Where have all the jobs gone?

Carpe Diem has posted graphs of manufacturing employment and agricultural employment as a percent of total employment in the United States (see below) what is striking is how much the two graphs look alike.  The manufacturing employment trend has followed almost exactly the agricultural employment trend, only later and at a somewhat more accelerated pace.


This is the consequence of constant technological change and productivity growth.  For our society to get wealthier each worker must produce more output each year.  And since there is only a finite number of physical 'things' we can eat, wear or even possess (our bulging closets and basements testify to that), inevitably productivity will outstrip demand and employment will fall.

So where have all the workers gone?  There has been a temporary surge of employment in technology or 'knowledge' work but that too is falling at an even faster rate than manufacturing.  Notwithstanding all of the state and government 'high tech' quality jobs programs, tech employment will not soak up the workers.  It is simply too easily automated.  Instead employment is surging two categories:  'personal services' and 'government and government subsidized businesses'.

Personal services is a huge category that includes everything from hair dressing to lawn mowing to resort management and restaurants.  As we get more affluent we are able to pay more for the sorts of things that only the rich could get in the past.  Indeed we pay each other to get these personal services.  Research comparing German married women to their American counterparts found that even though many more American wives worked full time outside of the home, they had more leisure time because they could rely on efficient, inexpensive personal services from each other.  In a real sense we've followed David Ricardo's law of comparative advantage to it's logical end:  those who like to cook, cook, those who like to account for taxes, do the taxes.

It is likely that many of the jobs of the future will remain in this category, only becoming more inventive and sophisticated over time.  Virginia Postrel's "The Substance of Style" is an important book to read in this regard.  A significant part of the entrepenurial effort of the 21st century is likely to go into enabling people to get the services that they want at higher quality, lower price and greater level of sophistication and customization.

More later on the other major growth area - government and government subsidized industries.

Something to think about while waiting for you Mochalatte with a shot of expresso out on the Openwater.