Wednesday, May 23, 2012

Engineers as the effect, not the cause

I would pick up a copy of The New Geography of Jobs by Enrico Moretti.  Moretti is professor of economics at the University of California, Berkeley.  The book examines the unprecedented redistribution of American jobs, population, and wealth.  The issue is not about cyclical change.  It is about a more complex, more interesting and more surprising shift.  We are experiencing structural changes.  The decline of Akron and the rise of Phoenix - - where Phoenix will triple or quadruple in size over the next thirty-year period.  It is a globe shift - - where Shenzhen's population has grown by 300 times in the same period.

The books details the centers of innovation - - the "new geography of jobs" - - places like San Francisco, Austin, Durham, and Boston.  Brain hubs - - where jobs in the innovation sector have been growing disproportionately fast.  The key to these brain hub jobs is human capital, which consists of people's skills and ingenuity.  People coming up with new ideas - - in very specific areas of the globe.

I really think this paragraph from the book is important - -

"If you take a walk in one of America's cities, most of the people you see on the street will be store clerks and hairstylists, lawyers and waiters, not innovators.  About a third of Americans work either for the government or in the education and health services sectors, which include teachers, doctors, and nurses.  Another quarter are in retail, leisure, and hospitality, which includes people working in stores, restaurants, movie theaters, and hotels.  An additional 14 percent are employed in professional and business services, which include employees of law, architecture, and management firms.  In total, two-thirds of American jobs are in the local service sector, and that number has been quietly growing for the past fifty years.  Most industrialized nations have a similar percentage of local service jobs.  The goods and services in this sector are locally produced and locally consumed and therefore do not face global competition.  Although jobs in local services constitute the vast majority of jobs, they are the effect, not the cause, of economic growth.  One reason is that productivity in local services tends not to change much over time.  It takes the same amount of labor to cut your hair, wait on a table, drive a bus, or teach math as it did fifty years ago.  By contrast, productivity in the innovation sector increases steadily every year, thanks to technological progress.  In the long run, a society cannot experience salary growth without significant productivity growth.  Fifty years ago, manufacturing was the driver of this growth, the one sector responsible for raising to wages of American workers, including local service workers.  Today the innovation sector is the driver.  Thus, what happens to the innovation sector determines the salary of many Americans, whether they work in innovation or not."

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.