Monday, April 24, 2006

Low-Skill Labor

A Leaner, More Skilled U.S. Manufacturing Workforce
Richard Deitz and James Orr

A very good Read by a senior economist and a head Statistician at the Federal Reserve.
Their own Summary:
While the U.S. manufacturing sector has contracted sharply since the early 1980s, employment
in high-skill manufacturing occupations has risen by an impressive 37 percent. An investigation
of the growth in high-skill manufacturing jobs reveals that virtually all of the nation’s
industries have shared in this trend. Moreover, skill upgrading has occurred in all parts of
the country, even those experiencing severe employment losses.

The trouble as this Author's perceived it comes in the unspoken assumption that this Trend will continue; in actuality, I surmise that the gain in high-skilled Jobs has already slowed since the end of the data field of 2002. There has been a marked increase of low-skill Jobs created since the last Recession, while high-skilled Job creation has slowed. Manufacturing equipment acquisition has not kept pace with normal Boom conditions during this Period since 2002, and offshoring has continued at a rapid pace. This leads myself, if few Others in the Economic community, to doubt the effectiveness of the Bush Economic policy. Tax Cuts have not generated Capital Investment, though there has been an alarming increase in liquid Paper assets and Speculation.

The Trend of Offshoring must also be considered of temporary duration. The Paper's authors might have been better employed in determining the magnitude of Wages transferred Overseas during the same Period. A second Thought suggests Federal Reserve efforts could be directed towards determination of how much Worker Income must be replaced by welfare payments by the practice of Offshoring. But why do I suggest Offshoring is temporary? Well, We have too high a level of Labor underutilization. This utilization could easily pay for the National Debt over about 12 Years, even under the Bush rates of Taxation. The second major reason is the Cost of Transportation: Finished Goods requiring tonnage charges much higher than gross bulk tonnage of Oil or other Resources (this is a factor undefined, but a factor multiple in excess of 2, and maybe 3). We also possess established infrastructure, especially for internal transportation, which is not created in Offshore countries; still very unenabled for the tonnage required with lack of Shipping as well. Offshoring will become as expensive as domestic production.

American Business will once again find American labor necessary for production. It will also be propelled by shortfalls in Immigration to this Country. It is irony in Economics that great Disputes develop often after economic threats have already reduced. The current Dispute over Immigration probably comes now with a slight reduction in actual Immigration, which is likely to accelerate due to greater advantage in their origin Countries, and increasing Living Costs in the United States. American Business may be losing its source of Labor allowing for Wages below domestic Living Costs. lgl

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