Wherein your author takes on a professional economist re: the manufacturing vs. service sector jobs debate.
Declan,
Far be it from me to take on a professional economist, but two questions for Donald:
a) does the hourly wage calculation he cites include “total compensation”? If he’s using the data cited at the URL below, that would not appear to be the case. The type of manufacturing jobs that Donald declares people have a “fetish” for (admittedly, perhaps never the majority of manufacturing jobs), generally included pretty decent health and other benefits (vacation time, etc.).
http://www.bls.gov/webapps/legacy/cesbtab4.htm#b4.f.1
I’d like to see some figures that include non-wage compensation, I’d be curious to see what the numbers look like. Given the cost of healthcare, etc., non-wage compensation can amount to a substantial percentage of total compensation for lower wage workers - for one unionized public service sector job I’m aware of, wages amounted to $23,000, and “benefits”, $14,000+ in 2001 (and probably the latter figure is only larger, today).
b) shouldn’t Donald’s model include “soft costs” and total time employed, as well?
as he’s no doubt aware, discussing things solely in terms of wage compensation, or even total compensation, doesn’t provide a complete picture - are modern service sector jobs generally less secure? I think a lot of people perceive them to be. There’s a cost to that lack of security, in purely psychological terms that should require a premium in compensation for such employment to be equivalent to a more secure job.
There are also more direct costs… what is the “switching cost” for a service sector vs. a manufacturing sector worker? How long does it take one vs. the other to find a job, to regain equivalent compensation, etc. and what costs (uninsured medical expenses, relocation, etc.) are incurred in the process?
Are service sector workers employed, over the course of a 10 year period (to pick an arbitrary number) the same number of hours on average as a manufacturing sector worker? If there’s a difference, that’s either a plus or a minus that wouldn’t be captured by these numbers. If “disposable income” amounts to 10% of your net wages over a 10 year period, even a small gap between the two would amount to a substantial proportion of that… if a service sector worker is employed at 95% of the time a manufacturing worker is, then *boom*, they’re looking at taking home only 50% of the “disposable” income that the latter is.
To be clear, the specific numbers are purely hypothetical, it could very well be that, when all the numbers are plugged into the model, service sector workers come out ahead.
But to point to a single number, and declare that the debate is over, doesn’t strike me as a particularly strong argument, or doing significantly more than simply assuming one class of jobs is better than another.
Regards,
Thomas Leavitt
—– Original Message —–
From: “Declan McCullagh”
To:
Subject: [Politech] Why service sector jobs are better than manufacturingjobs
>
>
> ——– Original Message ——–
> Subject: jobs
> Date: Wed, 31 Mar 2004 09:14:46 -0500
> From: Donald Boudreaux
>
> …………….
>
> 31 March 2004
>
> Editor, The Wall Street Journal
> 200 Liberty Street
> New York, NY 10281
>
> Dear Editor:
>
> In his letter of March 31st, William Hawkins merely assumes that
> manufacturing jobs are better than service-sector jobs. He’s mistaken.
>
> The average hourly wage in the U.S. for non-supervisory professional and
> business services workers now is 9.6% higher than is the average hourly
> wage for non-supervisory manufacturing workers. And this difference is
> increasing. In 1980 this difference was less than one percent; in 1990
> it was 3.3%; in 2000 it was 8.3%. The bulk of high-paying jobs is in
> the service sector.
>
> It’s time that people abandon the irrational fetish for manufacturing.
>
> Sincerely,
> Donald J. Boudreaux
> Chairman, Department of Economics
> George Mason University
> Fairfax, VA 22030
> 703-993-1157 (office)
> 703-993-1133 (fax)
> 703-426-9299 (home)
> 571-426-5751 (cell)
> dboudrea@gmu.edu
>
>
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>
