A Nation of Takers, Not Makers

A recent column in the Wall Street Journal by Stephen Moore highlights the growing issue of government job growth versus job growth in the private sector.

Beneath the looming shadow of government bankruptcy in many states, lies an issue that’s been steadily brewing for the last 50 years. Today, government employees outnumber manufacturing employees by nearly double. In fact, Moore points out that state workers now outnumber workers in construction, farming, fishing, forestry, manufacturing, mining and utilities combined.

It can certainly be argued that many of these industries have simply become more efficient over the last 50 years, requiring less manpower. However, while farmers are three times more efficient now than in the 1950s, there has been no similar efficiency boost in government organizations. In fact, we’ve seen quite the opposite.

In his column, Moore explains that the government sector has actually lost efficiency. Education is a perfect example. Rather than fewer educators, smaller school budgets and higher graduation rates, we’ve gone the opposite direction. In the last 30 years, spending per pupil has doubled (adjusted for inflation) and public school employment has doubled per pupil while standardized test scores have remained level.

Moore uses transportation as another example. While we continue to spend more government funds on mass transit, fewer Americans use public transportation now that at any time in recent history.

Unfortunately, Moore doesn’t see this trend changing anytime soon. According to recent surveys of college students, an increasing number of graduates wish to work for the government. With the amount of hiring being done by government agencies and the promise of lifetime benefits, you can’t exactly blame them. This sad state of affairs is a troubling sign for private sector growth, ingenuity and subsequently the state of our economy.

As Moore so precisely points out in the last line of his column, the only way to set our economy up for success in the future is to “grow the economy that makes things, not the sector that takes things.”

Moore’s column can be viewed here.

Read Full Post »

Manufacturing and Distribution: State of the Industry

Following the worst recession in years, businesses in the manufacturing and wholesale distribution industries are reporting encouraging improvements in overall business conditions.  According to a 2010 survey of 1,061 executives and managers of manufacturing and wholesale distribution enterprises conducted by RSM McGladrey, Inc. the industry is showing signs of life and appears to be on the rebound after a tough couple of years.

Source: McGladrey 2010 Manufacturing and Wholesale Distribution National Survey

The hottest segments within the industry is Food and Beverage, in which nearly 50% of executives report “thriving and growing” this year. The two closely  following segments are Medical (37%) and Chemical (33%). Unfortunately the outlook has not improved in all segments, as only 5% of Transportation executives report such prosperity.

The survey also indicated that the key driver to company health out of the downturn is size. For example 19% of companies with less than $25 million in revenue reports thriving and growing; whereas 32% of c0mpanies with $500+ million in revenue reports thriving and growing. Clearly, as company size increases, the outlook improves.

 

Source: McGladrey 2010 Manufacturing and Wholesale Distribution National Survey

In 2010, only 10% of executives in the industry say their business is declining.  This number is down drastically from the reported 40%  in 2009.  In general, 2010 was a year of recovery and growth for much of the industry.

Read Full Post »