Posted on 04/23/2006 2:44:37 PM PDT by Dialup Llama
Is your job safe? Not if it can be done abroad. The only safe jobs are in domestic services that require a "hands-on" presence, such as barbers, hospital orderlies, and waitresses.
For a number of years the Bureau of Labor Statistics’ monthly payroll jobs reports have been sending US policymakers dire warnings, only to be ignored. The March report repeats the message. Ninety-five percent of the new jobs created are in domestic services. The US economy no longer creates jobs in export or export-competitive sectors.
Wholesale and retail trade, waitresses and bartenders account for 46% of the new jobs. Education and health services, administrative and waste services, and financial activities account for another 46%.
This has been the profile of US employment growth for a number of years, along with some construction jobs filled by legal and illegal immigrants. It is the job profile of a third world economy.
From January 2001 to January 2006 the US economy lost 2.9 million manufacturing jobs. The promised replacement jobs—"new economy" high-tech knowledge jobs—have failed to materialize.
High-tech knowledge jobs are also being outsourced abroad. According to the Bureau of Labor Statistics, US employment of engineers and architects declined by 189,940 between November 2000 and November 2004 (latest data available). Economist Alan Blinder estimates that as many as 56 million American jobs are susceptible to offshore outsourcing. That would be about half of the US work force.
Offshoring has contributed to the explosion of the US trade/current account deficit over the past decade to $800 billion annually and rising. The US has a trade deficit in manufactured products, including advanced technology products, of more than a half trillion dollars annually, a sum far larger than the oil import bill.
To cover the trade deficit, the US has to turn over to foreigners ownership of its accumulated wealth. This worsens the current account deficit as the income streams on the US based assets now accrue to foreigners.
Many economists pretend that the whopping US trade/current account deficit is evidence that the rest of the world has great confidence in America. They pretend that it is foreign investment in the US that causes the trade deficit, whereas the simple fact is that it is the US trade deficit that gives foreigners the dollars with which to purchase our existing assets.
Traditionally, a trade deficit might indicate that a country’s industries were not competitive against imports from abroad, resulting in a decline in the exchange value of the country’s currency. This would make foreign goods more expensive for that country and its goods cheaper for foreigners, thus restoring a balance.
This does not work for the US for three reasons:
(1) The US dollar is the world’s reserve currency. The dollar can be used to settle all international accounts. Therefore, there is a world demand for dollars. This demand absorbs what would be an excess supply for any other country running such large deficits.
(2) China pegs its currency to the dollar, thus preventing an adjustment in the price of the two countries goods and services. Other countries, such as Japan, intervene in currency markets by purchasing dollars in order to support the dollar and prevent their currencies from rising in dollar value.
(3) Offshoring turns US production into imports. Much of the US trade deficit results from offshoring, not from traditional trade competition. The collapse of world socialism and the advent of the high speed Internet made cheap foreign labor available to US companies. US firms use foreign labor to produce offshore the goods and services that they market to Americans. For example, more than half of the large US trade deficit with China is comprised of goods and services produced by US companies in China for American markets.
How can the US reduce its trade deficit when it deprives itself of exports and fills itself with imports by offshoring its production of goods and services, and when the devaluation of the dollar is limited by the dollar’s reserve role and by other countries pegging their currency to the dollar or by intervening to support the dollar? Obviously, when balance returns to US trade, it will not come through traditional means.
One way balance can return is by the US oversupplying the world with dollars to the point at which the dollar is abandoned as the reserve currency.
Another way is through the limit placed on Americans’ ability to consume that results from replacing manufacturing and engineering jobs with waitress, bartender and hospital orderly jobs. A country that loses high value-added jobs and gains low value-added jobs is in danger of losing its prosperity. Offshoring raises corporate profits in the short-run at the expense of destroying the domestic consumer market in the long-run.
Most economists are confused about offshoring. They mistakenly think offshoring is an example of free trade bringing mutual benefit through the principle of comparative advantage. It is not. Offshoring is an example of companies obtaining absolute advantage by combining high-tech capital with low-cost labor. The gains from absolute advantage are asymmetrical or one-sided. The cheap labor country gains, and the expensive labor country loses.
As Morgan Stanley economist Stephen Roach pointed out on April 7, "average hourly compensation of Chinese manufacturing workers is only 3-4% of levels in the US, 10% of the pay rate of Asia’s newly industrialized economies, and 25% of levels in Mexico and Brazil." Roach also notes that with a rural population of 745 million (about two and one-half times the total US population) and headcount reductions of more than 60 million workers from state-owned enterprises, China will not experience a labor shortage any time soon.
This means that it will be a long time before Chinese wages rise enough to offset the benefits of offshoring. The same can be said about India. Consequently, a large percentage of US jobs is vulnerable to being moved abroad.
