By Saeculum Research / Neil Howe
According to the latest Bureau of Labor Statistics (BLS) jobs report, goods-producing industries created 19 percent of all private U.S. jobs added in January 2017; service-providing industries created the other 81 percent.
This data illustrate an immutable truth about today’s economy: Blue-collar fields are shrinking (and aging), while pink-collar fields are surging. The consequences are many. Baumol’s cost disease could fuel a long-term U.S. productivity slowdown. On the upside, the long-rooted shift away from blue-collar work means that any worries of technology killing off jobs are unfounded. Ultimately, this sectoral shift will cause ever-more Millennial men to join—and reshape—the pink-collar workforce.
The new BLS data are the latest manifestation of a longstanding trend: Pink-collar professions are growing much faster than blue-collar ones. For example, according to a Pew analysis of BLS data, the educational services and health care fields each have doubled in size since 1990. Manufacturing, on the other hand, has lost 30 percent of its jobs since 1990, the worst performance of any sector. The latest data tell a similar story. Consider that more than one-quarter of new jobs added in January (28 percent) were in health care and leisure. Goods-producing industries as a whole created only 19 percent of new jobs.
Projections show that, if anything, the January data understate what our future employment landscape will look like. From 2014 to 2024, BLS projects service-providing firms to create 95 percent of all jobs. Indeed, by 2024, the health care sector alone is projected to contain a greater share of total workers (15 percent) than all goods-producing industries combined (13 percent)—and that includes agriculture, mining, construction, and manufacturing. The top three job-creating professions over the next decade will all be in health care: personal care aides, registered nurses, and home health aides.
Not surprisingly, because blue-collar sectors have failed to experience much job growth, blue-collar employment is top-heavy with older workers. For instance, BLS data reveal that the median age for a construction worker is high and getting higher. It was 42.7 in 2016, up from 38.7 in 2000. Compare this to the median age for a wholesale and retail trade worker, which is low and rising more slowly. It was 39.3 in 2016, up slightly from 37.1 in 2000. Precisely because they aren’t growing, these blue-collar professions don’t generate much net demand for younger recruits. Over time, this disconnect from the young-adult job market makes it hard for blue-collar firms to attract and recruit youth even when and where they need new hires.
The graying of the blue-collar workforce disproportionally hurts males. Fully 91 percent of construction workers and 71 percent of manufacturing workers are men. By contrast, 79 percent of health care and social assistance workers are women. In fact, most of the jobs projected by BLS to grow the fastest—including the top three professions overall—skew heavily female.
What’s behind these sectoral divergences? The primary explanation is “Baumol’s cost disease,” the tendency of high-productivity sectors to shrink as a share of total employment—and low-productivity sectors to expand as a share of total employment. This theory explains why jobs have shrunk so drastically in sectors like farming and heavy industry, and why jobs have grown so steadily in sectors like education, health care, social services, and public relations.
Further reinforcing this trend is the growing economic demand for services and “experiences” over goods and “stuff.” (See: “The Immaterial World.”) In part, the demand shift is being driven by demographic aging—with retiring Boomers, for example, fueling extraordinary growth rates in home health workers. Changing consumer attitudes also factor in. When older generations including Boomers engage in conspicuous consumption, they buy “things”—autos, homes, jewelry, etc. By contrast, the rise of social media has enabled Millennials to conspicuously consume and curate significant moments.
The large-scale shift away from goods production and toward services provision has major implications for the future of our economy, some bad and some good.
The bad news is that Baumol’s cost disease could impose a long-term drag on productivity growth. As we’ve mentioned, growth in conventionally measured productivity (real worker output per hour) has slowed considerably over the past two decades. (See: “The Great Productivity Slowdown: Fact or Fiction?”) The continued expansion of low-productivity sectors and the contraction of high-productivity sectors will further pull down the overall rate. The shift may also make productivity ever-harder to measure: How, for example, does one quantify the output of a public relations manager?
The good news is that most workers may not have to fear technology after all. Many experts are convinced that robotics, IT, and AI are destined to render a huge chunk of the workforce obsolete. (See: “The Age of the Intelligent Machine.”) But to a great extent, this has already happened—meaning that the same percentage decline in goods-producing jobs will have progressively less impact on total employment in the years to come.
Perhaps the largest effect of this shift, however, will be a massive gender retooling in which men flow into pink-collar professions—and perhaps redefine them.
It may not be a historical accident that men dominate blue-collar work and women dominate pink-collar work. Most pink-collar jobs require right-brain EQ and/or “flow” dexterity skills—which confer a natural advantage to women. Research has also shown that women excel at multitasking. Men, however intelligent and accomplished, tend to perform well in tasks that involve left-brained, straight-line thinking—in other words, the very tasks most prone to automation and algorithms.
This paradigm shift is creating a sense of gender discomfort. On the one hand, authors like Hanna Rosin point out that women are surpassing men in workplace credentials and aptitude. Yet lately women’s labor force participation (LFP) has been declining and, in most households, females are still dependent on male breadwinners. On the other hand, Donald Trump’s promise to bring back America’s blue-collar workforce resonates with working-class men. Yet these men yearn for a past that isn’t coming back—and at some level take pride in America’s ability to make more with less.
Many no doubt recoil from the stigma associated with a pink-collar job. Out-of-work 53-year-old welder Tracy Dawson flatly declares: “I ain’t gonna be a nurse; I don’t have the tolerance for people.” This difficult adjustment may partly explain the declining LFP of prime-age males (see: “Why Americans Are Working Less”), a subject ably covered in Nicholas Eberstadt’s recent book, Men Without Work (2016).
The irony is that, while white Boomer men provide the groundswell of Trump’s support, they are the single age bracket most likely to hold blue-collar jobs. Millennials, on the other hand, have experienced a far different reality. Eventually, as pink-collar work keeps growing as a share of the total workforce, Millennial men may carve out their own niche and masculinize many of these professions in ways we cannot yet imagine. This may someday make “pink” an outdated label.
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