How Should We Explain The Post Industrial Society?

Manufacturing jobs as a percent of employment have been in a steady decline.  That suggests that the decline is an inevitable trend that is part of our transition to the "Post Industrial Economy".  However, if we look at level of jobs in manufacturing, the level was steady for the 35 years preceding 2000.  Over 5 million manufacturing jobs have been lost in the last 12 years.  The typical explanation for the loss of manufacturing jobs is to attribute it to rising productivity.  That explanation implies that productivity was not a factor for the 35 years prior to the great decline beginning in 2000 when manufacturing unemployment was stable.  All of the increase in manufacturing productivity must have occurred during the last 12 years according to that hypothesis. 

It makes sense that manufacturing jobs have been falling as a percent of employment because the number of service jobs has been accelerating relative to the steady state in manufacturing employment.  There are lots of explanations for the rapid increase in service sector employment.  For example, healthcare spending has been rising rapidly as a percent of GDP.  Productivity in services also grows more slowly than manufacturing productivity. Moreover, we are all spending more on new services that did not previously exist.  Cell phone bills, and payments to internet and TV service providers have become a growing part of household budgets.  Manufacturers have also been outsourcing some of their work to third party service organizations.  For example, security services, information services and janitorial services have been outsourced from manufacturing companies to third party service organizations.  Those jobs are reclassified as service sector jobs.

The loss of manufacturing jobs must also be due to factors in addition to rising productivity.  The US trade balance has been negative.  That means that we are importing more tradable goods than we are exporting.  It is estimated that intra-company trade is a large percent of our total imports.  US manufacturers are offshoring production and importing products back to the US for sale.  That must account for a large share of the loss in US manufacturing employment.  The "Post Industrial Society" is not an inevitable trend.  It is not totally the result of increases in manufacturing productivity.  Its part of the way that nation states have managed globalization.  They have turned the job over to multinational corporations.  The assumption is that what is good for our large corporations is good for the country.