Ed Luce in the Financial Times makes a number of excellent points about the dismal state of the American labor market, but perpetuates what seems to me to be a really unfortunate bias against the food service industry that exists in a lot of our commentary on economic matters:
Finally, a growing share of whatever jobs the economy is still managing to create is in the least productive areas. Of the five occupations forecast by the Bureau of Labor Statistics to be the fastest growing between now and 2018, none requires a degree. These are registered nurses, “home health aides”, customer service representatives, food preparation workers and “personal home care aides”.
Manufacturing is nowhere in the top 20, and such jobs cannot replace the pay and conditions once typical of that sector. “The food preparation industry cannot sustain a middle class,” says Dan DiMicco, chief executive of Nucor, one of America’s two remaining big steel companies, whose company motto is “a nation that builds and makes things”.
To understand this problem, you need to start with the fact that if I build a factory where people take fresh peas and put them in cans that’s a “manufacturing” facility full of manufacturing jobs and people who “make things.” But if I build a facility where people take fresh peas, mix them with some basil and a touch of mint, plus olive oil, parmigiano reggiano, and pine nuts then purée them to serve you a delicious pea pesto that’s a lowly service sector employment cite that couldn’t possibly generate good jobs. Similarly if I make pasta then dry it and stick it in boxes, I’m manufacturing. If I make fresh pasta and serve it to you on a plate with my pea pesto that’s services. The difference between manufacturing and services is not an ontological void between making things and not making things. It’s really a gap between putting things in boxes and not putting them in boxes. Like if you build a bookshelf and ship to a store and I buy it, that’s manufacturing. If I hire you to come to my house and install custom built-in shelves, that’s services.
The thing you’ll note about both of these examples is that the “services” option is more expensive. Going to a restaurant to eat fresh pasta and made from scratch pea pesto will cost you a lot more than buying some manufactured goods and cooking for yourself. Hiring a carpenter to build you shelves is more expensive than going to Ikea. And in both cases, they’re more expensive because doing it as a service is much labor intensive and labor is relatively expensive. What’s more, the exciting world of eating in restaurants admits of many different price points. Sbarro’s is cheaper than the Olive Garden which is cheaper than Graffiato largely because the more up-market restaurants use more and more-highly-skilled labor.
None of this is to say that we should be complacent about the state of the American labor market! Wages for working class men have been stagnating forever, and over the past decade women and college graduates have been getting squeezed too. The employment:population ratio is pathetic. We have huge problems. But the problem is not, as such, that we need more boxes of dried pasta and cans of peas and fewer restaurants.