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WHERE DID ALL THE JOBS GO?
Chronicles [Extra] ^ | February 24, 2004 | Paul Craig Roberts

Posted on 02/26/2004 3:09:59 PM PST by A. Pole

Since January 2001, a three-year period during which the economy has experienced one year of recession and two years of recovery, the U.S. economy has lost 2.6 percent of its private-sector jobs. These losses are not evenly distributed. Construction employment has declined by only 0.1 percent, and employment in oil and gas extraction by 0.7 percent.

Employment declines in manufacturing and knowledge jobs, however, have been dramatic.

Tables prepared by Charles McMillion of MBG Information Services from government data show employment in primary metals down 24 percent; machinery 21.6 percent; computer and peripheral equipment 28 percent; communications equipment 38.8 percent; semiconductors and electronic components 37 percent; electrical equipment and appliances 22.8 percent; textile mills 34.1 percent; apparel 37.3 percent; chemicals 8.3 percent; plastics and rubber products 13.8 percent; Internet publishing and broadcast 40 percent; telecommunications 19.4 percent; ISPs, search portals, data processing 22.6 percent; securities, commodity, investments 6.8 percent; computer systems design and related 17 percent.

Where has employment grown? Private service sector jobs have declined by 0.1 percent. Growth in state education jobs and local government jobs has boosted overall service employment by 0.6 percent.

During the past 12 months, the second year of economic recovery, the U.S. economy eked out 57,000 net new jobs in nontradable low-pay services, leaving the economy millions of jobs short of normal performance.

This is not a picture of an economy that is doing well. Low income jobs in nontradable services are the only sources of employment, while high value-added jobs that pay good incomes continue to disappear.

This job record is not one of a powerful U.S. economy dominating world markets and building consumer incomes for sustained recovery. It is not a record that promises jobs for university graduates. It is not a record that promises a future.

Economists have apologies, but no real explanations, for the loss of jobs in tradable goods and services. They are careful not to blame outsourcing of manufacturing and service jobs, which they claim creates as many new jobs as it loses.

Outsourcing platforms, especially the knowledge jobs platforms in India, are commissioning U.S. think tanks and consultants to do "independent" studies that prove "outsourcing is good for the U.S." Certainly, the people who are benefiting from outsourcing want us to think it is good for us.

For years as U.S. multinationals moved manufacturing offshore, Americans were told that their future was in "knowledge jobs." Today, knowledge jobs are being moved offshore more rapidly than manufacturing jobs were.

What are the unemployed computer engineers and information technology workers supposed to retrain for? What high value-added job can't be outsourced? Only those in the nontradable sector, such as dentists and surgeons. If everyone becomes a dentist or a surgeon, those incomes will be driven down.

Many young engineering graduates have discovered that they invested in acquiring skills for which there are no jobs and are headed to law schools in an effort to retrieve their future. I know young software engineers who are substitute teachers in middle schools, and others who are trying to organize rock bands to play the club and bar circuits.

They have no idea what to retrain for, and neither do the economists who tell them retraining is the answer.

What is happening is easy to discern from the daily announcements of the multinationals themselves. Cheap foreign labor is being substituted for U.S. labor over a wide range of goods and services produced for U.S. markets. Americans are losing the incomes associated with the production of the goods and services that they consume. Because of extraordinary differences in domestic prices and living standards, foreign labor can offer its services to U.S. capital and technology for far lower wages than can Americans. Capitalists maximize profits, not employment in their home countries.

This is a new development. Until the collapse of world socialism and the rise of the Internet, first world capital stayed in the first world, and offshore production was not the motive of foreign investment. As offshore production takes hold and spreads, the United States will lose more high value-added jobs.

A rise in Asian currency values could dampen and eventually end the exodus of jobs from America. The question is: How long does the exodus last before there is a new equilibrium?

In an important new work in trade theory (Global Trade and Conflicting National Interests, MIT Press, 2000), Ralph E. Gomory and William J. Baumol show that it very much matters which industries and occupations countries retain. They explode the free trade assumption that free trade always produces mutual gains. Gomory and Baumol show that in many cases, perhaps a majority, gains for countries come at the expense of other countries. The authors explain why the "man in the street," so derided by economists, is right in his understanding that free trade produces winners and losers.

University of Maryland economist Herman Daly has been making this point for 15 years and Senator Charles Schumer and I more recently. Now, Gomory and Baumol have provided powerful demonstration that trade has winners and losers. Right now, the United States is losing.


TOPICS: Business/Economy; Culture/Society; Foreign Affairs; Government
KEYWORDS: economy; free; jobmarket; jobs; layoffs; market; outsourcing; paulcraigroberts; trade
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1 posted on 02/26/2004 3:10:00 PM PST by A. Pole
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To: Willie Green; Wolfie; ex-snook; Jhoffa_; FITZ; arete; FreedomPoster; Red Jones; Pyro7480; ...
Outsourcing platforms, especially the knowledge jobs platforms in India, are commissioning U.S. think tanks and consultants to do "independent" studies that prove "outsourcing is good for the U.S." Certainly, the people who are benefiting from outsourcing want us to think it is good for us.

Independent studies bump.

