YOU DECIDE: Do we still have airplane mechanics?

Date posted: December 10, 2010

Dr. Michael Walden is William Neal Reynolds professor of agricultural and resource economics at N.C. State University.Dr. Michael Walden is William Neal Reynolds professor of agricultural and resource economics at N.C. State University.

Media Contact: Dr. Mike Walden, 919.515.4671 or michael_walden@ncsu.edu

By Dr. Mike Walden
North Carolina Cooperative Extension

A couple of weeks ago I heard a caller to a local radio program lament that the U.S. economy no longer has airline mechanics. I know he was exaggerating, but his point was that good-paying skilled jobs in our economy are falling by the wayside.

I hear this worry frequently expressed when I give talks around the state. And the concern is not just that the recession has taken away jobs — most people realize unemployment rises during recessions. Instead, the worry is more deep-seated, and it’s based on two factors. One is a long-held worry that technology and modern equipment are replacing jobs. The second is newer: that trade with other countries is cutting jobs here.

Technological change has been a factor in the labor market forever. But rather than destroying jobs, the historical record shows technology alters the distribution of jobs. The replacement of the mule by the tractor dramatically increased the productivity of farming and allowed fewer farmers to grow more. In North Carolina, the millions of former farmers provided the labor supply that attracted the textile and furniture industries.

In recent decades improved technology and equipment have been responsible for a plunge in manufacturing employment. Yet manufacturing output in both the nation and North Carolina has continued to increase. In our state, the labor released from factories has allowed for the expansion of companies and employment in areas like information technology, health care and personal services.

The impact of foreign trade on the job market has coincided with improved communication and transportation capabilities that have effectively brought countries closer together. While many people have concluded world trade has been a net negative for U.S. jobs, the reality is actually more complicated.

In fact, there are three ways international trade can actually create domestic jobs. One is through U.S. exports to other countries. U.S. exports to foreign countries have been growing rapidly, and many economists see tapping into foreign markets as one of the best ways to boost both revenues and jobs at home.

Jobs can also be created at home when foreign companies decide to establish operations on U.S. soil. The most notable recent examples are foreign-owned auto companies in several (mainly southern) states. While North Carolina has not landed one of these vehicle-assembly plants, factories in South Carolina have spawned a major vehicle parts industry in our state.

Economists argue that even buying foreign-made products can create U.S. jobs. How so? If the foreign-made products save money for U.S. consumers, then those consumers have funds left over to spend on other things, and this, in turn, can create domestic jobs.

While these job-benefiting impacts of international trade do not necessarily mean globalization has been a net job-gainer for the U.S., they do suggest the job losses and job gains may be much closer.

So how have all these impacts worked to change the job market recently? Because we know recessions knock out just about all kinds of jobs, let’s look at job changes between 2000 (after globalization began in full force) and 2008 (before the latest recession really kicked-in). Let’s also look at jobs grouped by what people do; that is, using occupational categories.

The results fall nicely into three groups. First are occupational categories that gained jobs, and these were professional, construction and service occupations. Second are occupational categories experiencing little change in total jobs: management, sales, clerical, maintenance and repair, and transportation occupations. Last are two occupational groupings that lost jobs: farming and manufacturing.

These findings actually make sense. With the shift in our economy to jobs requiring more reasoning and complex decision-making, it’s logical that professional jobs have been the fastest-growing occupational category. Personal service jobs — particularly in health care — are on the rise, as were construction jobs prior to the recession. Many of these jobs also require face-to-face or on-site contact, so it’s hard for them to be out-sourced to other countries.

In contrast, communication (cell phones) and computer technology have likely made workers in the second grouping of occupations — management, sales, clerical, etc. — more efficient, and therefore, not as many workers are needed as the economy expands. Technological advances are also behind the decline in the number of farmers. And manufacturing jobs have been hit by the double whammy of technology and foreign competition.

Is this all for the good? You’ll have to decide. But by the way, there are still over 120,000 airplane mechanics at work in the U.S.!

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Dr. Mike Walden is a William Neal Reynolds Professor and North Carolina Cooperative Extension economist in the Department of Agricultural and Resource Economics of N.C. State University’s College of Agriculture and Life Sciences. He teaches and writes on personal finance, economic outlook and public policy. The Department of Communication Services provides his You Decide column every two weeks. Previous columns are available at http://www.cals.ncsu.edu/agcomm/news-center/tag/you-decide

Related audio files are at http://www.ncsu.edu/waldenradio/

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