Thursday, July 27, 2006

5.7 Trillion Hours Worked in 2005

I was wondering to myself the other day, how many total hours were worked last year in the entire world?

According to this report by the International Labor Organization: at the end of 2005, 2.85 billion people aged 15 and older were in work. If we assume they each worked 2,000 hours a year (I don't know how good of an estimate this would be, some work part time and others much more than 40 hours a week, hopefully they cancel each other out) that comes to 5.7 trillion hours worked in the world in 2005.

That is a huge number that I have a hard time even comprehending. Imagine all that was accomplished and created in that effort. Imagine all of the food that was grown, the products that were manufactured and the services that were rendered.

Another interesting point is that table 5 shows the breakdown in employment by agriculture, industry and service sectors. Today there are 40.1% in agriculture, 21.0% in industry and 38.9% in service. The trend has been that the amount of agriculture workers is going down and service workers are going up. Next year for the first time in the history of the world it is likely that more people will have service jobs than agricultural jobs.

Some other interesting world wide stats:
The unemployment rate was 6.3% which translates to 191.8 million people
The labor participation rate was 61.4%
Between 1995 and 2005 the global labour force grew by some 438 million workers.
520 million made less than $1 a day
Nearly 1.4 billion made less than $2 a day

Why is this important? As the world becomes more globalized, if it is becoming the Flat World that Tom Friedman talks about, then workers in the US are now competing for jobs with people throughout the world. It may no longer make sense to look at the US job market by itself without also looking at the global job market. Software developers in the US are now competing for jobs with those in India. Car manufacturers are competing with those in Japan, and Europe. Textile manufacturers with those in China and Vietnam. Understanding the US job market might now require understanding the global job market.

Wages have not gone up as expected in the US during this business cycle. This might be due to the fact that workers are now competing with workers throughout the world. If so, the economic models that just look at the US economy to predict wage growth are no longer valid. The global unemployment rate might be more important in understanding wage growth in the US than the US unemployment rate. In order to raise the wages of the poor in the US, we might have to raise the wages of the poor in the entire world.

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