Good luck with the ‘service economy.’ Spend the $1,000, go walk around England and see your future. Somehow they seek to survive selling each other cell phones, chocolate bars, and life insurance. The single largest employer? The Government.

It appears that policy makers in this country are placing too much emphasis on consumer spending as the driver of the economy. As many have observed, any economy based on an over-reliance of consumption to the detriment of production (i.e. manufacturing) is doomed to fail.

As the multinational companies continue to chase workers with low wages in emerging countries to manufacture/assemble products for consumption in the developed economies, the foundations of developed economies will continue to erode to the point where their consumers will be unable to buy those imported goods due to increasing unemployment. When that time comes, I hope the Walmarts and Targets of the USA will see the wisdom of investing in and patronizing local sources of manufacturing.

If we are going to create jobs in the “service industry,” let’s keep them in the US.

Business has never been about creating jobs. Rather, business is about generating profits. There seems to be a premise that business will always create jobs. That is less true than it used to be and eventually may not be true at all.

Technology has always been in the business of doing more with less and reducing labor is a consequence if not an obligation. As the capabilities of technology become as good or better than labor, will business need labor? Eventually the answer will be no. Of course that will be a problem for business as people will not have money to buy their products.

I believe we’re coming to a point where welfare (jobs) has to work much more compatibly with business. I don’t know what form that should take but I think the US and eventually all countries will have to address that issue. Business by itself will not address it because each business prefers that other businesses hire and pay employees to buy their products.

I was relieved to see that McKinsey included manufacturing as one of their six sectors. I’ve been concerned for the past 20 years that there are (continually) “leaders” in this country who think it’s okay for the US to not make anything anymore. The nation-economy that stops making stuff for sale (i.e., manufacturing) has, in the long run, ceased to become a viable economy. You can’t build a national economy on cleaning houses and mowing lawns—becoming a “service sector” economy is the most ludicrous thing I’ve ever heard of.

The study recommends more service jobs mainly because most of the recent growth in high-income countries has been in services. The result of following this policy has been the massive US trade deficit that has caused most of our unemployment and budget deficit. Services will never balance the trade deficit and therefore can not be the solution.

The three associations are the NTMA (National Tooling and Machining Association), PMA (Precision Metalforming Association) and AMT (Association for Manufacturing Technology). We just held a re-shoring Purchasing Fair in Irvine, CA. The next Fair will be in Mashantucket, CT on Oct 29. See www.purchasingfair.com.

But over what time frame is this true, that innovative sectors make a small contribution compared to established sectors? Perhaps in the short term this is true but after structural adjustment the new equilibrium in the long term might be different.

The MGI findings represent something of a perverse bad news–good news scenario for the U.S. economy. The bad news is that the economy is not likely to generate large numbers of high-value, innovative jobs over the foreseeable future. The good news is two-fold:
1. It is probably just as well that we won’t generate many such new jobs, since our education system is not generating sufficient numbers of technically qualified workers to meet even current low levels of demand, and since the country is making it increasingly difficult and unattractive for qualified foreign-born workers to remain in the country.
2. Many of the relatively low-tech, local-business, and household-services sector jobs that MGI anticipates do not require particularly high skills and are not particularly tradeable are, therefore, less subject to competition and wage compression from higher-skilled, lower-priced offshore workers.

So, maybe the Rolling Stones were right. You can’t always get (the jobs) you want, but sometimes, you might find, you get (the jobs) you need. Even this, however, is subject to a huge assumption: that consumers will somehow find the money to pay for these services.

Perhaps, rather than count on new industries to develop or old ones to resuscitate, we should focus on educating our children to define and create their own jobs of the future.

The US will find economic growth and well-paying jobs though the following activities:
- Further exploration and production of oil and gas in the Gulf of Mexico
- Exploration and production of oil and gas in the Artic Ocean north of Alaska
- Exploration and production of oil and gas off the East and West coasts of the US

They leave out the important energy and food sectors which need to be re-democratized and localized. These eat up share of wallet and should be the targets for new competition. Too much subsidized oil goes into those, and the globalized systems won’t survive price spikes when demand rises again.

The small-business sector is the way to grow this economy and get American families back to earning their own livelihoods and owning equity in businesses. Services and retail are not the only sectors that we need to grow. Quite the contrary. The authors leave sectors out where their biggest clients don’t want new forms of competition!

We need an Internet for energy with distributed generation, smart grids, and storage that alone can be US innovation for the whole world. We can cut down on all the costs of road building for hauling coal, and healthcare costs for respiratory diseases thrust on Social Security and FICA taxes by C02 emissions from this outdated grid. Tiny Portugal has 40% grid from renewables.

We need to bring food production back to these shores because we can no longer guarantee the cheap oil subsidized by tax breaks and military spending that built the plantation-based system all across Central America and the world.

