The Revolt of the Rank and File

Excerpted from the periodical The Nation, Vol. 109, October 25, 1919

The most extraordinary phenomenon of the present time, the most incalculable in its after effects, the most menacing in its threat of immediate consequences, and the most alluring in its possibilities of ultimate good, is the unprecedented revolt of the rank and file. ...

The common man, forgetting the old sanctions, and losing faith in the old leadership, has experienced a new access of self-confidence, or at least a new recklessness, a readiness to take chances on his own account. In consequence, as is by this time clear to discerning men, authority cannot longer be imposed from above; it comes automatically from below. ...

It is by no means impossible, then, that the apparent shift of power indicated by the new movement may bring in the beginning fresh acts of spoliation, a wild riot of red ruin, as many thoughtful observers fear. Such is particularly likely to be the case in the first instance, indeed, if this movement is to be met with nothing but sheer unthinking opposition, with forcible suppression by means of the policeman's club and the soldier's machine gun, if Gary and Huntington and the muzzled steel-towns of the Monongahela Valley are to be the sole reply to this manifestation of the workers' purpose to rule their own lives. Unhappily, our capitalists and politicians seem able to conceive the problem in no other terms. They appear to feel that we are shut up to a choice between ruthless suppression (by the use of armed force, if necessary) of this mutiny of the rank and file, and submission to a "dictatorship of the proletariat," in the worst sense of that horrendous term. ...

This new mass movement of workers cries aloud, not for opposition, but for cooperation; for it cannot be suppressed. It needs understanding, sympathetic guidance, education, rationalization, spiritualization. It needs prophets and teachers, men who shall be at once brave and honest and thoughtful and humble, men who shall have faith and vision and patience. Leaders it will in time find or create; but they must be leaders in a new sense. Theirs it will be not to rule or exercise authority on the one hand, or to assure their own power by flattering the mob on the other, but to discover and proclaim the truth of industrial and social relations, no matter whether it be at the moment popular or not. The future has no place for the soldier; the lawgiver and judge must hold their places by speaking with the voice of reason, not of force. It is time, then, for the powerful and possessing classes, before it is too late, to give up their preoccupation with authority and property, to recognize in this new movement, not the emergence of merely hostile and destructive forces, but the next step in the long march of the human race toward liberty. Let them not fight that movement, but work with it and in it. ...

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Candidate Cain and the Economics of Restaurants

The media continues to press presidential candidate Cain with a few tough questions, but it is time to ask him about minimum wages for restaurant staff. Given his record as past president of the American Restaurant Association he knows about sub minimum wage for tipped employees.

The Federal minimum wage went up to $7.25 an hour on July 24th 2009 but not for tipped employees whose minimum wage remains at $2.13 an hour. When the Fair Labor Standards Act was passed in 1938 restaurant workers, among others, were excluded from the minimum wage. In 1966 they were finally included, but only at 50 percent of the minimum wage. Some in the restaurant owners complained they shouldn’t have to pay any wages because their waiters and waitresses earned plenty from their tips.

Until 1996 the tipped wage went up when Congress raised the minimum wage, but in 1996 and again in 2007 the restaurant industry lobbied Congress to leave the tipped minimum at $2.13 an hour. The Federal tipped minimum has remained at $2.13 an hour since 1991, which makes it only 29 percent of the present $7.25 an hour minimum wage.

The sub minimum wage for tipped employees allows business to further bid down wages where there is a surplus of labor like there is today with 14 million unemployed. The definition of tipped employees governing the sub minimum wage further contributes to a surplus by enlarging the number of occupations and pool of people that can be paid a sub minimum wage. That is because the sub minimum wage can be applied to employees in occupations that customarily receive as little as $30.00 a month in tips.

First, recognize that the monthly minimum wage at $7.25 an hour is $1,160 a month at 40 hours a week and 4 weeks per month. However, the $2.13 an hour sub minimum wage for tipped employees is just $340.80 a month, which means a tipped employee needs $819.20 a month in tips to get themselves up to the minimum wage.

