March 31, 2013
Imagine getting paid to write things on economics that don’t make sense for the New York Times? That job may not exist if Thomas Friedman didn’t invent it. Hence the headline of his Sunday column, “Need a Job? Invent It.”
As Friedman tells readers, you need to create your own job because:
“there is increasingly no such thing as a high-wage, middle-skilled job — the thing that sustained the middle class in the last generation. Now there is only a high-wage, high-skilled job. Every middle-class job today is being pulled up, out or down faster than ever. That is, it either requires more skill or can be done by more people around the world or is being buried — made obsolete — faster than ever.”
One part of this story is just wrong and the other part is at best misleading.
The wrong part is about jobs being made obsolete “faster than ever.” The Bureau of Labor Statistics (BLS) actually measures the rate at which jobs are becoming obsolete, it’s called “productivity growth.” Over the last five years productivity growth in the non-farm business sector has averaged 1.6 percent annually. That’s probably somewhat depressed as a result of the downturn, but even if we go back to 2002 we still only get up to 1.8 percent annually. That’s well below the 2.8 percent annual rate from 1947 to 1973.
Maybe Friedman was just talking about productivity in manufacturing. This sector generally had had somewhat faster productivity growth than the rest of the economy. It is also where we find many middle paying jobs.
He has a bit better case here, but not much. Over the last five years productivity growth in manufacturing has averaged 2.1 percent, over the last ten years 2.9 percent. This is certainly stronger than the economy-wide average, but even going back over a ten year stretch we just get a rate of productivity growth that is essentially equal to the economy-wide average from 1947-73. (The BLS website doesn’t post the productivity for manufacturing before 1987, but it’s a safe bet that in the 1947-73 period it also exceeded the economy-wide average.)
Okay, so the claim about jobs becoming obsolete faster than ever is just wrong. The part that is seriously misleading is middle skilled jobs, as opposed to high-skilled jobs, “can be done by more people around the world.” Why on earth does Freidman think that jobs like those held by doctors, lawyers, dentists, economists, can’t be done by people around the world? There are millions of very smart people in China, India, and elsewhere in the developing world who would be happy to train to U.S. standards in these and other high-skilled professions and work for half of the pay that our professions receive.
The reason that these fields are not all dominated by people from the developing world is that the professionals who fill these positions today have enormous political power. They use this power to keep out the people from around the world. They also use this power to block trade in their services, for example, by making it difficult or impossible for the government to save tens of billions of dollars by allowing patients on Medicare or Medicaid to have major medical procedures performed outside the country. (They could split the savings.)
But, Friedman instead perpetuates the nonsense that high-skilled workers are somehow protected from international competition by their skills rather than their political power. Of course even the idea that we are increasing becoming a nation of self-employed workers is complete nonsense. In 1973, the self-employed accounted for 6.5 percent of total employment. Last year it was down to 6.1 percent.
Friedman might think that in the new economy people have to invent their own jobs, but the data say otherwise. And that’s what Thomas Friedman does for a living.
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