Don't Confuse the Jobs Hype With the Facts

NewsMax.com ^ | Dec. 6, 2005 | Paul Craig Roberts

[Sonny M]

The November payrolls job report was announced Friday with the usual misleading hype. Spinmeisters made the most out of the 215,000 jobs. Looking beyond the glitter at the real facts, this is what we see. Twenty-one thousand of those jobs were government positions supported by taxpayers. There were only 194,000 new jobs in the private sector. Of those, 37,000 are in construction and only 11,000 are in manufacturing. The bulk of the new jobs – 144,000 – are in domestic services.

Wholesale and retail trade account for 20,000. Food services and drinking places (waitresses and bartenders) account for 38,000. Health care and social assistance account for 27,000. Professional and business services account for 29,000. Financial activities gained 13,000 jobs. Transportation and warehousing gained 8,000 jobs.

Very few of these jobs result in tradable services that can be exported or help to close the growing gap in the U.S. balance of trade.

The 11,000 new factory jobs and the 15,000 of the previous month are a relief from the usual loss. However, these gains are more than offset by the job cuts recently announced by General Motors and Ford.

Despite the gains, total hours worked declined, as the average workweek fell to 33.7 hours. The decline in the labor force participation rate, a consequence of the shrinkage in well-paying jobs, masks a higher rate of unemployment than the reported 5 percent. The ratio of employment to population fell again in November.

Average hourly earnings (up 3.2 percent over the last year) are not keeping up with the consumer price index (up 4.3 percent). Consequently, real incomes are falling.

This is not the picture of a healthy economy in which growth in high productivity, high value-added jobs fuels the growth in consumer demand and provides savings to finance Washington's red ink. What we are looking at is an economy that is coming unglued from the loss of jobs that provide ladders of upward mobility, and from massive trade and budget deficits that are resulting in unsustainable growth in indebtedness to foreigners.

The consumer price index measures inflation at 4.3 percent over the past year. Many people, experiencing household budgets severely impacted by fuel prices and grocery bills, find this figure unrealistically low. PNC Financial Services has a Christmas price index consisting of the gifts in the song, "The 12 Days of Christmas." The index reports that the cost of the collection of gifts has risen 6 percent since last Christmas. Some of the gifts have risen substantially in price. Gold rings are up 27.5 percent, and pear trees are up 15.4 percent. The cost of labor (drummers drumming, maids-a-milking) has remained the same.

Populations are hard-pressed when the prices of goods rise relative to the price of labor, because this makes it impossible for the population to maintain its standard of living.

The U.S. economy has been kept alive by low interest rates, which fueled a real estate boom. Consumers have kept growth alive by refinancing their home mortgages and spending the equity in their houses. Their indebtedness has risen.

Debt-fueled growth is qualitatively different from economic growth that results from an increase in high value-added jobs. Economists who look at the 3-plus percent economic growth rate and conclude that things are fine are fooling themselves and the public. When the real estate boom ends, what will be the source of new spending power?

[nopardons]

No, they don't want to stop the clock, they want a time machine. Of course, they really don't know nor understand what life back in whatever era they envision was the real "UTOPIA", was like, but that's another subject. LOL

[Hardastarboard]

PNC Financial Services has a Christmas price index consisting of the gifts in the song, "The 12 Days of Christmas." The index reports that the cost of the collection of gifts has risen 6 percent since last Christmas. Some of the gifts have risen substantially in price. Gold rings are up 27.5 percent, and pear trees are up 15.4 percent. The cost of labor (drummers drumming, maids-a-milking) has remained the same.

HTF is this even remotely relevant? He just drops this right in the middle of the article.

To respond to your statement, I don't believe there ARE any effective medications for senility, or whatever is causing him to make these kinds of totally irrelevant statements.

[1rudeboy]

And you, friend, appear to be paid by the inch for your posts.

[Calif Conservative]

** when [Paul Craig Roberts] makes reference to jobs growth being "only" he is making a judgement based on the monthly job growth requirements to stay even with or keep up with growth in the population and labor markets. **

You're wrong yet again. Look at the employment-population ratio, which is a way to determine if job growth is improving or deteriorating vs. population growth

This ratio was 62.8 percent in November 2005. From July through November of this year, this ratio has been either 62.9 or 62.8. Its high for the year was 62.9 percent, set multiple times.

Look at a longer trend.

In November 2005, this ratio was 62.8 %
In 11-04, it was 62.5
In 11-03, it was 62.3
In 11-02, it was 62.5
And in 11-01, it was 63.0

So the trend generally has been improving for the last four years and is headed back to the old pre-9/11 levels.

Your claim that jobs are not keeping up with populatiion growth is unfounded -- and refuted.

