Is America turning into a nation of hamburger flippers from a nation of workers who make things, like machine tool operators?
Answer: No, says economist Ed Yardeni, in light of the recent April jobs report. And that's good news.
Payrolls rose by 244,000 in April, following gains of 221,000 and 235,000 the previous two months. Some have debated whether a quarter of the increase in private payrolls, 62,000 new jobs, came from McDonald’s (NYSE:MCD) hiring more Big Mac flippers. McDonald's went on a hiring spree recently, but those numbers will likely affect the May jobs report. Still, food services and similar general merchandise stores added 54,200 jobs in April.
However, Yardeni notes that manufacturing payrolls rose by 29,000 during April and 141,000 so far this year. And that’s a good thing, because “a machine tool operator makes more than a hamburger flipper,” Yardeni notes.
And this is why media pundits have to stop with the doom and gloom talk and stop beating up on the U.S. economy.
I’ve been reading how, standing on its own, U.S. manufacturing would rank today as the sixth largest economy in the world, just behind France and ahead of Italy, Mexico and South Korea. And I've been reading how U.S. manufacturing output was $2.155 trillion (including mining and utilities), according to estimates by Mark Perry, an economics professor at the University of Michigan.
Guess what? That's about 27% higher than China's manufacturing output! I thought China was creaming us here?
Nope. China's manufacturing output was $1.7 trillion in 2010, the latest data available, says IHS Global Insight. China's manufacturing makes up about a third of its economy, whereas it makes up just around 13% in the U.S.
The U.S. still accounted for more than 20% of total global manufacturing output in 2009, the latest data available, says Perry at the University of Michigan.
And U.S. companies are increasingly using their profits to hire, like McDonald's did. Employers are hiring at a faster pace because their bottom lines continue to rebound, Yardeni says. During the first four months of this year, payroll employment is up 768,000, Yardeni says.
There’s more good news. “During economic expansions, revisions to payroll employment data tend to be to the upside,” Yardeni notes. “Over the past nine months, these revisions have added 346,000 to the first-reported estimates.”
In fact, 71.5% of private industries either are adding to payrolls, or are holding them steady in the three months ending April, which is little changed around March’s five-year high.
But what’s really hard is this: Wages continue to remain flat. Which is why fuel prices matter so much, because they take big chunks out of dearly needed pay checks. Food prices too. And health-care costs. And college tuition.
Yes, car pooling helps. But what to do about high food prices? The chief executive of Smithfield, the country’s biggest pork producer, had it right when he said, “you can share your car, but you can’t share your food.”
Wage inflation as measured by the “average hourly earnings” index for production and nonsupervisory workers rose 2.1% year-to-year in April, remaining around seven-year lows, Yardeni says.