Under federal rules governing the Fair Labor Standards Act employers who pay a sub minimum wage must verify that tips are enough to bring an employee up to at least the minimum wage, a practice known as taking the tip credit. Taking the tip credit requires detailed recordkeeping because employers are required to verify that tips are enough to make up the difference of the minimum and sub minimum wage. If tips are not enough to equal the minimum wage then the employer is expected to make up the difference.

Notice though that tips received up to $819.20 per month are in lieu of normal obligations to pay wages to employees. Even if tipped employees receive tips at or above $819.20 a month, wage costs drop from at least $7.25 an hour to as low as $2.13 an hour. Even when tips are less than $819.20 a month all of the tips recorded become a cost saving for their restaurant owners.

Fair Labor Standards rules also permit valid tip sharing agreements among tipped employees where tips are accumulated and redistributed by predetermined formula. Valid means agreements must be in writing and only include those who customarily receive $30 a month or more in tips. At a full service restaurant a number of different staff will meet the minimum tip requirement, but waiters and waitresses commonly get the largest share of tips over those who work as hosts, hostesses, runners, bartenders or other dinning room attendants and staff.

Tip pooling potentially saves on wage costs by helping to eliminate wage gaps among tipped occupations. Without tip sharing, wages plus tips for waiters and waitresses will tend to be higher than wages and tips for a host or hostess or bartenders, bus staff and other staff with less access to customers. Wage gaps make it harder to get people to do the host and hostess job without paying higher wages as long as we expect that people will want to leave low wage jobs for higher wage jobs. Tip sharing relieves that pressure by transferring tips from waiters and waitresses to hosts, hostess, bartenders and so on. Tip sharing improves the economic situation of these other staff, but at the expense of waiters and waitresses and not their employer. Tip sharing, like the sub minimum wage, saves wage costs for restaurant owners and relieves them of the normal obligation to pay wages.

Tipped employees work mostly in the full service restaurant industry, hotel and motel accommodations, personal services and attendants at parking lots and car washes. The Bureau of Labor Statistics defines 22 occupations in industries that customarily receive tips where employment came to 9.5 million in 2010. Food and beverage serving workers had 7.6 million of these jobs and 2.2 million of them as waiters and waitress. Personal appearance workers had 457 thousand employed in tipped occupations with the majority of them as hairdressers and hair stylists. Maids, bellhops, concierge and other transportation and tourism workers had 964 thousand jobs with nearly 866 thousand as maids. Parking lot attendants, and those cleaning vehicles, mostly at car washes, have another 413 thousand jobs. The total is nearly 7.5 percent of national establishment employment.

Despite the business and restaurant opposition that surrounds Congressional proposals to change the minimum wage, the regulations for the Fair Labor Standards Act provide many exemptions and legal ways to avoid and undermine the minimum wage in addition to the sub minimum wage for tipped employees. In practice the Federal minimum wage does not apply to millions of jobs or wages.

The record shows that America’s restaurant association lobbies to undermine the already low minimum wage. We know there are millions of cheapskates who support the sub minimum wage, but it’s time to ask Mr. Cain if he is one of them, or one of us who work for a living.

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America’s Jobs in a Recession

The ups and downs of jobs usually lag behind the ups and downs of Gross Domestic Product (GDP) that define the start and finish of recessions. Based on changes in GDP the latest recession ran from the end of 2007 until June 2009 but establishment employment reached a high in January 2008 and declined until February 2010. The full decline in establishment jobs was just under 8.8 million from the January 2008 high to the February 2010 low. (1)

Jobs increased by over a million in the last 10 months of 2010 and continue to rise, albeit slowly. The gains are welcome but as the old saw goes the devil is in the details. America’s job trends can be explained in sobering detail using published data from the Bureau of Labor Statistics, a.k.a. BLS. Data is not manna from heaven but has to be produced with a consistent set of definitions and procedures to be comparable between industries, occupations and over time. At BLS they produce labor data within the North American Industry Classification (NAICS) that defines a carefully crafted set of industries. They publish nearly a thousand national data series within these definitions.