Silo education in engineering and science? Olin must be in a vacuum. Engineering and science education gets more and more interdisciplinary every year—for the past decade—across the country. Every class incorporates creative and innovative problem solving because students demand this experience. Global UG competitions and co-ops do the same while giving students practical experience. We have to stop spouting cliches in this country.

The authors are correct by stating that policy makers’ focus on creating jobs through cutting-edge “clean” technologies is likely to be disappointed. An R&D diversification in various high tech that would have multiplier effects in the long term in creating jobs should be planned. It is possible for policy makers, in collaboration with industry experts, to identify the areas to which R&D should be allocated. In order to construct a portfolio of R&D areas, policy makers should identify what should be included in the R&D portfolio by quantifying the total effects—including the multiplier effects—and the complimentary effects. This approach is viable since it will reduce the risk and maximize the return in creating and expanding jobs.

The politics of place, and not the quality of innovation, restricts the growth of the clean-tech sector. Unlike the information technology boom where myriad jobs and huge wealth were created in “the cloud”, clean technology facilities need to be put somewhere (i.e. they need to be in someone’s backyard). Cumbersome siting requirements imposed by arcane, duplicative, and competing local, state, and federal layers of bureaucracy that give credence (and preference) to all would-be abutters, choke the life out of projects that would reduce America’s reliance upon fossil fuels. As a result, investment is chased away and innovation ceases. Thus making the viability of clean tech as a job-producing, wealth-creating sector a virtual impossibility.

Great discussion and good ideas about job creation.

It’s less a matter of competition as we have laid it out structurally in US, and more a matter of alliances that can converge to create finer innovation to solve 21st Century problems. It’s the broken system of traditional competition that led to greed from a few and complacency from many. It’s time to form dynamic alliances—based on merit—with solutions for the era we face. Let’s start by creating successful strategies to convert broken systems into vibrant innovation centers! Thoughts?

Any discussion about job creation leads to a conversation about competitiveness and innovation, largely dependent on scientists and engineers who generate the vast majority of innovation and a large percentage of new jobs in the US. Most companies are engineering-dependent and innovation-dependent and most CEOs would agree. Yet, the engineering hiring requirements still look to college graduates trained in technological silos (EE, ME, etc.) with little or no practical experience. Worse, little or nothing in their undergraduate curriculum that fosters creativity or allows for failure, a key ingredient in the innovation process.

Olin College of Engineering has demonstrated that an alternative approach works. Cross-disciplinary curriculum, “teaching in context” and project-based learning produce multidisciplinary problem solvers who happen to be engineers.

Olin has just graduated its 5th class including 3 Fulbright and 3 NSF Scholars; 35% are headed to some of the best graduate schools in the country and vast majority of the rest are employed. In the 4-year-old alumni group, there is 1% unemployment. More importantly, employers tell us that Olin grads ‘hit the ground running’ faster than others; and, after a year on the job, appear more like engineers that have been in the company for 3-4 years. It’s working. But, it is one small example of what could be.

It’s time for corporate America to tell colleges and universities that train engineers and scientists what they really want from undergraduate programs. That message might also filter down to K-12, as well.

The US would find the next era of growth in the entire spectrum of businesses, the key is to go rational in terms of pricing and the value add that we achieve shall be tremendous only if we are able to replicate a highly effcient wage model. Apple is a best example—design the hardware in Cupertino but manufacture it in China and sell it across the globe. Maybe an era would come when generic low-value stuff would be completely outsourced and the high-value-add stuff will happen in the US. The IT industry is an example. You have six million souls working in the US IT industry, most of the low-value jobs would go to a third world nation, what would remain is high-end niche product development and services.

Globalization was a necessary evil that has shifted the labor-intensive manufacturing sector to emerging economies of the world. Innovation along with the entire value chain in USA would ensure jobs are not outsourced and the products remain competitive. Also the mix of product-service portfolio is the best way forward.

We should focus on building transportation, affordable housing, clean energy and quality health care infrastructure.

America was built over two centuries of innovation. Once upon a time, almost everything: agriculture, retail, infrastructure, automobiles, space administration, everyday technology; reflected the best practices in the world. The fact that America became a giant super-power was a by-product of excellent, rational, best thinking on the part of every citizen. Wearing the patriotism on the sleeve couldn’t have a better effect—everyone related to the idea.

To get America back to the place it has belonged to for a long time, we need to challenge some assumptions.

First, old jobs cannot sustain forever, newer jobs have to take their place. We, as a nation, have to get in to the mindset of change.

Second, we need to stop being the world’s “information center”. America’s role, lately, has been to develop technologies and ideas; and then let the fruits of such meticulous research get eaten by others through leaks, co-operation, or outsourcing. This results in significant economic losses as our ideas and technologies fuel others’ growth.

Third, manufacturing has to return to America. There is absolutely no other alternative. We need to rework on our industries, outputs, productivity, and priorities. Manufacturing brings with itself a multiplier ripple effect, it is simply vital to let go. Perhaps, we could think of some model for sustainable manufacturing: more flexible finance models, long term material hedging, freight corridors, assured buys, etcetera, to offset others’ (for example China, India) low labor-cost advantage.

