Job losses - Technology or China

Globalization is a word that scares many people since for some it means the loss of jobs to off shore manufacturing. While there is some truth to the idea, there is another interesting aspect of what is happening that is only just now beginning to surface. The September 7th issue of the Cleveland Plain Dealer reported that Eric Fisher spent a year studying why we are losing manufacturing jobs and found that the main reason is because of labor saving technological progress.

This sounds like the Industrial Revolution all over again where productivity gains on the farm made it possible for fewer people to produce the food requirements of the nation. The paper reported that the share of total U.S. employment in manufacturing dropped from 26% in 1960 to 13% in 2002. This is happening all over the globe with Canada dropping from 25% to 15%, Germany from 34% to 24%, Netherlands from 29% to 14%, Sweden from 32% to 17%, the United Kingdom from 36% to 16% and there even indications that manufacturing employment in China is starting to go down.

Given that this is the reality of our world today, it makes little sense for the media and politicians to proclaim the reactionary stance that they will bring back the jobs that have been lost. Rather, we need a new vision that looks forward and encourages innovation and creativity. Our future is dependent upon developing new products and services that will grow and prosper into the future rather than bringing back production of products that are moving toward commodity status.

Globalization - Looking Forward Rather than Backward

The Plain Dealer had a very interesting article on Tuesday September 7th entitled, "Technology helped kill jobs in manufacturing, says expert." It reminded me of the Industrial Revolution where productivity increased on the farms reducing the need for labor to produce the same or increasing amounts of farm products. The paper reported that the manufacturing share of total employment dropped from 26% in 1960 to 13% in 2002. Canada went from 25% to 15%, Germany from 34% to 24%, Netherlands from 29% to 14%, Sweden from 32% to 17%, the United Kingdom from 36% to 16% etc., etc., etc.

They also recognized some lesser causes as well, but what struck me the most was the rhetoric we are hearing from the media and some politicians about how we should bring manufacturing jobs back. It struck me that once again, they are looking behind us rather than forward. Eric Fisher, Research associate with the Federal Reserve Bank of Cleveland, suggests that rather than looking backward, we should be promoting high tech services or service oriented jobs. "I would tell policy makers to encourage innovation and high-tech services."