[lbo-talk] Does Trade With China Matter?

[Nathan Newman]

----- Original Message ----- 
From: "Doug Henwood" <dhenwood at panix.com>
>Your analysis overlooks the failure of the U.S. to produce new
>service jobs. Outside health care, private services are still 1.3
>million jobs below the pre-recession peak. Retail is off, as are
>professional and business services and even temp work. Had private
>services been producing new jobs at the same rate it averaged between
>1948 and 2000, employment would be over 8 million above where it is
>now - and probably less than 500,000 service jobs have been
"offshored." Manufacturing has been shrinking rapidly over the last
>few years, but it also shrank (though much less dramatically) in the
>1980s and 1990s. For the service sector to be barely growing is
>unprecedented.

The idea that service jobs are completely separate from manufacturing jobs
is just misguided.  Many business and professional services are related to
manufacturing jobs-- that is who is being serviced in many cases.  If you
lose big manufacturing firms or have to scale back, you also cut back on
janitors, accountants, design services, and all the other folks who make
firms work.

In a large sense, the decline in manufacturing jobs as a percentage of the
workforce is very overstated in the last few decades.  Many more services
that used to be done in-house were counted as manufacturing jobs and are now
counted as service jobs.  But just because they are now counted as service
jobs doesn't mean that they won't decline when manufacturing takes a hit.
Don't mistake the outsourcing of manufacturing services for the lack of
importance of manufacturing in sustaining those outsourced jobs.


>From the Philly Fed Reserve Board's Q$ BUSINESS REVIEW:
"contributing to the decline of measured employment in the manufacturing
sector has been the increased outsourcing of manufacturing firms' ancillary
nonproduction functions. Workers in areas such as accounting, marketing, and
shipping would have been counted in manufacturing employment if they were
employees of manufacturing firms. If they are employed by accounting firms,
advertising agencies, and transportation companies - as many now are - they
are counted in service-producing employment. Similarly, a large increase in
the use of temporary workers in the manufacturing sector increased the
number of workers counted in the services industry (where temporary
employment is counted) and decreased the number counted in manufacturing."

Nathan Newman