The Shrinking Middle Class in America

[Whoha]

Are the other Chinese workers farmers or are they modern service workers?

You'd have to compare the wages of Chinese garment workers with Chinese working in retail or something... then, I doubt the garment workers make much more than the retail salespeople.

China isn't going to the mat for manufacturing because there are gobs of high paying service jobs available for their citizens.

Also, oh noes if the American less-absurdly-affluent weren't getting EVEN RICHER as fast as the American more-absurdly-affluent. Over the same time period that they've allegedly stagnated, HUNDREDS OF MILLIONS OF PEOPLE AROUND THE WORLD have been raised out of complete destitution and given some measure of basic comfort and security, largely due to the policies that are supposedly destroying our middle class.

If they truly have been raised up, then they should not be dependent on continuing to export to us.

[Al B. Sure!]

Here, we can settle this...

http://www.bls.gov/oes/current/oes_nat.htm

It appears that the national mean salaries of certain service occupations (food service, retail, healthcare support) are slightly lower than the mean salaries of production occupations. This does not, however, take into account differences in skill or education (take a $24K/year average retail salesperson compared to a $38K/year machinist; the machinist deserves a higher salary as he is more skilled and is harder to replace). Certain industries also pay less (for example, textile workers get paid less than or around the same as retail salespeople across several textile-related occupations).

All in all, I'd say as I said earlier... service occupations that do not require skill or education make around the same as manufacturing occupations that do not require skill or education. There is nothing inherently poorer about the service industries.

[Whoha]

Textile manufacturing employment in the US has collapsed so I'd imagine that has had a downward effect on wages.

[Al B. Sure!]

Regardless, there's no reason to say that service jobs pay less than manufacturing jobs for the same level of skill and education.

[Whoha]

I would say that is it a reason, since you are comparing services that are relatively protected from trade, against manufacturers that are totally exposed to it.

[Kuciwalker]

Compare the wages of Chinese garment workers to other chinese workers. Manufacturing does yield higher wage jobs on average.

Sure, if you're comparing them to subsistence farmers (or, often, farmers of any kind). But if you compare their wages to wages in even the bottom of the American service sector...

[Kuciwalker]

Textile manufacturing employment in the US has collapsed so I'd imagine that has had a downward effect on wages.

It's like you didn't even read anything I posted.

We used to have a broad array of manufacturing employment - some of which paid very poorly, some of which paid very well, some of which paid in between. The low-wage manufacturing employment went overseas and was replaced with low-wage service sector employment. The manufacturing that remains in the United States is overwhelmingly dependent on characteristics of American workers that can't be found easily in developing countries - namely, lots of education and human equity - and therefore is highly compensated. So if you look at the situation afterward, you think "oh man, all these high-wage manufacturing jobs were replaced with low-wage service jobs" when that's just not true.

[Whoha]

Sure, if you're comparing them to subsistence farmers (or, often, farmers of any kind). But if you compare their wages to wages in even the bottom of the American service sector...

If you're trying to argue that manufacturing doesn't drive wage growth, then what is the problem with protectionism?

[Whoha]

It's like you didn't even read anything I posted.

We used to have a broad array of manufacturing employment - some of which paid very poorly, some of which paid very well, some of which paid in between. The low-wage manufacturing employment went overseas and was replaced with low-wage service sector employment. The manufacturing that remains in the United States is overwhelmingly dependent on characteristics of American workers that can't be found easily in developing countries - namely, lots of education and human equity - and therefore is highly compensated. So if you look at the situation afterward, you think "oh man, all these high-wage manufacturing jobs were replaced with low-wage service jobs" when that's just not true.

The US runs an advanced technology trade deficit and has for a long time, we don't have any special advantage that is insurmountable in that field I'm afraid.

[Hauldren Collider]

If you're trying to argue that manufacturing doesn't drive wage growth, then what is the problem with protectionism?

You're an idiot.

[Hauldren Collider]

The US runs an advanced technology trade deficit and has for a long time, we don't have any special advantage that is insurmountable in that field I'm afraid.

You're disconnected from reality.

[Al B. Sure!]

The BLS has more information... Just putting it out there...

Let's compare mean hourly wages between manufacturing and service industries both in nominal dollars and 1982 dollars:
First number is the nominal mean hourly wage; in parenthesis are 1982 dollars.

Jan. 1993
Manufacturing:
$11.62 ($8.02)
Retail trade:
$7.27 ($5.02)
Wholesale trade:
$11.59 ($8.00)
Finance, Insurance, Real Estate:
$11.13 ($7.69)
Services:
$10.83 ($7.48)

Dec. 2009
Manufacturing:
$18.49 ($8.61)
Retail trade:
$12.74 ($6.03)
Wholesale trade:
$20.36 ($9.63)
Finance, etc. and Services have since been expanded into a bunch of industries; I'm not going to bother breaking them down.

Increases across the board but retail real wages have increased 20% since 1993 while manufacturing wages have only increased 7%.

Take that as you will. International competition probably did play a significant role in those differential growth rates.

however, real wages have increased across the board

[Kuciwalker]

If you're trying to argue that manufacturing doesn't drive wage growth, then what is the problem with protectionism?

This doesn't even make sense.

Manufacturing isn't fundamentally different enough from any other sector of the economy for that to make sense.

[Kuciwalker]

AS: if we want to compare to pre-outsourcing we really should go further back than 1993. However, 30s of googling didn't pull up easily viewable numbers so I'm not going to bother.

[Al B. Sure!]

The archives only go that far back unfortunately.

I did find this very quickly:

http://macroblog.typepad.com/macroblog/2005/12/are_workers_los.html

The url doesn't indicate it but it's from the Federal Reserve Bank of Atlanta


Pretty bad, right?

Not when you factor in other forms of compensation such as health benefits:


Kuci touched on it earlier but nice to see it in chart form.

There are some complications with this, however, such as the lack of median or variance figures. Also, how do increases in productivity relate to this increase in real total compensation. Is it possible that compensation is NOT increasing in step with productivity?