2 posted on 02/26/2004 3:11:52 PM PST by A. Pole (The genocide of Albanians was stopped in its tracks before it began.)
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To: A. Pole
Read the HOUSEHOLD employment figures..more people are working at home and for themselves!
3 posted on 02/26/2004 3:12:13 PM PST by kaktuskid
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To: A. Pole
BUMP
4 posted on 02/26/2004 3:12:45 PM PST by international american (Kerry has hired a full time clerk to keep track of his lies..........)
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To: kaktuskid
"Read the HOUSEHOLD employment figures..more people are working at home and for themselves!"

Uh... that's not exactly what the household survey means. The household survey just means that when you ask people if they are working, more say "yes." The establishment survey doesn't capture all the places they might be working. They MAY be working at home, but they could be working in a new business (establishment) that hasn't been covered by the establishment survey yet.
5 posted on 02/26/2004 3:15:58 PM PST by bolobaby
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To: A. Pole
Down with capitalism!! Down with dirty rotten profiteers!! LOL
6 posted on 02/26/2004 3:16:36 PM PST by Jim Robinson (I don't belong to no organized political party. I'm a Republycan.)
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To: A. Pole
Baumol show that it very much matters which industries and occupations countries retain.

Nah....We can all have great lives as consultants or baristas.

7 posted on 02/26/2004 3:17:31 PM PST by AreaMan
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To: A. Pole
The restaurant construction business is BOOMING in SoCal.
8 posted on 02/26/2004 3:18:25 PM PST by PRND21
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To: A. Pole
The people who commission and conduct these "studies" should be told to bump off.
9 posted on 02/26/2004 3:19:02 PM PST by Clintonfatigued
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To: PRND21
The restaurant construction business is BOOMING in SoCal.

Whew, what a relief. Why should I waste my time in Grad School when I can just wait for my future employer to finish building his franchise.

Yes, I would like fries with that student loan payment, thank you.

10 posted on 02/26/2004 3:20:50 PM PST by AreaMan
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To: Jim Robinson
Welcome!

Can you talk some sense into these guys?
11 posted on 02/26/2004 3:21:54 PM PST by reformedliberal
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To: A. Pole
Please remove my name from your list.

12 posted on 02/26/2004 3:23:09 PM PST by PhilipFreneau
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To: Jim Robinson
Are you a Republican or a Republican't?

Call me a 'two years of working at jobs just to pay the mortgage and my kids private school tuition, and finally in the last 2 months, finding a 'real' job with a real salary kinda guy".

I NEVER stopped working long enuf to B#tch!!!

13 posted on 02/26/2004 3:24:21 PM PST by keithtoo (W '04 - I'll pass on the ketchup-boy.)
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To: AreaMan
Yes, I would like fries with that student loan payment, thank you.

Fries? Try again. And you'll need the Grad school if you're not talented.

14 posted on 02/26/2004 3:24:23 PM PST by PRND21
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To: A. Pole
Where has employment grown?

The unemployment rate has dropped from around 6.4 percent less than a year ago to 5.6 percent.

This is the lowest unemployment rate in two years and below the average of the 1980s (7.3 percent) and '90s (5.8 percent), and still continues to drop.

15 posted on 02/26/2004 3:26:02 PM PST by Jorge
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To: PRND21
Fries? Try again. And you'll need the Grad school if you're not talented

You're right, what was I thinking, I'll have onion rings.

As for Grad School, even that may not help.

16 posted on 02/26/2004 3:28:48 PM PST by AreaMan
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To: Jorge
The unemployment rate has dropped from around 6.4 percent less than a year ago to 5.6 percent.

An engineer who is 50 and was paid $60-90K/yr gets canned (because the company offshored his job to India or Philippines for $40k/year) now gets a job doing (you name it) for $45k/yr.

New jobs in (name the industry) are created but the pay is less than it was last year.

Has unemployment has gone down? Yes.

17 posted on 02/26/2004 3:36:30 PM PST by AreaMan
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To: A. Pole
This is hardly an independant group, study, or report. This is a first person rant. The group is a liberal economic think tank: http://www.mbginfosvcs.com/

The claim that 57,000 net new jobs have been produced in the last 12 months belies the bias of this apocalyptic creed.

During the past 12 months, the second year of economic recovery, the U.S. economy eked out 57,000 net new jobs in nontradable low-pay services, leaving the economy millions of jobs short of normal performance.

"This is not a picture of an economy that is doing well. Low income jobs in nontradable services are the only sources of employment, while high value-added jobs that pay good incomes continue to disappear."

You can find this exact same quote from the 80s being used against Reagan.
18 posted on 02/26/2004 3:36:34 PM PST by optimistically_conservative (If consistency is the hobgoblin of small minds, John F. Kerry’s mind must be freaking enormous. T.B.)
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To: A. Pole
I'm in software ... during the "bubble", there were a ton of people hired who had only recently read "HTML for Dummies". I don't suspect their jobs are coming back.
19 posted on 02/26/2004 3:36:56 PM PST by Mr. Buzzcut
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To: PhilipFreneau
Please remove my name from your list.

Done.

20 posted on 02/26/2004 3:38:00 PM PST by A. Pole (The genocide of Albanians was stopped in its tracks before it began.)
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