US Jobs

Unemployment in the US is now 9.1%. Most everyone considers this high rate unacceptable, and the News is constantly entertaining persons who lament the high unemployment rate. In a few cases suggestions are made on how to decrease it.

I thought we might want to look at unemployment from a limited historical perspective and also some associated conditions involving standard of living. The 1960's started a distrust of government, similar to what we have today, but there seemed to be no significant economic concerns and jobs did seem to be a major consideration. For those reasons and also because it is a nice, even 50 years of time span, I have chosen data from 1961 for an analogy in several areas, but have eliminated farm employment, because of the lack of good data, the varying nature of migrant farm workers and the probability that ignoring it does not make a significant difference in our conclusions. The significant complete data are attached, but I will use portions in this text.

WORKING PEOPLE

Rather than handle "unemployment", I prefer to concentrate on the positive aspects, and I call it "Working People" or "Employment"

In 1961, there were 54.1 million working people (employed), and the total population was 183.7 million people. Therefore, the percentage employed was 29.5%. Those who were not employed included children, retirees, handicapped people, those who could not find work, and those who did not care to work.

In 2011, there are 139.9 million employed and the total population is 311.6 million people. Therefore, the percentage employed is 44.9%. Looks like a higher percentage of people working in 2011 compared to 1961. Am I missing something?

GROSS DOMESTIC PRODUCT (GDP)

GDP is the total value of goods produced and services provided in a country during one year. In other words, it's the total dollar economy, of which everyone gets a piece, even if unequally. Since the 1961 GDP was measured in 1961 dollars, it is necessary to adjust the 1961 GDP to bring it up to present dollar value. The present $1.00 was worth $ 7.14 in 1961.

In 1961, the GDP was $3,891,400 million, and the total population was 183.7 million people. This gave $21,180 per person.

In 2011, the GDP is $14,870,900 million, and the total population is 311.6 million people. This gives $47,700 per person. Unless I'm missing something, that's more than twice what it was in 1961, Surprised? Some may say. "Well, I don't see it". Look more closely. We now have more cars per family, larger and more expensive homes, prevalent air conditioning, more eating in restaurants, more exotic foods, more expensive vacations, nails and hair done once a week, etc. That doesn't sound like suffering. With a greater percentage of the population in the work force, each family has more wage earners, with higher total income.

DISTRIBUTION OF WORK FORCE

Private vs. Government - The work force consists of those who work in the Private sector and those who work for Government. The Private Sector is considerably larger than the Government Sector.

Private - In 1961, 45.4 million people were employed in the Private Sector. That was 83.9% of the work force.

In 2011, 107.3 million people work in the Private Sector. That is 76.6% of the work force. Not a big drop.

Government - In 1961, 8.7 million people worked for government. That was 16.1% of the work force.

In 2011, 22.5 million work for the government. That is 17.3% of the work force. Not a large increase, but enough to attract the attention of those who say government jobs give the economy a double negative effect. They not only take productive jobs from the Private Sector and turn them into non-productive jobs, but also have a negative effect on private industry by imposing various restrictions.

Goods Producing vs. Service - Goods Producing jobs include mining, construction and manufacturing. Service jobs are everything else. Examples of Service employees are school teachers, auto repair mechanics, barbers & hair dressers, lawyers, physicians, etc.

Goods Producing - In 1961, there were 18.6 million persons in Goods Producing jobs. That was 34.4% of the work force.

In 2011, there are 17.8 million persons in Goods Producing jobs. That is 13.7% of the work force, or a drop of 60.2%.

Service - In 1961, there were 35.5 million people in Service jobs. That was 65.6% of the work force.

In 2011, there are 112.1 million people in Service jobs. . That is 86.4% of the work force, or an increase of 31.7%.

ANALYSIS

We have shown that there is now a significantly higher percentage of the population in the work force than there was in 1961. We have shown that the GDP per person has doubled since 1961. Why then do we have the feeling of unrest?

The answer lies in perception and concern.

Note the huge increase in service jobs since 1961. All of these jobs involve a transfer of internal wealth for services which people in 1961 tended to do more themselves. For example, a barber now has what seems to be a cold. Instead of taking two aspirin, he goes to the doctor. The doctor uses that money to take his family to the cinema. The money you pay for a haircut goes to cinema tickets, and it doesn't stop there. It goes round and around, with each pass adding to the GDP. In some ways the GDP is then fictitious, but your haircut was performed by another person.. That was done more efficiently than you could do it yourself and you have more free time for reading, TV, etc.

Note the huge decrease in manufacturing employment. This can come about through several mechanisms. Mining, construction and manufacturing could have become more efficient, so that the same quantity of goods is produced with fewer people. Or, there could be less production of goods. In fact, both have occurred, but since there is no shortage of goods on the market, the shortfall of local production is made up by imports. There are many jokes about "Made in Japan", China, Barbados, etc. Nice deal that we have somebody else doing the work to produce our goods. All we have to do is pay for it, while we spend more time attending sporting events.

That is where the rub comes in. Only Goods Producing Jobs inject new wealth into the system.. Service Jobs only involve a transfer of wealth within the system. If we limit the "system" to the US, transfer of Goods Producing Jobs to foreign countries not only reduces our ability to inject new wealth, it also creates debt. After all, the foreign Goods Producers must be paid for their production, or they will not be increasing their local wealth.

This creates debt in the US. Not only government debt, but TOTAL debt.

The US public has begun to realize it has been living high on the hog at someone else's apparent expense, and the time will come when the piper must be paid. But, realization and acceptance of responsibility to take corrective action are two different matters. The public is not yet ready to accept responsibility. It is at the stage where it puts the blame on someone or something else. In this case, Government. Such blame is not completely misplaced. Government employment has grown and as mentioned previously, it has had a significant role in reducing US Goods Producing Jobs. While there is public unrest, the fact is that we have a high percentage of the population as a Work Force, and we have a high standard of living, even if it is based on a house of cards.

Pogo was right, when he said, "We have met the enemy and they are us".