This article is excerpted from the IIP publication Sketchbook USA, a richly illustrated volume that depicts Americans at work, at play, in their communities, and engaging in civic life. View and download the fully formatted Sketchbook.
Americans identify themselves closely with the work they do. If you ask working Americans to describe themselves, you are likely to learn pretty quickly what their jobs are. That response stems from a deep-seated feeling that work is of value to who we are and what we contribute to our community. Perhaps it’s a legacy we inherit from the generations that came before, the history that we learn as schoolchildren about pioneers who carved a living out of a wilderness and laid railroads across desolate territory. Diligent work was the key to their survival and their prosperity.
About 153 million people in the United States go to work or look for work every day — about two-thirds of all the people of working age in this country, and the largest labor force in the world behind China’s and India’s. When those people report to their jobs, they make a contribution to the world’s largest economy, which thrives both on 21st-century technology and on commodities that have been produced for centuries.
The colonies that became the United States engaged in a lot of international trade. They exported furs, timber, tobacco, rice, and indigo. They imported wine, rum, books, and other luxuries.
In the 19th and 20th centuries, as the United States became the world’s top manufacturing country, U.S. businesses focused more on selling to the rapidly expanding national market and less on shipping abroad.
In the 21st century, the United States is once again a major trading country. In 2005, two-way trade of goods and services represented 27 percent of total U.S. economic output, up from 11 percent in 1970. The jobs of at least 12 million U.S. workers now depend on exports. The United States still exports agricultural commodities; it also exports high-tech industrial machinery; high-tech goods, such as pharmaceuticals; and services, such as banking and insurance.
About half of the people in the workforce have jobs in small businesses, companies employing fewer than 500 people. In fact, of the nearly 26 million business firms in the United States, 97.5 percent employ fewer than 20 employees. Small businesses account for half of nonfarm economic output and generate 60 to 80 percent of new jobs. While U.S. corporations sometimes appear to be the giants of the economy, small business can also lay claim to many of the innovations that fuel economic expansion.
More and more U.S. firms and their employees face foreign competition. The United States has managed so far to stay way ahead of other countries in manufacturing, still accounting for nearly a quarter of the world’s manufactured output. Now, though, little more than 10 percent of U.S. employees work in manufacturing, down from more than 40 percent in the 1940s. Facing low-wage competitors abroad, manufacturers have slashed their labor costs through automation and by buying parts from foreign sources.
U.S. multinational companies are evolving, scattering different parts of their businesses in different parts of the world. Increasingly, the volume of goods shipped in foreign trade comprises intermediate goods, things on their way someplace else to undergo further processing.
“The growing ability and willingness of firms to fragment the production process — locating design in one place, parts manufacturing in another place, and assembly in a third place — has implications for U.S. competitiveness, wages, and employment,” a 2006 report by the National Research Council says. To remain part of the chain of production, each location must prove its competitive worth all the time.
U.S. workers are well placed to compete in a globalized economy because production of goods and services relies increasingly on knowledge, skill, and innovation. They and the companies for which they work — focused more now on design, marketing, and management than on assembly of product — possess many hard-to-measure intangible assets, such as patents and copyrights, well-known brand names, and investment in research and development.
“This shift to services, high-value manufacturing, and intangibles creates more opportunities for the United States with its traditionally strong position in knowledge-driven activities and an already high stock of tangible as well as intangible assets,” according to a 2006 report by the Council on Competitiveness.
Nevertheless, people on the council and a lot of other experts say that the U.S. leadership edge in science and engineering is shrinking, thus threatening U.S. competitiveness. A study by the U.S. National Academies science advisory organizations, called Rising Above the Gathering Storm, recommends strengthening the U.S. commitment to basic research and providing more incentives for innovation.
Partly in response to that study, the U.S. Congress passed the America Competes Act of 2007, which President George Bush signed in August 2007. The act increases research investment in a number of ways, including increasing spending by the National Science Foundation and the U.S. Department of Energy’s Office of Science. It directs other federal agencies to spend some minimum level of money for scientific frontier research.
The act aims to strengthen education in science, technology, engineering, and mathematics. For example, it authorizes grants to state governments for aligning their elementary and secondary education instruction with the knowledge and skills needed by the 21st-century workforce.
Some people, including venture capitalists, expect that the United States can continue to prosper by pioneering new technology, including goods and services for mitigating environmental problems — green technology. Besides the well-known need for clean, abundant energy, the world’s developed and rapidly developing economies need to deal with global warming; pollution of air, water, and land; and water scarcity.
“We are at the point of new wealth creation when it comes to green technology,” says Bill Joy, co-founder of Sun Microsystems and now a partner at the venture capital firm Kleiner, Perkins, Caulfield, and Byers. “We have been looking at a lot of things related to new fuels, such as ethanol, fuel cells, advanced battery technology, and new ways of using biotech to make fuels. We are trying to create the Googles, the Microsofts of the new era.”