Some industries showed little or no employment effect from the recession. For example, health care picked up 663.5 thousand jobs during the recession; a 4.25 percent increase. In the 20 years from 1990 to 2010, health care employment had its low in January 1990 and its high December 2010. Since 1990 there are no months with lower employment than the same month a year before. It continues to increase in the months of 2011.

In addition to health care, education and government services escaped the latest recessionary job losses. From January 2008 until February 2010 private education was up 133.7 thousand jobs and public education added another 37.3 thousand jobs. The Federal government had enough new jobs to offset smaller job losses at state and local government for net gain of 88 thousand more government jobs.

The combined increase of jobs in government, health care and education during a recession magnifies job losses in other service sectors and makes them more vulnerable to recessionary decline. Private service-providing employment dropped 4.6 million jobs during the recession months, a 4.9 percent loss. Given that health care, education and government increased during the recession, other service sectors had to decrease more than 4.9 percent; some dropped much more.

Take wholesale and retail trade where jobs dropped 8.2 percent after reaching an employment high of 21.6 million at the start of the recession in December 2007. The widely reported shift of jobs out of manufacturing and into the service economy does not always mention that replacement jobs came in discretionary services prone to abrupt decline in recession. In wholesale trade, durable goods jobs at merchant wholesalers for auto parts, home furnishings, construction materials and others dropped almost 13 percent. In retail trade, automobile dealers lost 19.2 percent of pre recession jobs; furniture and home furnishings store jobs dropped 22.4 percent; building material and garden supply jobs were down 11 percent.

Trucking employment dropped 12.8 percent from January 2008 until February 2010, the biggest drop in transportation jobs. Combined transportation and warehousing had 9 percent recessionary job losses, but individual sub sectors in air, rail and water transportation, couriers, messengers, warehousing and other support activities were off from 7.5 to 10 percent of jobs. Only local commuter transit was spared from recessionary job losses.

As Americans lost 3.8 million manufacturing jobs from 1990 until 2008, they took 3.6 million new jobs in administrative support. In the North American Industry Classification (NAICS) documentation manual, firms providing administrative and support services perform routine support activities for day-to-day operations of other businesses on a contract or fee basis.

Some of the 3.6 million new administrative support jobs in the 1990 to 2008 period included 1.44 million new jobs in temporary help services, and 517 thousand new jobs in professional employer organizations, which are jobs contracted with client firms to fine-tune employment with the ebb and tide of business. Count 382.6 thousand more jobs in landscaping services, 217.8 thousand more jobs in security guard companies and investigation services, 230.1 thousand more jobs in janitorial services, 140.8 thousand more jobs at telemarketing bureaus and telephone answering services. Include 87.8 thousand more jobs at collection agencies where employment more than doubled since 1990.

Combined administrative support services jobs built up to over 8 million before the latest recession wiped out more than 1 million of them, a 13 percent decline. Employment services including temporary help services proved especially susceptible with a 23.4 percent drop in jobs.

The expanded use of consumer credit and the build up in sub prime home mortgages helped fuel the build up and then collapse of financial services jobs at credit intermediaries for both deposit and non-deposit institutions. Jobs at deposit institutions like banks, savings and loan, and credit unions had modest but steady growth after 2000. Jobs at non deposit institutions like credit card issuers, consumer lenders, and real estate credit jumped 378.5 thousand to its highest employment of 776.3 thousand jobs in 2006. Housing related jobs in real estate and construction also reached their highest employment totals in 2006 as the housing bubble peaked prior to the recession.

Recessionary job losses in credit intermediation were slightly bigger than trade: an 8.43 percent drop. The non-deposit portion of credit intermediation lost 15.1 percent of pre-recession employment, down 219.4 thousand jobs from the 776.3 thousand high for 2006. Real estate jobs including jobs at offices of real estate agents and brokers were down 7.3 percent following their 2006 highs.

Construction took the worst losses from the housing bubble and recessionary declines: a 25.9 percent drop totaling 1.94 million jobs. Only 190.7 thousand jobs were lost in heavy and civil engineering construction, primarily for utilities and highway, street and bridge construction. The rest were for jobs in building construction and specialty trade contractors needed in home construction. Construction losses also affected professional employment where jobs at architectural and engineering service firms were off 11.7 percent, a decline of almost 170 thousand jobs.

