In 1973, Daniel Bell wrote a book, “The Coming of Post-Industrial Society,” in which he described how the U.S. economy was transitioning from being manufacturing-based to becoming service-based. He correctly predicted the global diffusion of capital, trade deficits and the relative decline of the manufacturing sector.

Bell also predicted that the importance of blue collar (manual) work would decline, and that technical and professional work, like lawyers and computer programmers, would come to predominate. As well, he asserted that theoretical knowledge would become more important than practical know-how and that health, education and government services would be the most important sectors of the new economy.

Many economists and academics jumped on the “post-industrial” bandwagon and have convinced themselves and most citizens that the transition is a good and inevitable thing. In 2005, The Economist published an article that summarizes the prevailing belief about manufacturing employment. The article, titled Industrial Metamorphosis, carried the following brief description: “Factory jobs are becoming scarce. It’s nothing to worry about.”

In conclusion, the article contends that we can transition to a “post-Industrial” service economy and enjoy continued economic growth:

“Neither manufacturing nor services is inherently better than the other; they are interdependent. Computers are worthless without software writers; a television has no value without programs. The issue is not whether people work in factories or not, but whether they are creating wealth. In developed economies today, telecomm, software, banking and so on can create more wealth than making jeans or trainers. Before long no one will much care whether firms are classified under manufacturing or services. Future prosperity will depend not on how economic activity is labeled, but on economies' ability to innovate and their capacity to adjust.”

Well, we are now in the "post-industrial" economy, and I totally disagree with the view that the loss of manufacturing is nothing to worry about, or that the service economy will continue to create prosperity in America.

The Post-Industrial Myth

It is my contention the “post-industrial” service economy -- especially one that that will provide continued economic growth and enough family wage jobs to sustain current living standards -- is a myth.

In my book, Saving American Manufacturing, I make the case that America must halt the decline of manufacturing, because it will lead to higher unemployment, fewer family-wage jobs and the decline of living standards for most workers. Wages and household income peaked in 1972 when manufacturing was 23% of U.S. GDP. The decline of manufacturing to 12% of GDP has coincided with a steady decline in wage and income levels for most of the middle class.

...there is a lot of evidence to support the notion that middle-class living standards could worsen with the continued decline of manufacturing.

There is no economic evidence to prove that this downward trend will be reversed. However, there is a lot of evidence to support the notion that middle-class living standards could worsen with the continued decline of manufacturing. So when The Economist says there is nothing to worry about, it depends on whether you are in the middle class or part of the credentialed elite.

The real issues that the economists never seem to address is this: What kind of jobs will be created in a "post-industrial" economy? Will there be enough family wage jobs to allow all members of the middle class to raise families? Will the new jobs pay enough to maintain middle-class living standards or to keep the gap between the "haves" and "have-nots" from increasing?

The Data Reveals the Downside of a Post-Industrial Economy

You can find out for yourself by studying the data on the Bureau of Labor Statistics website. Click on the link to "Occupations with the most job growth." Then add all of the jobs with a median annual wage below $40,000; you will find that the BLS projects there will be a total 41,123,000 jobs by 2022, with an average wage of $26,470 per year. Add up the nine fast growing occupations, with wages above $40,000, and you'll get a total of 14,155,000 jobs, with an average wage of $65,735. The problem? The low paying jobs make up 74% of fastest growing occupations.

Further review of this chart shows that Bell was right when he predicted that “technical and professional" occupations, like lawyers and computer programmers, will come to predominate.” The tables show that the wages of software developers, general managers and management analysts are above $80,000 per year --  but these jobs require professional degrees or advanced skill sets.

The creation of enough family-wage jobs is a big issue in our postindustrial society, but it is not the only issue associated with the decline of manufacturing.