Americans are extremely troubled about the economy. In the latest Fox news poll, 73% of respondents said the economy was either poor or fair. While this seems odd at a time when GDP growth is strong, it isn't odd when you take a look below the surface of the economy to analyze what is really going on. The US jobs market is currently in the process of realigning away from traditional blue-collar industries to more white-collar industry. While this process has been occurring for several decades, this trend in this expansion has been greatly exacerbated. The overall effect on the job market - and people's perception of the economy - is very negative.
First, I want to start with a few statistics that I will tie together in a minute. First, since November 2001 (
when the last recession officially ended), there were
130,883,000 establishment jobs in the US. In the latest reading of March 2006 there were 134,966,000 total establishment jobs. That's a grand total of 4,083,000 million jobs in 4.333 years - the weakest rate of establishment job growth in the last 40 years.
Secondly, the US has lost 1.6 million manufacturing jobs since November 2001 and 2.8 million manufacturing jobs since January 2001.
Third, According to the Census Bureau, there were 140,001,000 million people age 25-55 in the US in 2004. Of these, 28,149,000 or 20% had a bachelor's degree.
Fourth, the biggest areas of job creation during this expansion are professional services (1,120,000 or 27% of total job creation) and health/education (1,755,000 or 42% of jobs created).
Fifth, according to the Bureau of Labor Statistics, here is the definition of professional services:
The professional, scientific, and technical services sector comprises establishments that specialize in performing professional, scientific, and technical activities for others. Activities performed include: legal advice and representation; accounting, bookkeeping, and payroll services; architectural, engineering, and specialized design services; computer services; consulting services; research services; advertising services; photographic services; translation and interpretation services; veterinary services; and other professional, scientific, and technical services.
The management of companies and enterprises sector comprises (1) establishments that hold the securities of (or other equity interests in) companies and enterprises for the purpose of owning a controlling interest or influencing management decisions or (2) establishments (except government establishments) that administer, oversee, and manage establishments of the company or enterprise and that normally undertake the strategic or organizational planning and decisionmaking role of the company or enterprise.
The administrative and support and waste management and remediation services sector comprises establishments performing routine support activities for the day-to-day operations of other organizations. These essential activities are often undertaken in-house by establishments in many sectors of the economy. Activities performed include: office administration, hiring and placing of personnel, document preparation and similar clerical services, solicitation, collection, security and surveillance services, cleaning, and waste disposal services.
Sixth, according to the Bureau of Labor Services, health and education jobs are:
The educational services sector comprises establishments that provide instruction and training in a wide variety of subjects. This instruction and training is provided by specialized establishments, such as schools, colleges, universities, and training centers.
The health care and social assistance sector comprises establishments providing health care and social assistance for individuals. The industries in this sector are arranged on a continuum starting with those establishments providing medical care exclusively, continuing with those providing health care and social assistance, and finally finishing with those providing only social assistance.
OK - let's tie these seemingly unrelated strands together. First, the economy has lost a ton of blue-collar jobs. These jobs traditionally don't require formal bachelor -- or higher -- degrees. So, we have a lot of people in these industries looking for work. But, the biggest areas of job creation -- professional, educational and health services which are responsible for 69% of new jobs - all usually require some type of formal, post high school education. If we add financial services to the mix, which added 436,000 jobs since November 2001 or 10% of total new jobs - we get 79% of new jobs with a base requirement of some post high-school education requirement.
More importantly, only 20% of the traditional working age population - ages 25-60 - have college degrees. This means that 80% of the population between 25 and 60 don't have the qualifications to apply or perform jobs in the hottest areas of job growth.
Let's look at the areas of job growth that traditionally don't require a college education. Since November 2001, construction has gained 720,000 jobs. While the shift from manufacturing to construction is probably pretty easy in terms of job skills, there are still 1,000,000 unemployed manufacturing employees more than total construction growth. What is left is retail - with 190,000 news jobs or leisure and hospitality jobs with over 1,019,000 new jobs. The problem with retail and leisure and hospitality jobs is their pay is considerably lower than manufacturing.
So, let's tie all of this together. Job growth is historically the weakest of the last 40 years. The jobs the economy has created are skewed to college graduates. However, the percentage of people who can benefit from this trend only make-up 20% of the working population. The jobs created for people who don't have a college degree are very low-paying.
Considering the cost of college, maybe it's time we did something about this, huh, Dems?