Jobs in leisure and hospitality services declined sharply in the tech bubble recession of 2002 and again in the 2008, but otherwise they have acted as replacement jobs for jobs lost in manufacturing and jobs lost from slow growth in service sectors that utilize labor saving computer technology. Since leisure and hospitality combine arts, entertainment, recreation, accommodations and food services, these jobs are supported by discretionary spending prone to decline in a poor economy.

The necessity of eating does not extend to eating at restaurants. Going out to have others cook and serve turns out to be one of many ways to create leisure and hospitality jobs vulnerable to recessionary loss. Restaurants lost 356.3 thousand jobs in the recession but other jobs dependent on discretionary spending include hotel and motel accommodations, music and concerts, team sports, racetracks, nature parks, amusement parks, gambling casinos, golf courses, ski resorts, marinas, fitness centers, ice rinks, swimming pools, bowling alleys, day camps, and a few more. Fitness centers reached a high of 512.3 thousand jobs in 2008 after more than a decade of steady growth, but jobs dropped more than 5 percent in the 2008-2009 recession.

Exercise can be a walk in the park or walk on a treadmill; one has jobs, one does not. The latest recession gives a blunt reminder how easy it is to switch from one to the other. The growing reliance on jobs from discretionary spending is one result of the long term growth in labor productivity. As the growth of productivity in manufacturing and services like publishing, communications, finance and trade reduce jobs more people are forced to find work in low productivity services.

Health care, education and government services have millions of low productivity jobs that continue to be a major source of new jobs. Even though these jobs are more resistant to recessionary decline they depend more on tax financing, or tax subsidies, and political support than other low productivity services. Otherwise Americans are working in a higher percentage of low productivity jobs in discretionary services at restaurants, hotels, gambling casinos, pet care, landscaping, child care, and loans and credit cards. In the next recession these jobs will melt away; by the thousands, or millions.

Note (1) Labor data are from the Bureau of Labor Statistics, U.S. Department of Labor

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Job Training and Public Policy

Free traders, privatizers and devoted deregulators everywhere know job losses in manufacturing make up bad news, which is why they forecast new investment and expansion into sectors with higher productivity and more jobs for the future. They talk vaguely of new high tech jobs, always careful to mention computers and computer technology. They warn these new jobs take college degrees and so they advise, “Get some training.”

Holding out training and education as the path to better jobs shifts the responsibility for failure, or a menial job with low pay, on to the individual and away from business and government policy. Alan Greenspan, the former Federal Reserve Chairman, was very cleaver doing that. When he would testify on Capital Hill an inquiring committee member would ask why America has so many low paid jobs. He would answer people need to get some training so they are ready for today’s new high tech jobs. Today’s jobs require high skills, he would say. In other words, people could have better jobs if they would only take the initiative to get that training; Mr. Greenspan cannot be held to blame.

Committee members would usually stop their questions following his “Get some training” answer. After all making college pay depends on a financial return, which requires complicated calculations. The need for calculating compound interest gives the impression that investment returns are precise and use only one procedure. However, there are different procedures, even though the actual arithmetic is always precise.

Economists, for example, like to include time in college as time away from work. If time in college is time away from work then lost or foregone wages as well as tuition payments will be a cost of college and included in calculations. Those less devoted to the economist’s way might wonder why time in college is time away from work. Many go to college and work. The time in college might come from leisure or free time instead of work. The matter is in doubt and depends partly on preference.

Despite the need for choice in computing educational returns a common procedure compares interest adjusted wage differences over time with interest adjusted tuition and fees over the same time. The process requires interest calculations because money paid for college tuition and expenses could be used to buy stocks and bonds or other interest earning assets. Tuition and expenses amounts to an investment in a higher paying job, even though college students may want to go to college for other reasons. Millions of America’s jobs like cashier need only general workforce skills whereas jobs needing college degree skills like nurse, accountant or teacher earn a higher wage that allows estimating a financial return for the wage difference.

