• Mr. Steven J. Muehler

Steve Muehler's Plan to Address the Shrinking Blue Collar Work Force

Updated: Apr 23

Next Five to Ten Years:

  • Truck Drivers - the Human Labor Pool will be significantly replaced by Artificial Intelligence

  • Airline Pilots - the Human Labor Pool will be significantly replaced by Artificial Intelligence

  • CPA's - the Human Labor Pool will be significantly replaced by Artificial Intelligence

  • Retail Store Staff - the Human Labor Pool will be significantly replaced by Online Retail Stores

  • School Teachers - this Industry will be significantly disrupted by Online Schools, where online teachers (human) and Artificial Intelligence Programs will be able to teach more students at one time.

  • Grocery Store Clerks - Being Replaced by Self Check-out Technology

  • Welders - Being Replaced by Artificial Intelligence

  • Building Trades - Improvements in Building Technology is starting to affect the Human Labor Pool, and this trend will continue as technology continues to develop.

As exciting as "Disruptive Technology" is, but what happens to our diminishing Blue Collar Workforce? Where do they go when their paychecks are not enough to support their families due to lower wages or a completed eliminated human job, or when they are forced into a career change for which they are not properly educated for?

The National Trend in Blue-Collar Employment

In 1970, blue-collar jobs were 31.2 percent of total non-farm employment. By 2016, their share had fallen to 13.6 percent of total employment. While blue-collar jobs have been declining as a share of total employment over this whole period, this was mostly due to the growth in total employment. The number of blue-collar jobs did not change much through most of this period. In 2000 there were 24.6 million blue-collar jobs, only slightly below the peak of 25.0 million in 1979. However the numbers plunged in the next decade due to the impact of the exploding trade deficit and the 2008-2009 recession. Blue-collar jobs fell to 17.8 million in 2010 and have since rebounded modestly to 19.6 million in the most recent data.

The National Trend in Manufacturing Jobs

Most of the secular change in blue-collar jobs has been in manufacturing. During the 70s, 80s, and 90s, the number of manufacturing jobs basically held steady, with about 17 to 19 million workers being employed in the sector each year. Manufacturing employment then declined every single year from 1998 to 2010. At present there are just 12.3 million manufacturing jobs in the United States.

Construction Fluctuates Cyclically, With No Secular Trend

Construction follows a somewhat different pattern. Construction employment is highly cyclical following patterns in the housing market, following the ups and downs in the business cycle, but it has little clear secular trend. In 2016, 4.7 percent of the workforce was employed in construction (6.7 million workers), with the figure heading upward over the course of the year. This is down from the 5.2 percent figure for 1970, but not out of line with the average for that decade.

The National Trend in Mining Jobs

Mining employment has largely followed the path of world energy prices as the bulk of employment in the sector is energy-related. Employment in the sector rose through the 1970s and peaked in 1982 at 1.2 percent of total employment. The collapse in world energy prices sent employment in the sector sharply lower in the next two decades, with employment in mining falling to just 0.4 percent of total employment in 1998. Higher energy prices and the fracking boom increased mining employment from 2003 until 2014. Since then, the plunge in energy prices sharply reduced employment, so it again stands at just 0.4 percent of total employment, with 626,000 total jobs in the sector.

It is also worth noting that the longer-term decline in mining jobs is mostly attributable to a single sub-sector: coal mining. Even though coal mining jobs are a minority of all mining jobs, the job loss in mining has been concentrated in the coal industry.

Manufacturing Jobs in the Midwest

The Midwest has been hit especially hard by the loss of manufacturing jobs. Notably, this is not because manufacturing employment has declined more in the Midwest than throughout the nation at large; in fact, rates of manufacturing job loss have been similar in Midwestern and non-Midwestern states. Rather, it is because manufacturing jobs are a greater share of total employment in the Midwest.

Mining Jobs in the Midwest

Mining jobs are also disappearing in the Midwest. West Virginia had somewhat of an employment boom towards the end of the last decade, following the jump in world energy prices, but employment fell back to its lows of the last decade as prices collapsed. There was a similar pattern in Pennsylvania, although even at the 2011 peak, mining jobs accounted for just 0.6 percent of employment in the state. Mining accounts for less than 0.1 percent of employment in the other states.

Blue-Collar Jobs and Statewide Job Growth

In theory, historically blue-collar states could make up for the decline in blue-collar employment by adding jobs in the service sector. However, this has not come to pass – rather than finding new ways to add jobs, blue-collar states have gone into economic decline. Since the blue-collar employment peak of 2000, states with higher shares of blue-collar jobs have experienced slower employment growth than other states.

This trend becomes even more obvious when we highlight the stories of specific states. At the national level, 18.7 percent of all jobs in 2000 were blue-collar; and between 2000 and 2016, the nation experienced 9.3 percent job growth. Of the nation’s five most blue-collar states, four experienced significantly slower job growth than the national average:

  1. Indiana (27.3 percent of all jobs in blue-collar sectors): 2.3 percent job growth

  2. Arkansas (25.9 percent of all jobs in blue-collar sectors): 6.0 percent job growth

  3. Wisconsin (25.5 percent of all jobs in blue-collar sectors): 3.4 percent job growth

  4. North Carolina (25.5 percent of all jobs in blue-collar sectors): 10.5 percent job growth

  5. Mississippi (24.8 percent of all jobs in blue-collar sectors): 1.2 percent job LOSS

Similarly, the states with the greatest gains and losses differed strongly in terms of the share of blue-collar jobs in the state. In North Dakota, where just 13.1 percent of jobs were blue-collar as of 2000, job growth was a whopping 34.5 percent. By contrast, in Michigan, where 23.6 percent of all jobs were blue-collar, employment declined 7.3 percent.

In sum, blue-collar employment has fallen sharply since 2000, with a decline in shares of total employment turning into a sharp decline in absolute numbers as well. There has been no easy transition to other sectors for the effected workers, nor for the states with high shares of blue-collar jobs.

Under my Administration, we will explore remedies to ensure that (1) we are able to maximize our "blue collar" employment opportunities, (2) provide free / affordable re-education for blue collar workers affected by loss of employment in a market sector, (3) explore other remedies such as Social Guaranteed Income (detailed in an earlier blog post), (4) explore where the government can make capital investments to help with blue collar job growth, and other items.

Steve Muehler is the Founder & Managing Member of the Private Placement Markets:

About Mr. Steve Muehler, Founder & Senior Managing Member:

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© 2017 by Mr. Steven J. Muehler