While looking at job generation, I personally feel that these economies should also look at the capability to save and thereby the level of inflation that would affect savings in the future. It would boil down to the ratio of years of work to years of retirement in an individual’s life. Without this capability within the economy to provide to its citizens, it’s going to be a hamster scenario: keep on running until the lights go out! Taking India as a case, while savings are high, inflation rates suggest that the savings may not come in handy in the future when it gets to tough for retirees to just be retired! So every economy will have to look at the cost of living and the level of consumption along with the job scenario.

Sustainable growth will come only when US companies concetrate on real value add. This will happen through innovative products and production methods, improvement in productivity, and really speaking, manufacturing in the US itself. Value added in the process must be much more than the (high) labor and processing costs that are inevitable while doing production in US.

This is the only way that money will be put productively and in a sustainable manner in hands of American consumers. That is what will really drive the economy. Unless the economy is driven by such robust means whatever the growth that will come only through services or by credit, buying or other consumption-driven channels will evaporate in long run.

Consumption-driven business cannot really sustain in the long run. Sooner rather than later, all the credit will have to be paid off and on that day or reckoning things will unfortunately fall through.

The “new” economy is not about services only! Clever companies go for “product-service-combinations”, i.e., reinforcing and extending your product offering with services that give extra value to the customer. This may include outsourcing your production and refocusing on additional services to be added to these products.

Look at the present employment numbers in each identified sector. Categorize the Sectors A, B and C based on their employability. No doubt the potential to grow in numbers would be with the A category. I would not be surprised if IT falls in C and hence would not offer a solution even with growth. On the other hand, automotive and mining would be in category A, but every one knows they offer no increase in employment, as a matter of fact there would be shrinking employment with newer innovations (though the profitability would improve).

This calls for out-of-the-box thinking. Pursue multiple new sectors (after ensuring their potential). Hopefully few of them (definitely not all) will deliver over time. No doubt it calls for huge investments, but there is no alternative. Do not avoid or side step sectors which offer innovations which eat up present employment. Be ready to face them because if not you, your competitor will introduce those measures tomorrow. Choice of sectors to be pursued should left to a group of experts.

As a person who has studied social psychology in the US and lived and observed its worker behavior for a considerable amount of time, I am left wondering about a few things: 1. Why considerably smart workers in the US are opposed to the idea of doing something on their own in spite of easy availability of micro-finance? 2. Why are they indulgently following the state system of finding employment through the employment exchanges only? 3. Why are enough of them not moving from one place to another in a country that is known for its migratory trends? 4. Why have they not looked at potential export opportunities? 5. Why have they not thought of enhancing their skills? 6. And, why have enough of them not looked at service offerings for international businesses in the US?

Implied in these six questions is the question of general reticence of a people who claim to be liberal but who are inordinately sensitive to issues, including debate and advice. I fully agree with your conclusion that “Low-tech green jobs in local services, such as improving building insulation and replacing obsolete heating and cooling equipment, could generate more jobs than would be created through the development of renewable technologies” because we are basically referring to a low-skilled workforce that is busy enjoying government support and not willing to exert its way out of an endemic depression.

Two key factors to a locality’s or region’s sustainability and growth are minimizing economic leakage and maximizing dollar circulation within the communities where those dollars are earned. Unfortunately, the emphasis on megabusiness and its reliance on economy-of-scale global outsourcing have devistated regional and local manufacturing in the US. Where tangible goods can be produced and consumed locally, they should be. Small business offerings and entrepreneurship needn’t be limited to the service sector; but if investors do not embrace the long-term benefit to the U.S. of growing local economies, the nation as a whole will eventually bleed out.

For those interested in current job posting momentum—opportunities companies are recruiting for now, as we all watch for signs of recovery—Monster publishes a Monthly Employment Index (MEI), with February numbers announced yesterday and offering some welcome hope: the index rose by ten points in February, as employers resume recruitment activity following January’s seasonal lull; year-on-year growth rate now up a positive 2 percent. Most promising job categories: information (telecom and media distribution); professional, scientific, and technical services also rise.

The summary took 15 pages to say governments do not contribute to any economy. I am a service provider, but like the line from Pretty Woman “don’t you make anything?”. Service sectors exist because durable products are made. Just to remind us all, change is something to avoid not embrace (from the wisdom of proverbs).

Isn’t there a limit to getting new jobs from the small business end of the service sector? We can’t all live by taking in each other’s washing. Granted, we can get a lot of economy-wide efficiency by insulating, etcetera, which is usually done by small business; and more from adding public transportation capacity (which is not at the small business end). But in the end, someone in the US has to actually make something someone else wants, in order to pay for our appetite for imports.

I am an early baby boomer (late 1945) and I can think of many services and products that we will need and want. Imagining and developing jobs in this area would be a smart move.