Posted on 08/02/2004 2:44:54 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
Despite Fed Chairman Alan Greenspan´s praise for the New Information Economy, his recent comments on job-quality trends in America made it painfully clear that he needs a lesson in elementary internet use.
Responding at Congressional hearings last week to worries that the United States recently has been replacing high-paying jobs with low-paying jobs, Greenspan stated, “We have not been able to find a significant, meaningful change in the quality of jobs being produced relative to the quality of jobs being lost for the nation as a whole over the last year.”
Actually, Greenspan himself provided some evidence in his own remarks to the Senate and House. For example, he acknowledged that, despite the technical end of the last recession, businesses continue to hire an outsized percentage of temporary workers, who enjoy less job security and receive fewer benefits than permanent employees. Greenspan also admitted that Americans are having difficulty findings new jobs that pay as much as the ones they´ve lost.
More important, however, evidence of declining U.S. job quality is everywhere in the government statistics easily accessible on the internet – and for much more than the last year. Moreover, the data reveal that America´s recent successes in job creation have come largely in spite of globalization and its effects, not because of it.
Inflation-adjusted hourly wages are the best measure of a worker´s worth in the new world economy Greenspan and others so uncritically laud. Unlike weekly wages, they can´t be affected by the number of hours a worker stays on the job (although, shockingly, this figure has declined throughout the current economic bounce-back). Unlike benefits, hourly wages don´t reflect employer decisions driven by tax considerations, and they are easier to quantify. Unlike income, moreover, wages don´t reflect all-too-transient changes in asset values (like home
valuations and investment earnings) or government transfer payments that have nothing to do with free markets at all, much less globalization, or the recent move to two income-earner families.
These real hourly wage figures unmistakably show a sea change that coincides remarkably with the decision in the 1970s to open America´s market almost indiscriminately to world trade. For example, real hourly wages for the entire private sector (which are not set by legislative fiat as they are for government jobs), peaked in 1972. The latest figures show them to be 9.5 percent lower. Since December, 2002, with the economy´s technical recovery well underway, they´ve fallen 2.5 percent.
Real manufacturing wages, which are earned by the workers most exposed to imports and outsourcing, peaked in 1978, and have fallen 5.8 percent since. Their decline since December, 2002, has been 1.5 percent. How can job quality remain the same nationally if wages throughout the private sector are falling behind living costs? Further, the persistence of this wage decline and stagnation over three decades is completely unprecedented in American history.
Slicing and dicing the data another way, the Economic Policy Institute shows in a July 27 report that between June, 2003 and June, 2004, the weekly earnings in industries with expanding and fast-growing employment rolls have been 7.2 percent lower than comparable earnings in industries where employment has been shrinking or growing most slowly. Over the last three years, the gap was even wider – 9.4 percent.
And the recent differences between the growing and shrinking job categories are revealing. As is well known, manufacturing employment has cratered in recent years, down nearly 20 percent from its 1990s peak of 17.7 million (in June, 1998). Where have most of the new jobs been created? Overwhelmingly in occupations having nothing to do with the global economy. Employment in construction, repair and maintenance, personal and laundry services, and membership organizations and associations are all at their all-time highs or close to them.
The same holds for jobs in government – where the employment levels are not only unrelated to the global economy but depend purely on politics – and for jobs in education and health care services – which are heavily subsidized by government.
Greenspan is informed and politically savvy enough to know that something important is wrong with U.S. labor markets lately. Although job creation has picked up markedly in recent months (thanks largely to unsustainable tax, budget, currency, and monetary stimulus), its pace still lags that of previous recoveries. Wages are remarkably soft for a recovery as well.
The Chairman´s explanation? The nation has “not been able to keep up the average skill level in our workforce to match the required increases of increasing technology.” His answer? Improve our educational system – somehow.
Obviously, American public grade and high schools could be a lot better. But we Americans have been wracking our brains for 30 years searching for remedies, with almost nothing to show for it. So if those who stress education as the problem are serious about helping economically struggling Americans anytime soon, they need to look elsewhere.
Just as important, Greenspan missed an emerging trend that seems equally noteworthy: The education premium – the pay increases generated by better education and skill levels – may be about to shrink. According to the Economic Policy Institute, from the early 1970s and the great opening of the U.S. economy to foreign competition until 2001, wage growth for college-educated American workers did indeed outpace that for other Americans (15.85 percent for college grads, 1.46 percent for Americans with some college, and a whopping 18.5 percent decline for workers lacking a high school degree).
