Election Economics

   The issue of jobs comes up often as politicians promise prosperity during election campaigns, with a focus usually on the importance of manufacturing jobs.
   While jobs in what's called the goods producing sector of the workforce are an important measure of what a country needs, it's not the only, or even the largest, employment sector. That would be in retail.
   Of a total population of some 300 million people in America, the total civilian labor force is 160 million, and the total non-farm labor force numbers 144 million. Right away, it's clear that relatively few people -- 16 million -- are employed in agriculture, compared to the total work force.
   Military personnel are also excluded, since the unemployment rate is related to the civilian labor force. Nor are children, retirees, prison inmates, students and those in hospitals, since they are not available and actively seeking work.
   The largest employment sector, according to Department of Labor statistics, is retail, which has 16 million employees. Manufacturing follows, with a total of 12.3 million workers. And there are 6.6 million construction workers.
   All of these are important, and in some states the service sector, such as finance, insurance and real estate (FIRE) provides the most support for a regional economy.
   But for all the talk by political candidates about the need to bring manufacturing jobs back to this country, the reality is that many have gone and are not coming back.
   Moreover, the reasons for this are not hard to identify.
   One is technology, which enables manufacturers to produce more stuff more efficiently and at lower cost, even as wages rise to match new skill levels needed with more complex technology. So while steel production in America has not declined, the workers doing so has been reduced.
   A second reason, related to the first, is wages. Some products, such as garments, require more hands-on work. That's why much of this production has gone to other countries, where there are more people who are willing to work for lower wages. In fact, were it not for this transfer of garment making, workers in many of these countries would have no jobs at all.
   Meanwhile, American workers who formerly had such jobs moved on to finance, communications and other service sector jobs that demand higher skills and offer higher wages.
   Bottom line: Many people benefit as economies grow internationally.
   So for all the political noise about America losing so much, the reality is that the U.S. is in its seventh consecutive year of economic expansion, the unemployment rate is down to 4.9 percent, and household net worth is back to pre-crisis peaks, with household disposable income growing at 3 percent, according to a recent report by the International Monetary Fund (IMF).
   The Federal Reserve Board today noted that economic activity nationwide "continued to expand," though at a modest pace, from mid-May through the end of June. Pressure to increase wages was modest to moderate, the Fed said, except for the need for skilled workers and hard-to-fill positions.
   Moreover, a historical reality is that times and conditions have changed. Some 70 years ago, many manufacturing jobs offered high wages even in low-skill positions. That was an example of the basic economic Law of Demand and Supply. There was a shortage of workers in the face of soaring demand. To compensate for that, industries developed more technology, to make production more efficient with fewer workers.
   Since then, low-skill, low-pay jobs went elsewhere, and many urban areas of the United States shifted to service-sector employment. Meanwhile, highway construction enabled many folks employed in the cities to buy homes in the suburbs. There were fewer moderate-pay, low-skill jobs for city residents unable to qualify for higher-paying service sector jobs, and the result was increasing urban unemployment and poverty.
   An important issue for politicians who claim to seek answers to economic problems, then, is to offer incentives for better education and skills training in urban areas, thereby rebuilding America's economy from within, rather than pushing the impossible dream of bringing back what is long gone.