Monday, October 28, 2013

The Knowledge-Based Economy (excerpt)

During the second half of the previous century, the US economy evolved from manufacturing to services. Since 1950, payroll employment in services increased 90 million to a record 117.6 million during September. Manufacturing employment peaked at a record 19.6 million during June 1979, and is down to 12.0 million now.

In recent years, the economy has been evolving into a knowledge-based one. The number of adults with a college degree has increased from 21.7% of the labor force in 1992 to 31.6% currently. They tend to have the lowest unemployment rates. Currently only 3.7% of them are jobless. In other words, today’s structural unemployment problem is mostly among workers without a college degree.

Here’s the thing: Many knowledge workers are tasked with the job of eliminating the jobs of other workers, including well educated ones! They are constantly looking for ways to use technology to increase productivity. Many of them have their heads in the Internet Cloud and other technologies, and are using them to produce more goods and services with less labor. They are doing so in manufacturing, services, and even in information technology. Payroll employment in all information industries peaked at a record 3.7 million during March 2001. It dropped to 2.7 million during mid-2010, and has remained around that level since then.

Today's Morning Briefing: Pushing on a Cloud. (1) Yellen’s footnote. (2) Is unemployment cyclical or structural? (3) Fed’s liquidity lifting all stocks, not all jobs. (4) What is Yellen watching out for? (5) Involuntary part-timers, U-6, median time unemployed, permanent job losers, and the participation rate. (6) Five reasons why unemployment is structural. (7) The trauma of 2008 and business caution. (8) Policy uncertainty boosting unemployment. (9) Knowledge workers have their heads in the Cloud. (10) Working to put us out of work. (11) The government is subsidizing unemployment, and getting more of it. (12) Latest US data confirm all of the above. (More for subscribers.)

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