[andy58-in-nh]

I will take Mr. Wortzel's opinions with serious regard, if only due to his affiliation with the Heritage Foundation, which I greatly respect. Nonetheless, a direct quote supplied by you with regard to the "700,000": It is impossible to know (emphasis mine) if these people are here for study and research or if they are here to steal our secrets. The sheer numbers defy complete vetting or counterintelligence coverage.

Thus, Mr. Wetzel is not claiming that there are 700,000 Chinese "spies" in the US. That is your representation, not his. Wild exaggeration does not help your argument. What he does appear to say is that some number of Chinese visitors to the US (not foreign "workers" - but visitors, and companies established here as front organizations) are involved in espionage. I think this is undoubtedly true. After all, we know that there are thousands of Muslims in the US allied with terrorist groups or their front organizations (a much bigger threat, to my mind). It is the responsibility of our intelligence services and law enforcement agencies to deal with these national security threats - but that's not what we're talking about here.

When American companies use Chinese workers in Chinese plants to assist in the quality control of silicon chips made by Chinese manufacturing (for world export)- that's not espionage. American companies trade with rotten governments all over the globe for purely economic reasons - should we use our own state power to stop them because the governments they treat with are corrupt and/or dangerously aggressive? Other countries may not have constitutional republics and limited government - but we do. As long as American companies are not engaged in illegal activity or activities detrimental to national security - such a blanket prohibition would be blatantly Unconstitutional, even under an exaggerated view of the Commerce Clause.

That said, the matter of whether Chinese vistors to the US may be engaging in industrial and/or miltary espionage is serious business, and must directly impact our relationship with the Chinese government. I agree with that assessment and do not deny the potential threat.But as Mr. Wentzel notes, programs that help develop entrepreneurial skills among well-educated Chinese citizens are "admirable" and ought to be encouraged. It helps to spread Western and capitalist values, and will ultimately undermine the nominally (but not really all that) "Communist" government of China. As the Soviet Union went, so shall they. We do need to protect ourselves - America comes first - you'll never get an argument from me there. But let's not exaggerate the threat - or downplay the benefits of exposure to democracy.

[Edit35]

Food services and drinking places (waitresses and bartenders) account for 38,000.

And what is so wrong about food services?

My son's roommate is a server at a mainstream chain restaurant, and he pulls in nearly $2,000/week, much of it cash.

Of course, he doesn't get health care unless he makes manager, but still what the hey, he is making nearly $100,000 a year and he ain't even 25 years old yet.

[andy58-in-nh]

You can't have learned much good from your "business" experience, assuming its real.

It's real - and it's magnificent.

/Seinfeld reference

[Paul Ross]

It helps to spread Western and capitalist values, and will ultimately undermine the nominally (but not really all that) "Communist" government of China. As the Soviet Union went, so shall they.

That is not how the Soviets went. They didn't just fall. They were pushed. And right now, its we who are being pushed.

We do need to protect ourselves - America comes first - you'll never get an argument from me there. But let's not exaggerate the threat - or downplay the benefits of exposure to democracy.

Downplaying the what?? They have been innundating our nation with these spies for how long? 15 years plus, ever since Deng Xiou Ping crafted this long term game plan of the "Peaceful Rise". It always was a patient strategy, but nontheless dangerous. "Peaceful Rise" to what, precisely? Talk to the Chinese, they know exactly what they were rising to...supremacy. It was a euphemistic code phrase for lulling to sleep, and catching the U.S. off guard by pretending to no longer be an enemy, and seeming, partly to be dabbling with capitalism.

Remember how Deng Xiou Ping, when instructing his fellow hardliners why they were adopting the protective camouflage of partnering with Western capitalist industries said..."It doesn't matter whether you call the cat black or white, so long as it catches mice."

Then there is another issue you raised:

Thus, Mr. Wetzel is not claiming that there are 700,000 Chinese "spies" in the US. That is your representation, not his. Wild exaggeration does not help your argument.

I could simply say "True enough. I was just using a bit of hyperbole to counter your unwarranted rose-colored-glasses. And it worked, didn't it?" But the truth is, we really can't say that a single one of these Chinese are not potential spies. If it so happens that they land in an industrial job with defense applications, bingo! Many of them, such as "The Red Flower of North America" clearly were long-term moles from the get-go. All Chinese-funded students/businessmen would be likely susceptible to recruitment. Even if some were not terribly patriotic/nationalistic (which most really do appear to be...to an extreme). The PLA can be counted on finding out and pulling whatever strings are effective to bag the info from the Chinese national. Personal extortion. Family. Friends. Culture. Sex. Money. All the tools of tradecraft.

Mr. Wetzel likely doesn't come out and say this because the profound import might make him a target for the same kind of accusations that were falsely leveled against Notra Trulock, for example.

Expulsion en masse may be the only thing we can do. Allowing, of course, for a case-by-case review of those who willingly defect. And even then, keeping them far from defense technologies.