Another method converts college tuition and expenses into an estimate of the minimum salary increase that will make college a paying investment. Suppose in-state tuition at public college is $8,000 per year each year for four years. In some states like North Carolina, the state tuition is reported as $7,008, while in others like Michigan it is $12,634. Some are above, some below $8,000, but we let $8,000 be a representative tuition for 2010. In the first year $8,000 invested in stocks and bonds would earn interest or dividends. Similarly in the second year, except $16,000 would be invested and the second year earns interest or dividends on $16,000. At the end of four years at the time of graduation the principal invested and the interest earned is a total amount, which will equal $36,307.77 at 5 percent interest. Our thanks for the $36,307.77 total go to the built in spreadsheet functions on MS Excel.

Borrowing the tuition does not change the calculation unless interest rates differ between borrowing and investing. To have the college investment pay, a higher income stream from a higher paying job must be equal to, or greater than, monthly earnings on $36,307.77. If we presume the same 5 percent interest rate, then borrowing only changes $36,307.77 of equity investment into $36,307.77 of debt. Either way the college investment amount is $36,307.77 after four years.

The principal amount of $36,307.77 earning 5 percent interest over the next 10 years and compounding monthly will be equal to $59,799.24. Start at graduation and $384.97 of extra income each month over the next 10 years using 5 percent interest will be $59,799.02. The $384.97 equals the minimum extra monthly earnings necessary to pay for a college education at an interest rate of 5 percent. A lower interest rate will lower the amount of necessary earnings; higher interest rate will raise the amount. Using a 2,080 hour year means $4,619.64 a year of extra wage and salary makes college a paying investment. Experiment yourself. Use the Excel help file under FV, which stands for future value. The spreadsheet entries above are =FV(.05/12,120,0,- 36,307.77,1) and =FV(.05/12,120,-384.97,0,0).

Remember that graduation from college for the many who attend college right after high school implies entry into the labor force at age 22. The social security retirement age is 67 years. Congress and the country are expecting 45 years of work. Forty-five years of work means that all the BA graduates since 1965 to the present have not reached retirement age. The total comes to 47.2 million. (1)

The education and skills training necessary to fill America’s occupations varies widely but the Bureau of Labor Statistics developed a skills classification to reflect the current education and training needed for jobs reported within its occupational categories. The BLS categories include occupations that typically require college degree training: baccalaureate degree, masters, doctorate, and professional degree. The term required has a broad use because in some occupations the degree is absolutely necessary to be considered, where in other occupations a college degree is not strictly required but the skills needed for entry are such that candidates without a degree are much less likely to be considered, much less employed.

In 2010, 27.5 million jobs in the U.S. economy needed a BA degree or above for jobs reported from Bureau of Labor Statistics occupational data using the Bureau of Labor Statistics skills classification. Because those with professional, doctorate or masters degree usually have a baccalaureate degree before starting a graduate program, the 47.2 million eligible BA degree holders reported by the National Center for Educational Statistics can be directly compared to 27.5 million jobs that need a BA degree or above. The difference suggests plenty of qualified candidates for America’s jobs that need college degree skills, or conversely that many people with college degrees take jobs that do not need college degree skills.

Making college pay is a financial matter, not a matter of degrees, job title or status. People with college degrees take jobs that do not need college degree skills, but college will pay as long as those with a college degree earn more than a high school graduate in the same job. If college does not pay, it would be necessary to have a college graduate in a high school job and earning no more than high school graduates.

In the present circumstance of jobs, tuition and interest rates, “Get some training” remains good advice, but only for individuals. What works for individuals does not make a public policy applied to the larger society. The number in the labor force with BA degrees keeps going up because new BA degree graduates now exceed 1.5 million a year which is nearly triple the graduates from 45 years ago who are leaving the labor force. More are already attending and finishing college, but jobs needing college degree skills remain stuck under 28 million and continue to be 19 to 22 percent of employment reported in the occupational employment survey.

