Dear Washington Post: Poor Grasp of Economics

Dear Editor:

Harold Meyerson reveals a weak grasp of economics when he laments that "Manufacturing now employs just one in 10 American workers; the vast majority of new jobs in recent decades has come in the service and retail sectors, which tend not to be as productive and don't pay as well" ("Recovering the New Deal Ideal," Oct. 7).

The low proportion of workers employed in manufacturing results from the same phenomenon that causes manufacturing wages to be high: high productivity. Equipped with lots of very productive machinery, each manufacturing worker today produces such large quantities of valuable output that consumers' demands for manufactured goods are satisfied by using only one-tenth of the work force.

If government follows Mr. Meyerson's advice to create lots more high-paying jobs by "bolstering" manufacturing, it will set itself an impossible task. The only way to keep manufacturing wages high is to keep manufacturing productivity high. But, consumer demands being what they are, to keep manufacturing productivity high is to ensure that only a small portion of the workforce can be productively employed in manufacturing.


Donald J. Boudreaux

Don Boudreaux is the Chairman of the Department of Economics at George Mason University and a Business & Media Institute adviser.