Divide in economy gets wider

[TexasLawyer]

If you lose your job at GM or Ford, just go grab one of the many jobs waiting for you at Burger King!

Divide in economy gets wider
Service sector shines; manufacturing suffers

By James P. Miller
Published December 5, 2006, 7:52 PM CST

Two economic reports issued Tuesday highlighted the gap opening up between the nation's stagnating manufacturing segment and the service sector, which continues to show unexpected zip. "The service sector is not as weak as expected, and is performing vastly better than the manufacturing sector," said Wachovia economist Sam Bullard.

In a separate development, the Labor Department, in a move that cheered investors by suggesting that inflationary pressures are weaker than thought, revised an earlier measure of worker productivity upward and lowered its estimate of how much worker pay has risen.

Taken together, experts said, Tuesday's economic news suggests that the U.S. economy is holding up better than some pessimists had been predicting.

Fueled in part by softening demand from the automotive and housing industries, as well as a downward swing in the often-volatile timing of jet-aircraft sales, orders placed with U.S. factories dropped a hefty 4.7 percent in October, the Commerce Department reported. That's the biggest decline in more than six years.

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http://www.chicagotribune.com/business/chi-061205econ,0,7336319.story?coll=chi-business-hed

[mrreowwr_kittty]

1. Okay but who's buying all these services as manufacturing declines?

Maybe I'm being too simplistic but I don't get it. Michigan is experiencing job losses on a par with the Depression. So who's going to all these restaurants and getting their homes improved? The upper class can't account for all of it so I'm not buying it.

[Union Thug]

2. It's all going exactly as planned.

This is a conservative's wet dream.

[Selatius]

3. Let me attempt to break it down into laymen's terms.

Manufacturing is shedding a lot of jobs. This causes a lot of unemployed workers, and they're desperate to find jobs. The only sector that isn't outsourcing in large numbers is the service sector, so they go there.

When employers in the service sector have more than enough applicants, they can hire them at wages as low as the labor market can handle. If the situation were the opposite and there were very few applicants and many job positions to fill, employers are forced to raise wages to attract workers. The first situation is bad for employees. The second situation is good for employees.

Right now, it's "bad" for employees.

The second report basically says productivity is up and labor costs are rising slowly or is not rising at all. This means you're working longer and harder, while your wages are not rising at all or are rising at a rate not in proportion to the amount of effort you're expending.

Investors love it when productivity is up, while labor costs are flat. They love squeezing as much out of workers as possible.