There is no increase in Americans attending college that will relieve America from low wage jobs and unemployment. Increasing the supply of well trained job applicants does not create the demand to employ them, nor assure them a higher wage to make that training pay. Politicians who want you to “Get some training” give you good personal advice for now, but they are really changing the subject.

Note (1) National Center for Education Statistics, U.S. Dept. of Education

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Wisconsin Jobs and Governor Walker

Governor Walker needs new jobs more than most governors given the controversies over deficit reduction and public employees. The governor’s plan to create private sector jobs sounds like lots to expect from deficit reduction and business tax cuts, but the Bureau of Labor Statistics publishes enough about jobs to assess his chances for success.

Wisconsin reached a monthly average high of 2,884,400 establishment jobs in 2007, but it had 2,833,800 jobs in 2000. In 2010 the monthly average of statewide employment was down to 2,725,900, an average that is off by 107,900 jobs since 2000. The decline in jobs came as a net decrease of 128,500 private sector jobs and a 20,700 net increase in public sector jobs.

Like most states Wisconsin has a decline in manufacturing jobs. In 1990 it held fifth place for states with 22.8 percent of statewide jobs in manufacturing. It reached first place in 2009 even though manufacturing jobs dropped to 15.7 percent of Wisconsin establishment jobs. Now manufacturing jobs are down 165,300 from the high of 594,700 in the 1990’s.

Wisconsin has the best record of states in limiting manufacturing job losses, yet it still needs 165,300 new jobs to replace jobs lost in manufacturing. That will be difficult because some Wisconsin services have a decade long record of decline. Wholesale and retail trade, utilities, information services that include publishing, broadcasting, phone and Internet, real estate services, and repair-maintenance services show a modest but steady decline in jobs and declining percentage of Wisconsin jobs from 2000 to 2010.

Higher labor productivity limits manufacturing jobs but labor saving computer technologies have limited jobs in service industries like wholesale and retail trade. The use of computers for barcodes, inventory management and Internet sales raise sales per work hour and limits jobs. Digital technologies allow Craigslist to supply free classifieds with a few dozen out of state jobs, while netflix knocks out jobs at video stores. Higher quality for automobiles, appliances and machinery limits the need for repairs and the need for repair jobs.

Wisconsin job losses occurred in 11 industry sectors defined and reported by the Bureau of Labor Statistics. Combined these sectors dropped 8 percent of Wisconsin jobs from 2000 to 2010: 55 to 47 percent. While some jobs in construction or transportation should recover in a stronger economy, jobs already decimated from computer technologies and higher labor productivity and with a decade or more of decline will not recover their previous share of Wisconsin jobs.

Percents must total one hundred which guarantees an 8 percent loss equals an 8 percent gain for other industries. Expect new jobs to come from the limited number of services that had higher growth over the last decade. Health care picked up 73 thousand jobs, which were more new jobs than all other private sectors combined. Health care, government jobs including education combined with private education jobs many at colleges were the big gainers since 2000. These three accounted for over 70 percent of the 8 percentage gains over the last decade. The remainder of replacement jobs came from selected professional and financial services, accommodations, restaurants, personal services like salons and laundries and non-profit membership associations.

The governor’s plan eliminates government as a source of new jobs, but health care also needs government support, which the governor apparently opposes. Tax incentives to generate investment capital are risky for creating state jobs because the funds might leave Wisconsin for investment elsewhere.

People in Wisconsin should ask themselves, “Where will I work in the economy the governor wants to have?” I confess it might be in another state.

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Texas Jobs

In the Time magazine April 4, 2011 issue on page 20 you will find a story “Where the Jobs Are.” There is a U.S. map with a red line pointed to the state of Texas. The caption reads Texas added 211,800 jobs in 2010.

I checked the Bureau of Labor Statistics, Current Employment Survey file for statewide Texas jobs and found the numbers to compute the increase. As Time reported Texas establishment jobs were up 211.8 thousand for the 12 months ending December 2010.(1)

Citing the 12 month increase when jobs are going up generates a larger number than comparing another commonly cited figure: the monthly average of jobs for the year. Texas reached its highest monthly average of 10.6 million establishment jobs per month in 2008. Jobs declined to 10.3 million in 2009, but the monthly average improved by only 35 thousand in 2010.

