The Folly of a Free Trade Pact with Central America

AmericanEconomicAlert.org ^ | Wednesday, April 07, 2004 | Alan Tonelson

[Toddsterpatriot]

Insight report on income decline was sourced from Bureau of Census.

Do you have a link to the Insight report?

[templar]

These dollars are only redeemable for American goods made by American workers.

Or ownership of American assets, ownership of American government and private bonds (which is not good for several reasons), purchase of American politicians, courts, legislation, etc., and on and on. It means that, since we don't really have anything to export to them that they aren't already making cheaper themselves (thanks to out outsourcing, manufacturing transfers, etc.) that they will buy controlling interests in America. It also gives them substantial amounts of the "reserve currency" of the world (dollars) which they use to pay for things like oil from Saudi Arabia and goods and commodities from other unfriendly countries (enemies of the US, even if we like to kiss their butts a lot) which further strengthens our enemies. If all they could buy was American goods, there would be little problem from my standpoint.

[Toddsterpatriot]

No matter the Government policy--in 50 years, the country will be vacant.

True

Their Gummint policy worked from 1980-1995, BTW.

Their recession started in 1989.

[XBob]

132 - "So they're gonna take the land and companies back to China? What about those foreign car companies that own plants in the U.S. is that bad for us too?"

Dummy - they take the income stream back to their home country, so the profits, instead of staying here are outsourced. And then they also have great clout with our government and buy it to get more of our money from our efforts.

Why do you think Sony bought Paramount pictures (or what ever movie studio it was) which has now become Sony pictures. They make the money on the movie, every time you pay to see it, and that money goes to Japan.

[XBob]

137 - "Your hero's [bush] not doing well, my friend."

sad but true.

[Toddsterpatriot]

Dummy - they take the income stream back to their home country, so the profits, instead of staying here are outsourced.

So, they take more dollars (pieces of paper) back to their home country? So, Americans are working for foreign companies? They're outsourcing work to America? Hmmmmmm. Interesting.

So, what's most important, the profits or the salary paid to American workers?

[XBob]

So, if you want to work for a country owned by foreigners, go to that foreign country and try to work there.

Personally, I would like to live and work in the country I own and govern.

I don't like being a wage slave to foreigners, who own our means of production and our government.

Sorry, you have no ethics, patriotism or cohones - only greed.

[Toddsterpatriot]

Sorry, you have no ethics, patriotism or cohones - only greed.

And you have no clue, no brain, yada yada yada.

Are you a grumpy union worker missing past days of glory?

[XBob]

148 - "Are you a grumpy union worker missing past days of glory?"

hardly, though I know and have worked with hundreds of them on large projects around the world, and I have bought hundreds of thousands of tons of iron and steel and pipe for huge projects around the world.

I would have thought you would have looked at my little notes on my home page by now.

[ninenot]

Nope. It's the only thing I didn't pick up. I pulled the item on 2/23. Just ran a search on O'Meara's name in Insight, didn't see it; then ran through their back archives to 2/3; didn't see it.

Here's the first couple of graphs:

It is no secret that tens of thousands of jobs in the software sector are being shipped to India, nor are many unaware that millions of manufacturing jobs, once filled by America's blue-collar middle class, have been moved to Communist China where desperate people are willing to work for substandard wages. What may not be understood is that 2.5 million Americans have lost their jobs since 2001, and nearly 400,000 ran out of their federal unemployment benefits in January of this year alone. Indeed the U.S. Bureau of Labor Statistics reports that the average salary for U.S. workers has fallen from $44,570 to $35,410 since 2001, with nearly 5 million Americans working at part-time employment to make ends meet.

This bleak picture is wholly out of line with the reported "recovery" touted by Alan Greenspan, the top money man at the Federal Reserve. Despite what has been described as a jobless recovery, President George W. Bush last month proposed a more lenient immigration policy in an effort to "create a system that is fairer, more consistent and more compassionate."

The president appears to be responding to upbeat data provided by his top economic advisor, N. Gregory Mankiw, who recently announced that outsourcing American jobs overseas is actually good for the nation's economy. Mankiw assured, "I know there will be jobs in the future," and in fact has predicted 2.6 million new payroll jobs by the end of 2004. Not everyone agrees with that upbeat assessment of the nation's job market.

And the new immigration reform, say critics on both the left and right, invites mass immigration to the United States to "match willing foreign workers with willing U.S. employers when no Americans can be found to fill the jobs."

According to the fact sheet provided by the White House, "the Federal Government [will] offer temporary-worker status to undocumented men and women now employed in the United States and those in foreign countries who have been offered employment here." While the president's proposal has been short on specifics, the idea is that U.S. employers first must consider Americans for these jobs, the program will prevent exploitation of undocumented workers, and the process will become an incentive for temporary workers to return to their countries of origin when their temporary status expires.

