WASHINGTON — Why would you create a job in America? That’s a once-unthinkable question for the world’s premier economy, but it’s a necessary one, because there are so many reasons not to create a job here today.
WASHINGTON — Why would you create a job in America? That’s a once-unthinkable question for the world’s premier economy, but it’s a necessary one, because there are so many reasons not to create a job here today.
Recent monthly jobs reports have shown solid, but not spectacular, job growth (in September, the economy added 248,000 jobs, the Bureau of Labor Statistics reported Friday). That’s the story of the past 15 years — at their absolute best. Job creation has run historically slow or once-in-a-lifetime negative throughout the 21st century. Even President Barack Obama, in a speech Thursday that celebrated the recovery from recession and predicted even better times ahead, conceded that “job growth could be so much faster, which would drive up wages.”
It’s important to ask, though, where that faster job growth will come from. The increasingly connected, increasingly automated global economy gives companies a lot of options for how to spend their money in search of profits. Most of them don’t involve hiring an American. You could hire someone in a developing country, for a fraction of the price. You could invest in software or machinery or robotics that do the work humans once handled. You could buy a foreign company for tax advantages or simply buy back shares of your own stock.
So why create a job here?
We begin with the simplest answer — and, historically, the most important one: Americans spend a lot of money.
How they spend money is changing, though, with heavy implications for job creation in the years ahead.
Dating back to the 1970s, about three in five U.S. jobs have been directly supported by consumer spending. That share has stayed level even as consumer spending has grown more and more important to the economy overall — it contributed about 61 percent of GDP in the mid-1960s and rose steadily thereafter, to 71 percent in 2012, according to the Labor Department.
That’s a critical decoupling, and one that sheds light on workers’ anxieties today. The reason consumer spending grew as a share of the economy, but consumer-related employment did not, is that Americans started spending more money on products made in other countries — and automation made it easier for American companies to produce more consumer goods and services with the same amount of workers.
In the coming decade, economists expect that trend to change. Stephanie Hugie Barello, a Labor Department economist, projects that consumer spending won’t grow anymore as a share of the economy, from now through 2022. That would suggest consumer-driven employment should start to fall as a share of the economy — but her projections say it will basically stay the same.
That’s because Americans are likely to spend a larger share of their money on health care and education — services that still require a lot of human labor — and less on other things.
The Baby Boomers are retiring and will require more medical care. Higher education is becoming a near-prerequisite for a well-paying job. These trends are sending more people to hospitals and to school, places where automation and outsourcing have not displaced nearly as many jobs as, say, manufacturing. In other words, they’ll need to hire to meet the domestic demand.
Barello projects health services alone will account for half of consumer-supported job growth in the next decade and one-third of all job growth. Those jobs will be funded by spending straight from consumers’ pockets but also from government safety-net programs (which is to say tax dollars and government borrowing).
This, then, would be a primary reason to create a new American job: to serve an ailing American consumer. But there are a few reasons to think it might not come true, at least not in the numbers currently predicted. Health spending growth has slowed recently — a fact Obama trumpeted in his speech Thursday, without mentioning that health care hiring has slowed, too, from its pre-recession peak.
Technology could change the picture, too; in 10 years, we could have robot doctors and widespread attendance in online colleges. History suggests tech advancements will mess with forecasts at least a little bit: In 2002, a Labor Department report predicted big job gains from the bustling field of videotape rental services.