Texas jobs from 2000 to 2010 are up by an average monthly increase of 910.4 thousand, a bigger increase than any other state. However, Texas also had the biggest increase in population in the same period, which was up 4.3 million between 2000 and 2010. Despite the new jobs, population growth was four times faster than jobs.

The figure Time magazine cites suggests a better future for Texas jobs, but the Bureau of Labor Statistics publishes 159 data series that give statewide details of Texas jobs by industry sector and sub sector. As the old saw goes the devil is in the details.

Texas had just under a million manufacturing jobs back in 1990, which was 13.3 percent of statewide employment. Only 811 thousand remain, which is now 7.8 percent of Texas jobs. The 5.5 percentage decline means Texas needs faster than average growth in service industry employment to make up for the declining share in manufacturing.

Trouble is higher productivity restricts jobs in services not just manufacturing. Computer technology limits jobs in wholesale and retail trade where the use of computers for barcodes, inventory management and Internet sales raises sales per work hour and limits jobs. Amazon computers put Borders books in bankruptcy as netflix knocks out jobs at video stores.

Craigslist offers free classified advertising with a few dozen out of state jobs while fewer and fewer bother with the Yellow Pages. More enjoy the convenience of on-line banking from their home computer while fewer drive to a bank to exchange paper with a teller. More use continuously updating Internet stock quotations instead of newspapers.

Services like wholesale and retail trade, newspapers, communications and finance including insurance and real estate dropped as a percentage of statewide jobs between 1990 and 2010, which makes them like manufacturing because they have to be replaced by a declining number of other services.

In all, 12 sectors defined by the Bureau of Labor Statistics lost 11 percent of Texas jobs from 1990 to 2010. Small share losses in natural resources, accommodations and personal services should recover with a better economy, but jobs lost to productivity gains and computers will not recover their previous share of Texas jobs.

The reality of shifting jobs between service sectors together with the long term decline in manufacturing limits the opportunities for Texas jobs. Percents must total one hundred which guarantees an 11 percent loss equals an 11 percent gain for other industries, but the sectors that gained a percentage of Texas jobs over the last two decades will have to continue to do so if Texas can meet its job requirements.

The biggest share of replacement jobs came in health care. Health care picked up 643 thousand new jobs equal to a 3.6 percent bigger share of statewide jobs. Public and private education jobs are up 485 thousand jobs over the last decade, 1.6 percent of statewide jobs. Texas has to support education and further health care expansion and concentrate on producing its health care needs within its borders to expect to meet the need for new jobs.

Private sector services in selected professional and business support services gained another 3.3 percent of Texas jobs. These include 280 thousand more jobs in careers like accounting, architecture, engineering, computer design, management consulting, and scientific research, but also business support services with 318 thousand new jobs in administrative and facilities services, employment services, temporary help services, telemarketing, security, janitorial maintenance, landscaping and a few more.

Professional services give a chance to bring in spending from outside Texas to support jobs with exported services. For 20 years growth rates nearly double the statewide average helped Texas meet its job needs with professional services. However, professional services are increasingly produced and delivered by computer as part of competition in the high productivity global economy. The reality of competition from other states and other countries makes it risky to expect above average job growth for professional services.

After professional services it was leisure and hospitality jobs including 401 thousand more jobs at restaurants that gained percentage share of Texas jobs. Construction, transportation, and repair services, mostly auto repair, also made small percentage gains.

Like so many other states, Texas jobs are shifting out of high productivity industries in the global economy and into low productivity industries in the local economy. Low productivity is the friend of jobs, but low productivity jobs can be divided into career jobs with generally self supporting salaries in health care and education and lower paid jobs in business support, leisure and hospitality as janitors, waiters, waitresses, maids, cashiers, ushers and ticket takers.

