Thoughts On The Knowledge-Based Economy
Ed Yardeni | Oct 28, 2013 01:42AM ET
During the second half of the previous century, the US economy evolved from manufacturing to services. Since 1950, payroll employment in services increased 90 million to a record 117.6 million during September. Manufacturing employment peaked at a record 19.6 million during June 1979, and is down to 12.0 million now.
In recent years, the economy has been evolving into a knowledge-based one. The number of adults with a college degree has increased from 21.7% of the labor force in 1992 to 31.6% currently. They tend to have the lowest unemployment rates. Currently only 3.7% of them are jobless. In other words, today’s structural unemployment problem is mostly among workers without a college degree.
Here’s the thing: Many knowledge workers are tasked with the job of eliminating the jobs of other workers, including well educated ones! They are constantly looking for ways to use technology to increase productivity. Many of them have their heads in the Internet Cloud and other technologies, and are using them to produce more goods and services with less labor. They are doing so in manufacturing, services, and even in information technology. Payroll employment in all information industries peaked at a record 3.7 million during March 2001. It dropped to 2.7 million during mid-2010, and has remained around that level since then.
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