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Howard Gold
Oct. 30, 2010, 12:01 a.m. EDT
View all Howard Gold "º
"¹ Previous Column
The gold bubble isn't here "” just yet
First Take "º
Remarkably little change in U.S. sentiment
By Howard Gold
NEW YORK (MarketWatch) "” Economists may have declared the 2007-09 recession over, yet the pain lingers.
Unemployment has hit younger and older workers, males and African-Americans especially hard. But one group is paying the biggest price: Blue-collar U.S. manufacturing workers have suffered disproportionate job losses, and their plight has big implications for all of us.
In October, the overall U.S. unemployment rate was 9.6%, while total unemployment and "underemployment" (including people who would prefer to work full-time but currently aren't) topped 17%.
In addition, the disparity between white-collar and blue-collar unemployment is stunning: 4.5% among college graduates versus 10.8% for those with a high-school diploma, and 14.3% for those without one. Read why economist Gary Shilling thinks it's not a real recovery on MoneyShow.com.
The likely reason is a precipitate decline in U.S.-based manufacturing employment. The United States has been losing those jobs for years, but the pace of the decline picked up steeply in the past decade and during the recession.
Although some big, U.S.-based multinationals recently have announced plans to add production facilities here, this hemorrhage of manufacturing jobs puts us in danger of losing our competitive edge and missing out on the jobs of the future.
The adjacent table tells the story.
From its peak of 19.5 million in 1979, manufacturing employment declined, on average, by about 1.5 million jobs a decade until 2001. Then it fell off a cliff: America lost 2.5 million manufacturing jobs from 2001 to 2007 and almost that much again during the latest recession.
So, nearly 5 million American manufacturing jobs have disappeared since 2001, an astonishing 29% plunge in less than 10 years. The United States has lost more than 42,000 factories during that time.
Clearly, it was a "lost decade" for far more people than investors in U.S. stocks.
The number of U.S. workers employed in manufacturing is at its lowest level since 1941 "” when our factories became the "arsenal of democracy" that helped win World War II. Where have you gone, Rosie the Riveter?
The hollowing out of U.S. manufacturing would make it hard for us to do that now. Whole industries practically have picked up and left the United States "” textiles, furniture and many electronic components.
Natural, free-market forces have driven most of it. The technological revolution has helped companies boost productivity sharply, so they need fewer people to produce the same amount of goods.
"During the late 1990s, productivity growth in "¦ manufacturing accelerated "¦ averaging 4.1% annually over the 1995"“2007 period," the Congressional Budget Office reported. "As a result, productivity in manufacturing has risen by about one-third since 2000."
Of course, globalization has triggered explosive growth in lower-cost emerging markets, especially in Asia, and they have become formidable competitors in an amazingly short time.
Margaret McMillan, an associate professor at Tufts University, has studied the impact of foreign competition on U.S. manufacturing. She said the declining price of computers, greater U.S. penetration of imports and shifting production to lower-wage countries have caused the big decline in U.S. manufacturing employment.
"?Offshoring "¦ is responsible for a downsizing of the American workforce.'
Margaret McMillan, Tufts
Not infrequently, short-term market timers change their forecasts every few days. But not so this month: None of the several dozen short-term timers tracked by the Hulbert Financial Digest made even one change to recommended equity-exposure levels.
11:15 a.m. Oct. 29, 2010
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