In other words, the estimated 8 million to 12 million undocumented aliens now illegally residing in the United States, and the untold millions of other "willing employees" who may be granted temporary status in the United States, will, after making a living wage, return voluntarily to the countries from which they fled because they could not make ends meet there. Critics of the proposal quote the president's father, who was fond of saying in other contexts, "It doesn't seem prudent."

[Toddsterpatriot]

Indeed the U.S. Bureau of Labor Statistics reports that the average salary for U.S. workers has fallen from $44,570 to $35,410 since 2001, with nearly 5 million Americans working at part-time employment to make ends meet.

This doesn't pass the smell test. 2.5 million lost jobs have caused average wages to drop 20%? That would be kinda like a depression. Isn't the employment number around 130 million? That would make 2.5 million 2% of the total. Those 2% would have to be very highly paid for the drop in their salary to drop the average 20%. I just don't buy it.

[Toddsterpatriot]

I would have thought you would have looked at my little notes on my home page by now.

Yeah looked at your little notes. Didn't see the cause of your bitterness there.

[ninenot]

Frankly, I placed THREE phone calls to the reporter about her source(s) for the stats.

I suspect it's a combination of stats.

We know that 'hours worked' is deteriorating, now hanging around 33.1/week. (It was as high as 35.7 in the '90's.) We know that 'median wage' is only holding steady vs. cost-of-living. (Using 'median' wage gives a slightly different, perhaps more clear picture of middle-America than 'average' wage.) As an alternative, she could have used 'spendable income' which would have factored in the significant consumer-paid cost of healthcare (vs. 'insured').

But I could not directly verify her stat, either. Of course, one could spend the better part of a week on Census/BEA statistical reports--and THEN learn only that "personal income" is not exactly just income. (It also amortizes increases in the value of housing, e.g. into the 'income' number.)

Is it credible? Perhaps. There's been a serious wage compression issue floating around since the early 1990's. During the 1990's, it was a bother. But since 2001, the result has been a distinct 'downslide' in the salaries paid for certain positions: ALL HR-related with the exception of VP, and in IT at all levels except VP, as well. I can testify to that directly as a professional in recruitment.
From indirect sources, one gathers the same is true in the field of design engineering.

IOW, if you take out the very highest levels of corporate governance, the vast 'middle's' income has gone down, and 20-25% is a reasonable number.

Summarily: I can't verify her number directly. She won't return phone calls on the topic. The article seems to have disappeared from her byline archive on Insight, but WAS printed after Minkew's famous 'gaffe.' On the other hand, her claim is not without some merit, based on my knowledge of the job market and other statistical info.

[Toddsterpatriot]

IOW, if you take out the very highest levels of corporate governance, the vast 'middle's' income has gone down, and 20-25% is a reasonable number.

The only way this stat makes any sense is maybe average salary of new hires has dropped.

[ninenot]

Not necessarily.

New hires (if there are any) can still run in the $30K range (slightly more for EE/ME, slightly less for sales/administratives.) Early word is that college grads are having a hard time finding jobs in their preferred discipline, btw.

The crunch is in the high-end professionals: 10-20 years' experience administratives and IT types. THERE, when their jobs are cut, they find comparable experience requirements pay $15-20K less than they were used to.

Typical IT Project Manager was $80-100K. Now $60-80K. Bennies Manager, same. Customer Service Manager, same. It's almost like taking out a layer of the salary mountain.

[GOP_1900AD]

"because the masses don't know what's best for the US economy. " and, pray tell, you do? [All: Go check out this user's posts across FR. A real chameleon.... goals? objectives? ...]

[hedgetrimmer]

Have you read this one? This is the Bush doctrine.It partially explains what is going on in the US economy.

This growing interdependence plainly has domestic U.S. consequences for such matters as immigration policy, cultural identity, and electoral politics; such changes are already in train. Vicente Fox has called for open borders and free labor mobility on the EU model between Mexico and the U.S. Although that goes too far for current American opinion, President Bush is on record as favoring a more generous immigration policy. His administration has sought to extend amnesties to illegal Latin American immigrants in the U.S. And he has asked a task force to examine the virtues of a temporary U.S. "guest worker" program for Mexican workers. All of these signs point ultimately to a single U.S.-Mexican market with full labor mobility and, as the FTAA expands to cover all Latin America, to a much broader version of the same thing.

Bush has also sought to help this process along by making the U.S. culturally hospitable to Latino immigrants — opposing "English First" laws and endorsing the argument that the U.S. is no longer united by a common culture and language but bilingual and multicultural. In the course of assuming the leadership of a continent divided mainly between Hispanic and Anglophone traditions, the U.S. will adapt to a new identity, one that is in theory multicultural, in practice bicultural:

http://www.nationalreview.com/flashback/flashback-osullivanprint090501.html