Where the Jobs Aren’t

I heard a man call in to a radio talk show about jobs this week.  He said “I am a job creator, with a small business of several employees.  No tax cut will affect my hiring.  I will hire someone only when there is more demand and I need more employees to handle that demand.”

Today in the Washington Post Dana Milbank confesses that he is a “small businessman,” but has NO employees.  This is not unusual because 21 million of the 27 million small businesses are single individuals who have never hired anyone and never will.  So I don’t want to hear anymore from the GOP about taxing the job creators.  Most of the rich who should be paying more taxes don’t earn salaries or direct profits from business anyway; they earn from investments and speculation.

I continue to search for economists who understand what is happening.  On CNN Money online Jeff Colvin says that “Obama is looking for jobs in the wrong places.”  Leaving out the gratuitous swipes at Obama, he tells some good history:

“American manufacturing boomed during the expansion. The value of "what we build" increased every year. The problem for the President -- and it's a giant, central problem for him -- is that we did it with fewer workers every year.

“The great story of manufacturing in America and every place with a market economy is that we continually produce more stuff with fewer workers. The trend is not new. Manufacturing employees were 39% of total U.S. workers at the end of World War II, and that was the peak. The proportion has declined steadily ever since and is now 9%. Looking past percentages, the raw number of U.S. manufacturing workers topped out in 1979. Today it's 11.8 million, about half what it was then, though the country is far larger and richer and manufactures enormously more. For perspective, in 1941, before our entry into World War II, we had more manufacturing workers than we have today.

“None of this should be surprising, because we've seen this movie before. Well over 60% of U.S. jobs were in agriculture in the 19th century, and the proportion has been declining ever since. Today it's less than 2%. Back when it was 60%, hunger was a significant worry for much of the population. Today that tiny 2% of workers produce so much food so efficiently that obesity is our gravest national health problem.

“Fewer people relentlessly produce more and better stuff, whether it's corn, cars, or any other physical product. The trend isn't going to reverse....  Smarter, more sophisticated, higher-technology manufacturing is good for America. But one thing we know for sure is that the more advanced that manufacturing becomes, the fewer people it employs. At a time when the country desperately needs more jobs, manufacturing is obviously not the place to look for them.

I am still looking for a “unified theory” of economics, that takes into account the housing bubble.  What comes closer is an interview with a Japanese economist in Money magazine (not on line) that offers good advice, and suggests that Obama is on the right track.  No clues on where any new jobs might come from.  Other analysis of Japan’s lost decade in the Economist and on NPR suggest otherwise.  So is economics truly dismal and not a science?