Russ Roberts has a typically clear and lucid commentary on jobs and “outsourcing” in Business Week. Short of jumping into the fray on this issue, let me simply suggest that you read this, circulate it, and consider his conclusion:
The hardship that results from economic change always tempts politicians to limit individuals’ freedom to buy what they want and businesses to hire whom they desire. Such political restraints will make life more secure — but poorer and less dynamic. Ultimately, it will have no effect on the number of jobs in the U.S. but only make the ones that survive pay less.
While we’re talking jobs, I have a couple of observations that are consistent with Virginial Postrel’s NY Times article from Sunday about new non-tech jobs. Her observations about the establishment of spa service jobs, and the number of women performing these jobs in a free-lance and more difficult to measure way, ring true in Chicago. In the past six months I’ve seen four new nail salons open, and that’s just within about a 20-square-block area in Lakeview. Virginia points to manicurists as one of the most overlooked professions in the Bureau of Labor Statistics surveys, and it is one that has been growing fast recently:
Similarly, the bureau has missed more than 300,000 manicurists. It puts the total at around 30,000, compared with the count of 372,000 — up from 189,000 a decade ago — by Nails magazine, using private survey and state licensing data. Even if not all licensed manicurists are practicing, the bureau number is off by an order of magnitude. There are 53,000 nail salons in the country, most of them with more than one manicurist. The industry supports two major trade magazines, each with about 60,000 subscribers.
Compared with stone crafters, gardeners or graphic designers, manicurists should be easy to track. ”This is not a gray market business,” says Cyndy Drummey, the editor of Nails. ”It is licensed and regulated.” Yet because this business is wildly decentralized and doesn’t fit traditional categories of what constitutes a job — most manicurists are independent contractors or shop owners — it can add tens of thousands of jobs without catching the government’s notice. And behind each manicurist are people making the tools of the trade.
And the esthetician who used to share the chiropractor’s office downstairs from us went out and got her own space, after having gone freelance from working at a spa about 3 years ago. I also see the same phenomenon happening with personal trainers, particularly given the current trend for exercises that don’t necessarily require lots of heavy and expensive gym equipment.
The nature of the economy, and the highest value uses of resources (including labor), is dynamic. What was valuable yesterday may be less so tomorrow. And as Russ’s piece suggests, protecting what was valuable yesterday may rob us of the ability to create what will be valuable tomorrow. Or worse, when inevitably someone does create what will be more valuable tomorrow, we won’t be the creators, and our status quo jobs won’t provide us with enough income to afford to buy into it. We will be made even worse off than if we had let the things go that weren’t our comparative advantage.
Thanks to Kevin Brancato for the pointer to the Russ Roberts article, and for his forceful conclusion to his own discussion of the matter:
So some of the lowest-skilled service industry workers today are making as much or more than the best technically-skilled assembly line workers of Henry Ford’s day. And that’s because of outsourcing.