[Paul Ross]

It helps to spread Western and capitalist values, and will ultimately undermine the nominally (but not really all that) "Communist" government of China.

Read their constitution. The new economy is enslaved to service the communist sector. Its right there. Read it. Haven't you ever wondered why they keep 80% or so of their populace in the old economy? Why each and every foreign investment is required to be paired with a domestic partner getting 50% control? Why with the tremendous success that these supposed reforms they hadn't concluded it was a success and simply abandoned all residual traces of communism?

And "nominal" you say...Here, this speech by the PLA Defense Minister Chi Haotian should be an eye-opener for you...

[Common Tator]

Maybe there's a "clock" we should be trying to stop...

I have a huge trade deficit with Kroger.. I buy several hundred dollars worth of groceries from them every month. As far as I know Kroger has never spent a dollar with me?

How long do you think I would continue to exist if I decided to end my trade deficit on food purchases by not buying any food unless the grocer spends the same amount with me?

There are only two possiblities. First we buy from a foreign country. We give them dollars in exchance for goods. We know they are not buying goods from us. Thus we have a huge trade deficit. So is the transaction over when we are giving them pieces of paper with green ink on it, and in return we get goods like shirts, shoes, furniture, oil and gasoline?

HOW DARE THOSE DAMNED FOREIGNERS TAKE OUR PAPER MONEY IN EXCHANGE FOR THINGS AND THEN DON"T MAKE US GIVE THEM ANYTHING BUT GREEN INK ON PAPER IN RETURN?

Can you imagine how ticked you would be if you bought my home and paid me with a check I never cashed? I can just hear you screaming... " I have title to my new home and I paid you with a $300,000.00 check and you never cashed it. No one is going to screw me like that.!!!! I DEMAND YOU CASH THAT CHECK!!"

Of course the other possiblitiy is that they do spend the money we give them. They don't hide it under a matress. The facts are they buy services from us and invest in our nation. Services and investments are not counted in the trade deficit.

We are in the process of becoming a service providing nation. A hundred years ago we transistioned from a farming nation to a manufacturing nation. But since the middle of the 20th century we have been transistioning to a service economy. Every year since the 1950s the percentage of our workers engaged in manufacturing has declined.

Between 1880 and 1920 about 80 percent of our workers had to find new occupations. They changed from being farmers to being factory workers and service providers.

If we demand that Nations buy manufactured goods from us in order to sell us manufactured goods neither will happen. They will sell their goods elsewhere and buy their services else where.

It was the Republican party in the late 1920s that thought the way to greater prosperity was to limit imports. They passed the Smoote Hawley tarrif act. It brought on a world wide depression that lasted until world war II and its repeal.

There are only two things that can be done with money we pay foreigners for imported goods. The people that get that money can save it or spend it. If they save the money, our nation in effect got the goods with out payment until they do spend the money. If they spend the money it comes back to this nation.

Just as the money I spend for food goes into the nations economy. That economy provided the wealth that gives me my next months pay check.

But if you would like to sell me your house and then never cash the check I give you for it, I am willing to let you punish me that way forever.

[ex-snook]

"A hundred years ago 96 percent of our population was in agriculture. Today it is less than 2 percent."

True. But we did not achieve that reduction through exporting farms.

BTW do you happen to know the comparable figures for those employed by government?

[Paul Ross]

Your analogy doesn't work. What if an enemy simply wants you to quit working, feeds you your toys for 10 cents on the dollar, and gives you a pile of credit to keep buying...and you do so.

You sell off your tools that let you do your advanced work...coincidentally to the very enemy who is selling you the goods on credit, and your skills get rusty after you train your enemy replacement to do what you used to do.

Your credit with most other vendors starts slipping as they see your unwillingness to compete, or prevent profligate consumption and they start getting nervous. So because of the lack of income which you no longer are earning, you start refinancing your house. And continuing the party. The enemy buys up your note to keep you buying toys from them.

At last, when the enemy says, game over...it really will be for the debtor nation.

[Paul Ross]

But if you would like to sell me your house and then never cash the check I give you for it, I am willing to let you punish me that way forever.

Comrade Defense Min. Chi Haotian
salutes you for aiding his program.
Keep up the good work.

[nyconse]

Total nonsense, The government tells you we don't have enough educated Americans for jobs...not true. I saw accountants-highly educated- being let go at various corporations. These corporations promtly hired cheap guest workers. Construction used to pay decently. Now with illegals, it pays nothing. Illegal immigration is economically and politically costly. We pay for these people in lost jobs that paid well, we pay to educate their children. We pay and pay. Personally, I am totally sick of it. As for India, you are misinformed. Sprint,Dell and certain banks moved their operations to India-costing American jobs.