But for highly educated Americans, the times may be a-changin´ – for the worse. Although the exodus of many high-paying information technology and professional services jobs to India has not adequately been captured by official data, evidence is now streaming in that the allegedly best and brightest are facing the same kinds of economic pressures already familiar to blue-collar workers.
According to a July 26 press release from the Institute of Electrical and Electronics Engineers, between the first and second quarters of this year, employment among computer software engineers fell by 131,000, among computer scientists and systems analysts by 51,000, among computer hardware engineers by 3,000, and among computer programmers by 16,000. And these jobs losses are occurring during a supposed tech industry recovery!
The longer term trends are even worse. Since their various late-1990s or turn-of-the-century peaks to the present, employment for workers in computer systems design and related services, custom computer programming, and other computer-related services has dropped by 17.38 percent, 16.03 percent, and 27.53 percent, respectively. Yet the total private sector workforce has shrunk by only 1.22 percent since its peak in October, 2000. Put differently, the odds of losing a computer services job in the last few years were only slightly better than the odds of losing a job in the devastated manufacturing sector.
It´s hard to believe that Greenspan´s unwillingness to acknowledge the most important job-quality data is unrelated to his determination to defend current globalization policies at all costs. But let´s give him the benefit of the doubt and offer him his first lesson in browsing government and other relevant data on the web. “This, Mr. Chairman, is a mouse....”
I don't know why I can't find the stats I'm looking for as there were several articles quoting the same IRS figures. Lob Dobbs, who is the best pundit on the subject had one as well as Fox News. I think Wall Street Journal did as well.
That's good news. But those reports are few and far between. They also tend to be Geocentric.
That's good news. But those reports are few and far between. They also tend to be geocentric.
This, Mr. Greenspan, is a mouse, we'll call him Mickey - the american job. This, Mr. Greenspan is what you guys term "fluffy the cat" see how soft and furry fluffy looks based on your descriptions. Now we take the pretty white wig off fluffy to reveal Lupo, the mexican hairless with one eye, a limp and frothing mouth - this is globalization. Ope, #$@! looks like we're gonna need another few million Mickeys.
You're kidding, right?
No complaints here, I'm a happy camper!
it's now "We Demand High-Paying Jobs!"
What happened to the free traitor low level campaigner that all the fuss blew up about this morning? Any more news. She expressed the same abusive, carefree attitude toward the plight of american workers that our free traitors here were warned months ago would be massively damaging if it ever made it out to the public. And today, our fellow freepers were saying fire her. One wonders if it is an effort at cover up or if it was just non-free traitors on the thread. It's reassuring to be right. But I don't know what to make of it. I'm sick to death of watching jobs leave this country and hearing from neighbors in the industry who are shovelling pig crap just to have a job now. The democrat ad "take a prozac" is very much a possibility at this point. I'd run it. We need to get our heads together on this and scuttle these people in our midst before they're the ruin of all of us. And there ain't much time to do it. And the President needs to get off the pot and do something because the appearance out here in flyover country is that he don't care and thinks this is good for us. Rumors that this might not be true ain't gonna make anyone change their minds.
Aside from that, one would expect that the pay for jobs would be at the lower end at the beginning of the cycle compared to the end of the cycle. That's nothing unusual.
Uuuhhhnnnhhh..
I've tracked the price of copper for a few years, on and off. It's the "old geezers'" economic predictor.
It took off beginning about a year ago and IIRC has about doubled in the last 12 months--maybe more.
No real surprise to hear that copper mining/smelting/refining is hiring.
Correct--as the article points out, most jobs in this country can be done by a graduate of a respectable high-school (not too many of those around, but...)
That's the way it was designed, BTW, by the industrial-economy gurus--Henry Ford's bunch--following the Adam Smith and Ricardo schools of economics and management.
This is truly an interesting period in which to live.
By the way--think of the possibilities. Less earnings, then less earnings vs. inflation. 2) Add a few quarter-points to the home mortgaage rate. 3) See foreclosures grow, Dick, see them grow. 4) Watch Freddie Mac and Fannie Mae collapse, Jane, watch them collapse.
Greenspan's got good reason for a quick retirement, besides his wifie.
Actually, it IS unusual--as is pointed out in some other posts, above.
This particular income-recovery cycle is stretching waaaayyyyy longer than most others, and providing much less in earned wage than others, as well.
There are only two factors which have contributed to a halfway decent cashflow picture: low mortgage rates (to date) and tax reductions.
OTOH, rates are already on the way up and scheduled for another bump in 10 days or so--and the tax-deficiency merely puts into bonds what ain't there now in revenue.
