Great encapsulation by the FT of the economic challenges facing the US:
New technologies are transforming the structure of the US economy but creating only modest numbers of jobs, according to the biggest official survey of businesses, conducted only once every five years.
It highlights concerns that recent innovations in information technology tend to raise productivity by replacing existing workers, rather than creating new products that demand more labour to produce.
Tyler Cowen was quick to note this data seem to reinforce his “average is over” thesis. Two thoughts from me: one, the study also seems to support my point about the overrated labor market impact of fracking. Two, President Obama’s manufacturing nostalgia for 1950s America is misplaced:
In manufacturing, the story is of a productivity boom that allowed a solid increase in sales, coupled with falling employment and payrolls. Manufacturing sales rose 8 per cent between 2007 and 2012 to reach $5.8tn. However, the industry shed 2.1m jobs – employment falling to 11.3m – and its payroll dropped $20bn to $593bn.
The relatively greater drop in jobs than payrolls highlights how remaining jobs in the sector are becoming more skilled. Annual payroll per employee in the manufacturing sector rose from $45,818 in 2007 to $52,686 in 2012. That is among the highest of any big industry, but highlights how manufacturing increasingly employs skilled engineers to tend complex equipment, rather than being a source of well-paid jobs for less-skilled workers.