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Shedding Light on the U.S. Economy And the Middle-Class
In his book 'The Race to the Bottom,' Alex Tonelson explains many little understood but crucial factors at work in the rapidly changing U.S. economy.
As the global economy progresses, he notes, the fundamental strength of the U.S. regresses. As much as we emphasize college degrees and our transition into a service and information society, Tonelson calls attention to the fact that three-quarters of the workforce lack a college degree or equivalent skills. The U.S. actually has the largest underclass in the industrialized world, he says.
Moreover, Tonelson says that at least half the Americans that do have college degrees are employed in occupations where no college degree is necessary!
Historically, production and manufacturing jobs and enterprises spread widely among the population were the foundation which made the U.S. the world's strongest and wealthiest nation and created the largest middle-class the world had ever known. Manufacturing was the only sector of the economy with a long record of paying good wages and providing good benefits to Americans lacking a four-year college degree. Despite the proven importance of manufacturing jobs, in the 20 years from 1979 to 1999, the U.S. lost 3 million manufacturing jobs and ran up a cumulative manufactures trade deficit of $2 trillion.
Employment in the typically lower paying service sector, however, jumped by some 37 million jobs, with the two biggest job-creating service sectors being the two lowest-paying: wholesale and retail trade and a category including business, personnel and health services.
Jobs requiring at least a 4-year college degree will make up only 23 percent of the total new job openings appearing between 1998 and 2008 for the 160-million American workforce. By contrast, jobs requiring only one month or less of training to perform satisfactorily comprise 39.2 percent of the workforce. Fully four of the top ten occupations expected to generate the most job growth are in the bottom 25 percent of the U.S. pay scale and nine of the top 20 are in this category. Only six of the top 20 are in the top quarter of the pay scale. Only two of the top ten and five of the top 20 will require at least a four-year college degree.
From 1980 to 1996, the other 12 advanced industrialized nations saw their peoples' average incomes rise much faster than America's.
As time passes and imports increase, it is easy to determine the erosion of the U.S. economic foundation. In 1980, the manufactures trade deficit was already 54 percent.
By 1990, the manufactures trade deficit stood at 73.5 percent of the total $101.7 billion trade deficit.
By 1999 revival of $330 billion In 1997, Business Week reported that imports accounted for a record 31 percent of all the goods consumed by Americans, other than oil. In 1991, the beginning of the economic bubble of the '90s,' the figure was only 19 percent!
During the last two decades, the rising American demand for goods has been met by goods produced overseas, not goods produced in the U.S. The trade figures show that most of these imports are manufactures, including high-tech products, whose percentage of manufacture outside the U.S. has soared since 1995. Not only that, but the most sophisticated jobs in engineering, design, research and development are increasingly being transferred to third-world countries where high-performing college graduates can be hired for a fraction of the cost of hiring U.S. professionals.
Notably lacking in U.S. dialogue, Tonelson said, is specific 'truth' in information on the ability of private industry remaining in the U.S. to absorb the American college graduates of the future.
From the standpoint of American living standards, large and drastically rising shares of these high and low-tech imports are coming from low-income countries. Not only are these countries with economies either too small to purchase anything like a corresponding amount of U.S. products or with consumers too poor to do so, they are the countries whose trade with industrialized countries like the U.S. must inevitably pull wages down toward their level.
Contrary to what globalization proponents say, Tonelson reported that Economic Policy Institute researchers found that from 1979 to 2000 (when Tonelson's book was published) imports have destroyed tens of thousands more jobs each year than they create in the top ten percent of the American pay scale. The negative impact on the jobs occupying the top fourth of the pay scale was in the HUNDREDS of thousands each year.
The bottom line, Tonelson warns, is that imports destroy better-than-average jobs, while U.S. exports increasingly compete in markets using low-wage labor.
Payson.cc © 2002 Carrol Cox
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