A steady meme over the past month has been the zero sum game that comprised the U.S. economy over the past decade. Net job creation was at zero; GDP, adjusted for inflation, grew less than 20%; and, household net worth (through November 2009) was down 4%.
The Washington Post ran a great graphic contrasting the performance of the last decade to the previous six decades. The contrast is astounding: the last 10 years were the least productive by a wide margin.
A cursory look at the chart makes you wonder whether we hit the top for the U.S. economy and are at the beginning of a long decline, or whether we’re simply poised at a critical inflection point for change. The disconnect for me is reconciling the sense that we’ve experienced remarkable changes in tools, processes and outcomes over the past decade, but have experiences virtually no net tangible economic benefit.
One theme is that changing nature of work in our economy. A lot has been written about how we’ve transitioned from a manufacturing to a service base. The trend has been significant over that past 40 years, with manufacturing jobs dipping to below 10% of total employment this past March.
Economies have to make something in order for its participants to consume things. Our service economy relies on Americans having enough money to buy things — fast food, flat screen TVs, clothing, cars, homes and everything else. A lot of people spending money creates a lot of jobs for people, creating more people who can spend money.
But somewhere in our economy we have to make something. The shift away from manufacturing over the past 40 years has been partly offset by the shift towards creating information products — technology and media primarily — that are broadly consumed, at home and abroad.
After a decade of standing still, a disproportionate amount of hardship falls on groups that traditionally are less qualified to participate in the information economy.
From the Bureau of Labor Statistics:
In November, both the number of unemployed persons, at 15.4 million, and the unemployment rate, at 10.0 percent, edged down. At the start of the recession in December 2007, the number of unemployed persons was 7.5 million, and the jobless rate was 4.9 percent.
Among the major worker groups, unemployment rates for adult men (10.5 percent), adult women (7.9 percent), teenagers (26.7 percent), whites (9.3 percent), blacks (15.6 percent), and Hispanics (12.7 percent) showed little
change in November. The unemployment rate for Asians was 7.3 percent, not seasonally adjusted.
One characteristic of the lost decade is the stagnation of educational levels. The chart below shows the change in the percentage of people who have graduated high school and college from 1947 to 2003.
There’s clearly incentive for getting an education. The economy provides higher rewards and security to people who have more education. (The chart below shows the figures for 2006 from the Bureau of Labor Statistics.)
It’s striking that since 1970, when higher-paying jobs for unskilled labor (read manufacturing) began to decline as a portion of the overall economy, the level of educational attainment has shown relatively little growth.
Our economy is paying the price right now for an absence of vision and commitment to creating a workforce with the skills to push and innovate on an even wider margin than we have before.
The test of the next 10 years will be our ability as an economy to find new ways to make things and to put people in the position to do the work.
The technology skills of the newly educated are formidable. The broad absorption of social media tools into the population is an ultimate benefit for creating real-time training in the kind of skills and interactions that are going to be needed to these new ways of making things.
Take a look at one Millenium’s take on the lost decade of music
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