This is right. I have been looking to move up the ladder so to speak. I have been at my current job over 18 months and have improved my skill set. I have applied for other positions that are the next step up and they now pay the same or less then what I make now. There are jobs starting to open but the pay and benefits are noticabley lower.
Before I get flamed for invalid reasons (I'm sure flames will come my way) - let me state that I fully support Bush for re-election. He is the best man for the job - his heart is in the right place - but there are some global and inexorable changes underway that no President can fight against for long.
The American worker is under attack from many fronts.
When I grew up as a State department employee dependent, I lived in several Asian countries. While living there, I watched them develop from manufacturing cheap rubber crappola to bicycles, then to motorcycles - and then watched from back stateside in Silicon Valley, as they continued into autos, then low-grade electronics, to higher-end electronics, to computers and componentry - and now into the higher ends of indigenous research, design and development.
During all that time - the general American philosophy of Comparative Advantage prevailed. We would always hike up the skills ladder to do more advanced stuff, using our superior educational and technological skills base to create higher end jobs, leaving the lower production activities to third-world producers.
Things have changed. Our Asian competitors have caught up to us in their skills base, except for the extreme high-ends of technology, such as aerospace, advanced computer design, nanotechnology and the like.
Manufacturing is going like gangbusters in China. New factories and businesses are locating there in droves. And when all else is equal - price is the deciding factor, and our wages are WAY higher than the average Chinese and Indian wage for low to upper-skill levels.
Outsourcing takes several forms. If a factory making widgets closes down, because it can't compete with much cheaper Chinese widgets, then our widget production and the jobs that go with them have effectively been outsourced. This may be technically inaccurate to economists, but it has the same effect, nonetheless, to the US widget worker.
Then there are companies that don't go out of business - but merely close their US production plants and relocate in China. Same effect to the US worker.
On another front, a company, in services or manufacturing, might stay here and outsource key services and componentry, such as s/w development, customer support, accounting, product subassemblies, which is outsourcing in piecemeal fashion, a good number of jobs heretofore accomplished by US workers.
Then there is the insourcing/outsourcing H1-B jobs, performed by guest workers, who again fill jobs that were performed by indigenous US workers.
And finally, for those attempting to move into local services - such as construction, retail, lawncare, plumbing, electrician-work, there is the illegal South American immigrant. If one thinks that illegals can't get that kind of work - I invite you to look at Mt Kisco NY (one town over from Chappaqua) - and Charlotte, NC.
Mt Kisco is entirely overrun by Guatemalans. They staff virtually ALL the service positions - even though they can barely speak English. The wealthy citizens of Mount Kisco barely notice - as they do not compete for jobs at that level - and their kids are WAY too good for that kind of work.
And in Charlotte, NC, during the 7 years here - I watched as they started from "Hey Pedro! Get that piece-a wood - and get it on up here!" - to filling ALL the construction positions - and even doing plumbing and electrical work - under the licenses of a plumber and electrician making the rounds supervising their work.
When up in New England - I asked an electrician-friend who makes 80K plus a year, how business was, he said "Great! I've got more work than I can deal with. Because young kids today don't wanna work. They don't wanna get into the trades. And Mexicans? Up here? They ain't up around here - too cold."
So what would a President be able to do, under these global economic circumstances. Not much. However, the last two categories of outsourcing (in the broadest sense of the term), needs to be curtailed. We need to shut down H1-B - and close the borders and expel illegal US immigrants - to give US workers a fighting chance to get all those service jobs we're supposed to be flooding into.
OK - rant over. Flame away...
No lie there on the temps. Where I work they are replacing $20 an hour perm employees slowly with $10 contractors. My kit once was run by people with at least some college, now we have a batch of people that on large just barely made it out of high school. One even told me that this job beats the best one she ever had before this, Burger King. They are less productive, and the rip up more gear, but they are what is being hired.
Nothing a little government-funded light-rail program wouldn't fix.
Ole one note Willie, you're a hoot! :)
I just looked it up. From early 2002-date, copper's gone from around 65 to 130 (HGX, high-grade, futures.)
There was a brief retreat from 135 to 120 between April and June (approx) this year--now it's back to upswing.
Workers are earning less in new jobs.
manufacturing is up,
..but not hiring workers
GDP is growing,
..measured in sales of goods mostly manufactured in China
interest rates are at all time lows
...for the next few months, anyway
and Willie Green thinks the world is coming to an end.
Wrong. Willie thinks there are some interesting problems which have not been addressed.
And it ain't just Willie; even our President knows there's trouble.
But you can select whatever sound-bites you like.
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