Obama, Florida, Hanauer

In an extended interview with Bloomberg editors about America's economic future and role in the global economy, Obama hewed to a simple principle: embrace global trade, but adjust current rules to increase labor's bargaining power while investing in education and skill development. He struck a couple of  notes that recalled things I've read that have resonated with me, about why, where and how wages have to rise. 

First, with respect to manufacturing vs. service jobs:

I think that as we move toward an economy where, because of automation, you need fewer and fewer people to make more and more stuff, more and more of us are going to have to move into the service sector. The service sector historically has been a low-wage sector. And in order for us to make sure that we don’t see this growing divide between haves and have-nots, with a middle class that’s shrinking, we’re going to have to make sure the service sector pays better.

Yes, the U.S. can create some good new advanced manufacturing jobs, in ways that James Fallows has illustrated in his travels around the country for the American Futures project, but the share of those jobs in U.S. employment won't match the totals of yesteryear.  The notion that service jobs are not inherently inferior to manufacturing jobs is one that Richard Florida has been advancing for some time, e.g., in this 2010 essay:

Reminder: manufacturing jobs were not always 'good' jobs

At a Netroots Nation plenary panel this morning, labor leaders Ai-Jen Poo of the National Domestic Workers Alliance and Richard Trumka of the AFL-CIO each made variants of a fundamental point about the current American labor market.

As Trumka put it, manufacturing jobs -- steel jobs, auto industry jobs, etc. -- were not always "good" jobs.  Collective bargaining made them good. In the 1920s and 1930s, the position of factory workers was  analogous to that of service workers today.

Poo added that service jobs and "care" jobs are where the growth is  The demographic shift toward the elderly is as important as shifts in the country's ethnic makeup (and, she might have added, or may have implicitly, growing numbers of relatively young nonwhites are making their living caring for elderly whites.  The status and dignity of those jobs needs to be raised.

Richard Florida does a nice job putting these points in context.  Here's one iteration from a July 2010 op-ed:

The problem is that on average, service workers earn only half of what factory workers make – and only a third of what professional, technical and knowledge workers are paid. The key is to upgrade these jobs and turn them into adequate replacements for the higher-paying blue-collar jobs that have been destroyed.

It has happened before. Yet the blue-collar jobs we pine for were not always good jobs: we made them good jobs. When my father came back from the second world war, his poorly paid factory job had been transformed. He was able to buy a house, put his two sons through college and participate fully in the American dream. Some of this was due to the power of unions. Most of it was because of the enormous improvements in productivity wrought by improved technologies and management techniques.

If service workers are to be well paid, the country has to keep generating wealth by selling goods and services abroad. Seems like we don't have a problem with that; the problem is that our successful companies don't generate as many jobs at home as they used to, and their profits flow mainly to the top.  Can that wealth be shared without killing the golden geese?  That is, can the wealth generated by American companies be better distributed to benefit not only their own workers, but the growing number of service workers we all seem to require?