Posted on 03/11/2004 2:47:22 PM PST by shrinkermd
ANOTHER month, another dismal set of job figures. America pulled out of its last economic recession way back in November 2001, yet the country's “jobs recession” finished only last autumn, by when 2.7m jobs had been lost since the start of the slowdown. Now, though economic growth has bounced back, new jobs refuse to do the same in this, the third year of recovery. In February, a mere 21,000 jobs were created, according to the official payroll survey, at a time when George Bush's economists forecast 2.6m new jobs for 2004. Mounting alarm at the White House, and increased calls for protection against what a growing number of Americans see as the root of most ills: the “outsourcing” of jobs to places like China and India.
Last week the Senate approved a bill that forbids the outsourcing of government contracts—a curious case of a government guaranteeing not to deliver value-for-money to taxpayers. American anxiety over the economy appears to have tipped over into paranoia and self-delusion.
Too strong? Not really. As The Economist has recently argued—though in the face of many angry readers—the jobs lost are mainly a cyclical affair, not a structural one. They must also be set against the 24m new jobs created during the 1990s. Certainly, the slow pace of job-creation today is without precedent, but so were the conditions that conspired to slow a booming economy at the beginning of the decade. A stockmarket bubble burst, and rampant business investment slumped. Then, when the economy was down, terrorist attacks were followed by a spate of scandals that undermined public trust in the way companies were run. These acted as powerful headwinds and, in the face of them, the last recession was remarkably mild. By the same token, the recovery is mild, too. Still, in the next year or so, today's high productivity growth will start to translate into more jobs. Whether that is in time for Mr Bush is another matter.
>P>As for outsourcing, it is implausible now, as Lawrence Katz at Harvard University argues, to think that outsourcing has profoundly changed the structure of the American economy over just the past three or four years. After all, outsourcing was in full swing—both in manufacturing and in services—throughout the job-creating 1990s. Government statisticians reckon that outsourced jobs are responsible for well under 1% of those signed up as unemployed. And the jobs lost to outsourcing pale in comparison with the number of jobs lost and created each month at home. Even here, the rate of job “churn” has, for unclear reasons, been falling since mid-2001.
Waiting for the job recovery might be a good time to take a broader measure of the material well-being of Americans. Their condition is widely held to be perilous. The economy, it is said, is being “hollowed out” by international competition and the connivance of business and political elites, creating “two Americas”, one rich, one poor. Median income of American households, commentators often say, has been stagnant, though census figures give a rise of one-fifth since 1980. Lou Dobbs, on CNN's “Lou Dobbs Tonight”, is just one media fabulist who makes his living by claiming that, as America is being “exported”, so the well-being of middle Americans is in a parlous state.
It is a good story, but false on many levels. For a start, this slow growth in median income overlaps with a scale of immigration into America outpacing all immigration in the rest of the world put together. Many immigrants have come precisely to take up the lowest-paid jobs. As a result, in the 20 years to 1999 some 5m immigrant households were added to those defined as below the poverty level. Yet among native-born Americans, poverty rates have declined steadily since the 1960s. In the case of black families, median incomes have recently been rising at twice the pace for the country as a whole.
Strip out immigrants, and the picture of stagnant median incomes vanishes. Indeed, for the nine-tenths of the population that is native-born, middle-income trends continue their improvement of the 1950s and 1960s. For these people, inequality is not rising, but falling. Gregg Easterbrook cheekily points out in his excellent recent book, “The Progress Paradox” (Random House), that if left-leaning Americans seriously want better statistics about middle-income gains, then they should simply close their borders.
Mr Easterbrook points to something else about the figures for median household income. A quarter-century ago a typical household had three members. Today, it has just 2.6 members. Simply by this effect, median households have seen their real incomes rise by a half.
Another measure of improved well-being is increased access to jobs. Between 1980 and 2002 Americans in work rose by over 40%, a far brisker pace than the 26% growth in the population. Some three-quarters of the adult population are now in work, close to a record and some ten percentage points higher than in Europe.
