Business spending on structures no higher than 1979.
It is interesting to note that while business spending on equipment and software is rising, business spending on structures -- the other component of capital spending -- is not. And it's spending on such items as factories, office buildings and warehouses that provides more bang for the buck, at least as far as labor is concerned.
Structures outlays flattened in the third quarter, after having risen by a meager 4.2 percent in the second. Prior to that, this type of business spending had fallen in eight of the previous nine quarters -- most times by double-digit annual rates.
Indeed, business spending on structures, adjusted for inflation, is no higher today than it was back in 1979.
It's not difficult to see why. For one thing, as noted above, business is doing more with fewer workers. And those functions that do require labor are increasingly being outsourced overseas.
In addition, since today's equipment is usually smaller and lighter than it used to be, office workers need less room than previously. Architects allow only about 250 square feet per office worker today -- down from 400 square feet as recently as a dozen years ago, so companies still have plenty of space available.
Labor benefits when firms put up buildings, since these are built on site, using local labor and local materials. After all, you can't import a building -- at least, not yet.
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