In politics the Democrats promise jobs and fail to deliver, the Republicans promise jobs and fail to deliver, and back and forth. Jobs are a long term problem. I reference 1990 and 2000 to emphasize that point. If Texas politicians want jobs they will need to put away their free enterprise slogans and develop some new policy for the long term. But that is a topic for another article.

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Note(1) All job and employment number citations are from the Bureau of Labor Statistics, United States Department of Labor, Current Employment Survey. No exceptions.

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Ohio Jobs and Governor Kasich

Ohio Governor Kasich has picked a tough policy challenge for himself, but far more with jobs than politics. Ohio ranks second for statewide jobs losses over the last decade. Only Michigan did worse.

Ohio establishment jobs are down a monthly average of 603 thousand in 2010 compared to 2000. The Governor's plan to turn jobs around looks doubtful. In the mean time the U.S. Bureau of Labor Statistics publishes plenty about Ohio jobs to assess his chance for success. Note (1)

All of Ohio’s 603 thousand job losses came from the private sector. Ohio state and local government including public education is up by 5 thousand jobs, but losses to federal jobs in Ohio offset the gains. Ohio had 785 thousand government jobs in 2010, the same as 2000, even though statewide establishment jobs dropped from 5.6 to 5 million.

Ohio had just over a million manufacturing jobs back in 1990, which was 21.7 percent of statewide employment. Only 624 thousand remain, which is now 12.4 percent of Ohio jobs. The 9.3 percentage decline means Ohio needs faster than average growth in service industry employment to make up for the declining share of manufacturing.

Trouble is higher productivity restricts jobs in services not just manufacturing. Computer technology limits jobs in wholesale and retail trade where using computers for barcodes, inventory management and Internet selling raises sales per work hour and limits jobs. Amazon computers put Borders books in bankruptcy as netflix knocks out jobs at video stores.

Craigslist offers free classified advertising with a few dozen out of state jobs while fewer and fewer bother with the Yellow Pages. More enjoy the convenience of on-line banking from their home computer while fewer do paper transactions with Ohio’s 21 thousand remaining bank tellers. More use continuously updating Internet stock quotations instead of newspapers.

Computer technologies helped decimate trade jobs in Ohio, which declined 144 thousand since 2000. Information services like newspapers and communications and finance including insurance and real estate lost another 56 thousand jobs with them. Worse these services are like manufacturing because they have a declining percentage of Ohio jobs that have to be replaced by a declining number of other services.

In all, eight industry sectors defined by the Bureau of Labor Statistics lost 8.6 percent of Ohio jobs from 2000 to 2010. Small share losses in construction, utilities, and transportation should recover with a better economy, but jobs lost to computers will not recover their previous share of Ohio jobs.

The biggest share of replacement jobs came in health care. Health care picked up 134 thousand new jobs equal to a 4 percent bigger share of statewide jobs. Government jobs including education did not increase, but government jobs excluding education picked up 1 percent of Ohio jobs. Even though public education jobs are off slightly, private education more than made up the difference. Public and private education jobs are up 1.1 percent of statewide jobs over the last decade.

A service sector defined by the Bureau of Labor Statistics to report jobs for offices of holding companies and corporate, subsidiary and regional managing offices added 23 thousand jobs, a .6 percent share increase. Ohio has lost so many jobs there were small percentage gains for utilities, transportation, selected professional services, accommodations, restaurants, and personal services even though all these services lost a few thousand jobs from 2000 to 2010.

Governor Kasich plan cuts spending and jobs in the principal sectors that did well enough to relieve the misery of statewide job losses over the last decade. Free enterprisers like Governor Kasich ignore the shift out of high productivity employment and the necessity of looking for anything leftover. Increasingly what is left are jobs in health care, education, government and a smorgasbord of low productivity services in accommodations, restaurants, business and personal services.

More health care means more jobs. Ohio desperately needs to keep its manufacturing jobs, but Governor Kasich and the Washington establishment ignore jobs moving abroad in search of cheap labor. Ohio has many jobs left to lose. Gains will be harder, especially with Governor Kasich on the attack.

Note (1) All job and employment number citations are from the Bureau of Labor Statistics, United States Department of Labor, Current Employment Survey. No exceptions.

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