11.16: Deindustrialization

Deindustrialization

Historically industrialized countries were the wealthiest countries of the world. Industrialization, however, is now two centuries old. In the last decades of the twentieth century, deindustrialization began in earnest in the United Kingdom, the United States, and many other places. Factories left and the old jobs left with them. Classical economics holds that such jobs had become less valuable, and that moving them offshore was a good deal for everyone. Offshored goods were cheaper for consumers, and the lost jobs were replaced by better jobs. The problem with this idea is that it separates the condition of being a consumer from the condition of being a worker. Most people in any economy are workers. They can only consume as long as they have an income, and that is tied to their ability to work. Many workers whose jobs went elsewhere found that their new jobs paid less than their old jobs. 8.5.5 What Happens After Deindustrialization?

The simple answer to the above question is this. The service economy happens! As manufacturing provides fewer jobs, service industries tend to create new jobs. This is a very delicate balance, however. If you are a 50-year old coal miner whose job has been eliminated by automation, it is very difficult for you to simply change jobs and enter the ‘service sector’. This transition is very damaging to those without the right skills, training, education, or geographic location. Many parts of the American Midwest, for example, have become known as the “rust belt” as industrial facilities closed, decayed, and literally rusted to the horror of those residents who once had good jobs there. The city of Detroit, for example, lost nearly half of its urban population from 1970-2010. Meanwhile the state of Illinois loses one resident every 15 minutes as job growth has weakened in the post-industrial age. However, job growth and productivity in the service economy have strengthened and provide more job opportunities today than the industrial era ever did in the U.S.

There are 3 sectors to every economy:

1. Primary (agriculture, fishing, and mining)
2. Secondary (manufacturing and construction)
3. Tertiary (service related jobs)

The vast majority of economic growth in the post-industrialized world comes in the tertiary sector. This doesn’t mean that all tertiary jobs pay well. Just ask any fast-food worker if the service sector is making them rich! However, service sector jobs are very dynamic and offer tangible opportunities to millions of people around the world to earn a living providing services to somebody else. We can further break down the service sector into 1) public (the post office, public utilities, working for the government) 2) business (businesses providing services to other businesses) 3) consumer (anything that provides a service to a private consumer e.g. hotels, restaurants, barber shops, mechanics, financial services). Traditionally, service sector jobs worked very much like manufacturing jobs in that employees worked regular hours, earned benefits from the employer, gained raises through increased performance, and went to work somewhere outside of their home. Many service jobs in the 21st century, however, have been categorized as the gig economy, in which workers serve as contractors (rather than employees), have no regular work schedules, don’t earn benefits, and often work in isolation from other workers rather than as a part of a team. Examples of ‘jobs’ in the gig economy include private tutor, Uber/Lyft driver, AirBNB host, blogger, and YouTuber. Work, in this economy, is not necessarily bound by particular places and spaces in the way that it did in manufacturing. Imagine a steel worker calling in to tell his/her boss that they’re just going to work from home today! Even public schools have adapted to this model in the following manner. As schools cancel class due to weather, the new norm is to hold class online, whereby students do independent work submitted to the teacher even though nobody is at school. As such, some workers are freed up from the traditional constraints of time and place and can choose to live anywhere as long as they maintain access to a computer and the Internet. Services like fiverr. com facilitate a marketplace for freelance writers compose essays for others or for graphic artists to sell their design ideas directly to customers without every meeting one another.

The global marketplace continues to be defined as a place where the traditional relationships between employer and employee are changing dramatically. A word of caution is necessary here, however. As many choose to celebrate the freedom that accompanies flexible work schedules, there is also a darker side in that the traditional ‘contract’ and social cohesive element between workers and owners is very much at risk. One defining factor of the 20th century was the development of civil society that fought for and won a host of protective measures for workers, who otherwise could face abusive work conditions. Child labor laws, minimum wage, environmental safety measures, overtime pay, and guards against discrimination were all based upon an employer-employee relationship that seems increasingly threatened by the gig economy. Uber drivers can work themselves to exhaustion since they are not employees. AirBNB hosts can skirt environmental safety precautions since they do not face the same safety inspections required at hotels. These are just a few examples, but they are very worth consideration. Regardless of the positives and negatives, the new service economy is having a transformative effect upon all facets of society. Although, the authors of this textbook are all geography professors with PhD’s from a variety of universities, perhaps the next version of this textbook will simply draw upon the gig economy to seek the lowest cost authors who are willing to write about all things geographical. Will you be able to tell the difference? (We hope so!!!)