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.
John Williams is a charlatan who is only interested in selling books. He claims that there are five million discouraged workers in this country that the government somehow reclassified so as to hide the real rate of unemployment. Let's look at what a reliable and conservative source has to say about the issue:
NRO: The Myth of the Discouraged Worker
You seem to believe in a lot of dubious information. Maybe you can find a credible source for showing us what the non-massaged rate of unemployment and inflation are?
Another grim report on the Paul Craig Roberts mental health front.
They also seem to be blinded by factual information.
You certainly haven't presented much factual information to look at.
yes, it always works that way - before you lose your job and find you can't replace it in the private sector at a comparable wage.
I meant in non-401K savings. I wish I had put away additional money into Treasury notes, and tax free municipal bonds, in addition to the maxing out of my 401K.
Mark
my total savings rate is between 30-50% depending on the month
first for me this year, since 2001. alot of freepers don't understand what is really going on in a lot of sectors - private sector middle class jobs especially, anything touched by offshoring and globalism. I am attacked here regularly by them (as are you I see) as a troll. they see a 39% approval rating for the economy, they look at the macro numbers, and they say "the polls are wrong".
people don't live in the macro economy, they live in their own mirco economy. the economy is stratified - divided into individual sectors that each have their unique dynamics. that's why the numbers don't add up.
HELP!!!! THE SKY IS FALLING, WE'RE ALL DOOMED, IT'S POINTLESS TO STRUGGLE, IT'S ALL BUSH'S FAULT ARRRRRRRRRRGGGGGGGHHHHHHHH!!!!
Awesom!
Mark
indeed, and how much education do you need to be a waiter at Ruth's Chris? not much. so if those are the kinds of jobs our economy is creating, why bother advocating college for young americans?
but i am scared to do riskier high return investments with my non-401k savings..they sit in short term bond funds or money market.
The judges wanted to let you know that yours has won the honors for "Dumbest Post of the Day."
And we are much better off today then we were in the 80's. Household wealth has increased by more than $30 trillion since Reagan took office and that's more than the previous 200 years combined. In 1980, only 25% of American's owned stock in their economy. Today, it's more than 52%. Japan and Germany regularly run large trade surpluses. Instead of our economy would you prefer Japan's 15 years of deflation/recession and no growth economy, or Germany's 12% unemployment and no growth economy?
As for your manufacturing numbers, what could they have been?
You've seen this chart before. Just look at that manufacturing growth! Since 1992, it's increased more than 50%. What part of that growth is unnatural? Do you think it's easier to grow a large economy or a smaller economy in terms of percentages?
Numbers of individuals employed in that sector have tanked.
China has lost more manufacturing jobs than we have. The truth is that manufacturing jobs are declining world-wide. Productivity is the key to success in manufacturing and automation is the reason we produce much more now with fewer people.
Actually, a lot of young Americans, especially males are skipping college. If you are going to be an engineer, or some other sort of professional, that's one thing. But what will a Political Science degree give most young graduates? Almost nothing. For too many, it's just four years wasting their time.
You know, someone might take you seriously if you'd even bother to look at the Fed funds report you were linked to. The report easily refutes the misinformation you seem to want to believe. No one can make you believe anything you don't want to, facts notwithstanding. It never worked for Eeyore either.
you are correct.
these days - good private sector jobs are in services for the wealthy. get in between a wealthy person and something they want - chefs and waiters at high end restaurants, their mercedes dealers, their real estate brokers, employees at top end hotels where they stay, etc, etc. those are the higher paying private sector jobs now.
maybe you can explain americans approval rating of the economy that is in the high 30s.
let me guess, the biased media and gas prices are going to be your answers.
It's a combination of dissatisfaction with the Iraq war and stupid poll respondents.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.