"Somehow I think you have wandered onto the wrong forum and have completely closed your eyes to all that you can learn here........"
Cocky little know-it-all, aren't you. We'll see whose right on this thread in the not too far fuure.
Don't you think it would be fair to say that China's populace is considerably more well off financially today, than they were 14 years ago?
absolutely..and China's imports have gone through the roof since then
When the kids of today realize that they won't have careers in football, basketball or baseball and maybe they should start focusing on educating themselves..........
FWIW, those "homeland" jobs arent being given to foreigners over Americans, they are being given to the foreigners due to the lack of properly trained Americans. The demand is out there, look at the want adds.
Mase, you know as well as I do that the trade deficits in the 1980s were bout 10% what they are today. As for your manufacturing numbers, what could they have been? I keep hearing that they are great, but that ignores the natural growth that has taken place for the last 100 years. Numbers of individuals employed in that sector have tanked.
The poster I was replying to stated: the foreclosure rate is now increasing rapidly. Is that what my chart shows? Hardly. Increases in delinquencies spiked after the tech bubble burst and again after 9-11. They have not gone up since interest rates began increasing two years ago even though home ownership is at an all time high.
The doom you and the other Eeyore's are trying to sell here cannot be backed up by facts. That's what my chart shows. Now back to your gloomy place.
LOL!!! Don't you have a union meeting to go to tonight? LOL!
Federal Gov't employee or Washington lobbyist??
Somewhere on this thread is the mention of somethink near a 189,000 lost engineering jobs in the U.S. The President in the last day or two said that if students would get a good engineering education, they'd take jobs from overseas.
I suggest that not very many people are going to be stupid enough to earn an engineering degree when the going rate of pay will be judged by what China and India are willing to pay for that position.
You seem to be suggesting otherwise. I'm not sure how you can.
"LOL!!! Don't you have a union meeting to go to tonight? LOL!"
I'm retired, and never was in a Union, thank you. You must be one of those world globalist types. LOL!
We'll, I'll fall back on that old axiom, there is only a recession if You are out of work. My wife and I are the first of the Boomer's. We are approaching 60, and we have been employed our entire working lives. We get raises every year. We have a diversified retirement portfolio. We have already bought our retirement home. Our son is 35, his only education was four years in the Marine Corps, and he's making $125k a year. Who says anything is broken??!! Where are these people who get no raises? I work at a major US corporation, and we give raises every year. And, we're hiring!!
I work for a major corporation as well. We just recieved our first raise in two years. It was for around 2%. I'm glad things have turned out well for your family.
Thanks for the comments folks. I'm going to have to be going now. See you on the next thread.
I know a waiter at Ruth's Chris Steakhouse who makes $80k a year...Not bad.
If all the people who have been laid off and can't find work and others who have had to find another job that pays far less than their original one go vote this fall, the Republicans have no chance to retain power. These are not isolated anecdotes. There are millions of voters who fall into that catagory.
I've never sold doom. It's just that my glasses aren't rose-colored.
Contained in my previous post: "The well-being of those countries you see at this time was regained following The Dark Ages."
The point is, Nations do fall from their lofty place, and it takes a very long time to regain a higher status. While Europe was in the Dark Ages, China was a highly developed economic civilization. Egypt was a remarkable civilization; and, a very large part of it is pure third world today.
Every economic move that is made must be done with the preservation of the Nation kept in mind. Nowadays the only thing on anyone's mind is "rape at the checkout line". America just can't remain the world's greatest Nation if all of the engineering and manufacturing is outsourced. Soon, those producing Nations will have no use for the parent companies in our Nation. We will be reduced to buying their products, for they will indeed just make their own instead of ours.
You don't really believe that there is any stability in a consumer Nation, do you? This better be making economic sense to you, for the collective "we" don't have much time to save our America from the affects of total and destructive greed. Wal-Mart cares little for America. It is America's money they want. One day the wages scale will fall across the board, not just as it has for people like myself. Who will design the products once my class does not exist in this Nation? Indians and Chinese, that is who. Who will, ahem, continue to manufacture them? The same folks, it seems. Who will buy them mostly? Indians and Chinese.
Third world countries are third world countries for only one reason: They don't produce. Take the production from America and a third world Nation is what we shall be. (By the way, the definition of a third world country includes the notion that it consumes more than it produces.)
People of today are mostly "I", "me", "my", "mine". This is especially true for those who control "corporate America". There is little thought given toward what might be good for the Nation and our fellow citizens. It is back to that "United We Stand", which really isn't happening. That leads to the "Divided We Fall".
This is why I continue to spar with you: You are my fellow countryman. I want you to stand with me to save our America. We must indeed care a great deal about the economic downturn that is experienced by "the producers" in this Nation. If we don't, this misfortune will surely spread until we have a great gulf between "the haves" and the "have nots". That gulf is very prevalent in third world countries.
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