One reason is more teenagers in work: over the same period, teenage employment grew by nearly two-thirds. As Andrew Hacker points out in the New York Review of Books, teenagers are a significant source of low-paid labour in supermarkets, shopping malls and fast-food franchises. Exploitative? Hardly, since it helps them buy cars and independence.
Yet the chief reason for higher participation is more women in work, notably married women. Very roughly, in the past half-century the average weekly hours worked by married women have tripled, while hours worked by men and single women have stayed about constant. The usual reason given is that married women have had to work so that families can make ends meet. A recent study* by three economists, Larry Jones, Rodolfo Manuelli and Ellen McGrattan, published by the Federal Reserve Bank of Minneapolis, punctures that notion. They find that the tripling of married women's hours can be explained entirely by a gender wage-gap that has narrowed. That is, a smaller pay differential between men and women gives married women sufficient incentive to invest in education and careers.
Of course, many American households struggle to survive on minimum-wage jobs with employers who do them few favours. We will look at low-paid work in a future week. What this piece attempts to argue is that the middle is far from being hollowed out. As Mr Easterbrook emphasises, most Americans have at least two cars and their own house, and they send their children to college. Certainly a bigger share of household income is being spent on things that did not feature 50 years ago, such as high-tech health care. But it has brought the benefit of a longer and better life, and not just for the old: since 1980, infant mortality has fallen by 45%.
At the end of last year, America's household wealth, at $44 trillion, passed the previous peak set in early 2000. With Americans wealthier than ever, why are many so anxious? Perhaps they think prosperity will vanish in a puff of terrorist smoke or a housing-market collapse. Perhaps, tentatively, the suburbs, in which half of Americans live, are to blame. For the suburbs fulfil the American dream, but at a price. On the one hand comes greatly increased space: the typical American dwelling now has two rooms per person, double Europe's level or America's half a century ago. On the other hand, expectations grow for every family member to have her own computer, DVD player—and another car. Pile on top of that an annual family holiday by plane, a bass-fishing boat (Americans spend $25 billion a year on boats and jet-skis) and regular meals out (Americans now spend nearly half their food dollars in restaurants). The American dream may cost less than it used to, but it still comes dear. And in a sated society, there is less and less new to look forward to.
I wonder about the IT outsourcing and IT numbers as well. I am aware of "contracting IT" companies that are doing a very robust business. How many of those jobs paying well over 50.00 per hour are showing up on the jobs report?
I'm in IT and the whining I am hearing from my colleagues is getting annoying.
Stay ahead of the curve technology-wise ... start a company, whatever ... just stop whining. Nobody said life would be a cakewalk ...
That's an intersting statement in a lot of ways.
- It's an admission of just the opposite of what the author is arguing
- On one hand I bet he would argue that immigrants help the economy, yet he is willing to dispose of them to make a point about the economy
- He is willing to dispose of them (bears repeating)
- Why would you strip out such a convenient group of people if your argument is so strong?
- Is this an unintended comment on our immigration policy?
- Should immigrants be held to a different standard?
And I'm sick of hearing this BS. Esp. companies that hire someone, then have to "train" them. What the hell are the managers thinking? Do they need someone with skills or not?
Translation: Americans are incapable of providing good work at a fair price.
If it is feasible to oursource government contracts (for maybe one fifth of American wages), it is feasible to outsource every single government job, from the top down the the lowliest janitor, and even further down to public school teachers. Taxes could immediately be cut to one fifth their current level across the board.
Who would object most loudly, and why?
It would be the people already working in government, who have already been outsourcing the work to be done. Government has shown the highest increases of employment and the highest increases in per capita income (over 6% nationwide) during this "recovery". Increase in per capita income in the private sector has been around 0.2% according to the tables on the BEA website.
Our government is working hard to benefit foreign competition, and using taxpayer funds to accomplish our own destruction.
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