 - services to businesses such as advertising, data processing, credit reporting, etc.

Source: USA TODAY analysis of Bureau of Labor Statistics data



The trade union movement has placed halting and reversing the de-industrialization trend at near the top of its economic and political agenda. While long range trends point to disappointment on this program, there are deep reasons that motivate the AFL-CIO to focus on manufacturing.



First, mass manufacturing is the foundation of modern industrial unionism. It provided both the economic and political strength that compelled enactment of the laws that legalize ALL collective bargaining rights. The economic strength consisted in the right to strike and the immense costs that right could impose on employers, especially where there were large concentrations of workers. That large concentration was a key feature of the economic transition of the previous era that gave rise to the industrial revolution from a primarily agricultural economy. Without that strength, the rights of any and all workers -- both public and private, manufacturing and service, to effectively bargain for a fair return on their labor, and increasingly, their human capital is seriously undermined. It is no accident that attacks on all labor rights have escalated and become ever more vicious every year that de-industrialization has worsened.



Second, as manufacturing -- and with it, unionism -- has weakened, so have the entire “middle class” aspirations of working Americans gone up in smoke. The only alternative path to a reasonable standard of living -- a college education -- becomes increasingly out of reach for working families. Students are now a trillion dollars in debts they will never be able to pay if current inequality trends continue. Universities are charging hundreds of thousands of dollars for training for occupations that simply do not pay enough to pay back the educational investment. Many students begin, but cannot afford to complete, their education.



Some pin hopes on political battles for labor law reform, or raises in the minimum wage. Both are important battles. The major difference between US and European standards of social benefits and protections are the stronger union rights in the latter. National health care, superior public education, retirement and infrastructure systems were all consequences of European labor’s stronger bargaining power and political strength coming out of WWII. However, even though Europe is better, the de-industrialization forces are at work there too and labor strength is weakening -- just not as fast or as dramatically as in the US. The vast erosion of workers’ rights to receive the same proportion of increase in national wealth as capital has also had the side effect of corrupting democratic institutions, like Congress. The corruption is so severe that it has become the anthem of the Occupy movement, and it becomes increasingly doubtful anything short of a huge social upheaval in class relations at the grassroots can correct the dark course our country is on.



News coming out of China of strike waves against the labor-intensity and extreme low wage manufacturing may end up being the most effective brake on the export of jobs NOT motivated by automation. There are signs China’s immense reserve army of subsistence agricultural labor can no longer sustain the growth of this mode of manufacturing. If so, wages and incomes of Chinese workers will rise, and higher productivity, higher skilled labor will be required for the next stage in China’s development.



As Stiglitz notes, increasing inequality is itself becoming a cause of even more draconian inequality as the majority of the people are not able to provide the demand needed to resume the level of growth needed for escaping the depression. For thirty years, workers have been given higher and higher limits on their credit cards, but little or no real wage increases.







A new working class paradigm?



If the manufacturing era is irreversibly passing from the US labor market, can non-manufacturing workers find a path to bargaining power sufficient to reverse inequality trends?



Who are the service workers?