Transcript The Changing Nature of Employment

Structural Imbalances in the U.S. Economy
The uneven pattern of employment and income growth
in the current economic recovery
Phillip LeBel, Ph.D.
Emeritus Professor of Economics
Montclair State University
Montclair, New Jersey 07043
[email protected]
The U.S. is a global leader in output recovery,
but lags in employment growth.
Lags in employment reflect a structural shift from traditional blue collar
manufacturing to a knowledge-based human capital skills economy
Part of the employment shift has been driven by outsourcing of traditional
manufacturing. The current rift in Congress over fast-track trade negotiations
reflects concerns over the pace of adjustment, not unlike the debates over
NAFTA twenty years ago. Today, this is being counter-trended somewhat by
insourcing of jobs from foreign direct investment in the U.S.
As real wages have grown more slowly, there has
been a major increase in two-person working
households, in greater annual working hours, and
in fewer vacation days. Much of this shift has
been well documented by Juliet Schor in
The Overworked American (Basic Books, 1992), and
updated periodically by many studies since then.
While productivity has grown, average wages have remained
stagnant, with most increases in income accruing to those at the
upper end of the income scale.
Some differences in income can be explained by the number of hours
worked, and some can be explained by a secular decline in wage and
salaried workers under collective bargaining agreements. But most of
the changes reflect the overall shift from manufacturing to service
employment in the economy in which human capital skills are key.
Women now outnumber men in terms of undergraduate college degree
graduation numbers, account for a majority of law school and medical
school graduates and other human capital intensive occupations. All of
this is reflected in an uneven shift in the composition of household
activity, and in the formation and dissolution of households. Hanna
Rosin examines these changes in her book The End of Men and the
Rise of Women. (Penguin Riverhead Press, 2012).
Not surprisingly, in a structurally changing economy, while nominal economic
indicators point to more robust health, poverty has risen, as measured by
the number of food stamp recipients, and the overall poverty rate.
As a result of both the deep recession that began in late 2007 and the uneven pattern of
economic recovery, federal spending and federal deficits have been under upward
pressure. Without structural reforms in incentives, austerity alone will not lead to a
sustainable recovery in either jobs or in public deficits. Reforms need to address the
changing nature of work in a human capital intensive service economy.