3 Enormous Issues With the United States Economy

Americans are getting paid less, getting fired, or just giving up altogether -- and it’s destroying the United States economy.

Feb 8, 2014 at 3:30PM

The United States economy is in trouble. Employment is the backbone of any economy, and there are three reasons jobs today just ain't as sweet as they used to be. Here's why Americans are getting paid less, getting fired, or are just giving up altogether.

1. Uneducated only, please
The United States economy was built on the backs of John Rockefeller, Henry Ford, Rosie the Riveter, and countless others who transformed our nation into a manufacturing machine.

In 1960, General Motors Company (NYSE:GM) was the largest employer, putting 595,200 Americans to work. That's 0.8% of the entire work force, and a whopping 3.5% of all manufacturing jobs.

General Motors Company Corvette

Source: General Motors Company; 1960 Chevrolet Corvette Convertible. 

But while manufacturing has brought the United States economy unprecedented wealth, it's recently been more headache than help. Outsourcing, improved technology, and a global recession have mangled manufacturing's role as America's everlasting employer.

Since its 2009 bailout, General Motors Company has been cutting jobs and trading out high-paid workers for cheaper labor. The automaker has hired around 18,000 hourly production workers, allowing the company to remove skilled trade jobs. The Center for Automotive Research says General Motors Company saves approximately $57,000 a year when it hands a pink slip to a high-skilled $32-per-hour earner and hires a $15-per-hour employee instead.

2. Subsisting on services
But manufacturing might not even matter much to the United States economy. Today, the sector employs around one-tenth of America's workforce, while the services sector has soared to nearly 90%.

General Motors Company topped the top employer list in 1960, but the biggest spots in 2010 were all filled by services corporations. In first place, Wal-Mart Stores (NYSE:WMT) employed an astounding 2.1 million people -- that's equal to the population of Houston, the country's fourth-largest city.

The biggest goods-producing employer in 2010 was Hewlett-Packard Company (NYSE:HPQ), with just 324,600 employees. Not only is that less than General Motors Company employed in 1960, but it's shrinking even more. Hewlett-Packard Company announced on New Year's Eve that it will cut 5,000 more jobs, bringing its total termination count to 34,000 -- 11% of its entire workforce.  

For a closer look at services, the Bureau of Labor Statistics periodically releases data on the hottest occupations in the United States economy. For May 2012 (the most recent data available), retail salespersons, cashiers, and restaurant workers snagged the top three spots. Collectively, these three industries alone employ a staggering 10.6 million Americans.

Largest Employers

Source: Bureau of Labor Statistics 

But the news isn't all good for services. The Bureau of Labor Statistics also tracks hourly wages, and our nation's largest employers are also paying pennies compared to manufacturing. While General Motors Company is happy to hire $15-per-hour workers, the average cashier makes just $9.21.

The lowest earners list is littered with services workers. Food preparation workers have it worst, earning just $7.92 per hour. That's lower than the minimum wage for 15 states.

Lowest Earners

Source: Bureau of Labor Statistics. 

3. Giving up for good

Unemployed

Source: National Archives; Unemployed wait outside a soup kitchen in 1931. 

While the services sector keeps its employees on subsistence wages and manufacturing jobs continue to get cut, the biggest problem may be getting workers to work-period. The global financial crisis pushed the United States economy's unemployment rate from an enviable 4.5% to an ugly 10% in just two years' time.

US Unemployment Rate Chart

US Unemployment Rate data by YCharts

But although rates are back down to 6.7%, it's not because employers are hiring. Many Americans are simply giving up and leaving the work force altogether, making numbers look better than they actually are. Since 2007, the number of employable Americans looking for work has dropped from 66.4% to a measly 62.8%, the lowest since 1978.

US Labor Force Participation Rate Chart

US Labor Force Participation Rate data by YCharts.

The future of the United States economy
The United States economy is in a rut. Although the Federal Reserve recently noted that things have "picked up" in recent quarters, it described labor market indicators as "mixed." With current movements between manufacturing and services, as well as in and out of the economy altogether, it's easy to understand why. Employment is the undisputed backbone to the United States economy, allowing America to both produce and purchase.

America's road to recovery
Manufacturing will never employ as many Americans as it did in 1960. But for America to make a comeback, it doesn't have to. For the first time since the early days of this country, we're in a position to dominate the global manufacturing landscape thanks to a single, revolutionary technology: 3D printing.

Although this sounds like something out of a science fiction novel, the success of 3D printing is already a foregone conclusion to many manufacturers around the world. The trick now is to identify the companies -- and thereby the stocks -- that will prevail in the battle for market share. To see the three companies that are currently positioned to do so, simply download our invaluable free report on the topic by clicking here now.

Justin Loiseau has no position in any stocks mentioned. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers