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.
The old we're drowing in debt argument. This will be a hard line for you to prove in light of the incredible increases in family net worth (family assest minus debt) in the country. The Fed actually tracks that information. You can find it here - Page 110 of 124
So what you are trying to say is that 46% of the workforce are high school students. Oh okay.
In Boston would you say that the Big Dig had employed a lot of people? I'd wager it has since we're talking tens of billions of bucks. Who is paying that tab ultimately?
We have doubled the education budget. Do you think the new employees that supported go out to eat? Who is paying the tab for that ultimately?
You and I are. Do you think those workers go out to eat? I'm just curious as to how many of those service sector jobs are now supported on your and my tax dollars.
Most the departing (voluntarily or otherwise) employees in my IT department are being replaced in Bangalore. The department is already dominated by local Indians on green cards. One Anglo manager was pushed out to make room for a US based Indian, who would then manage his underlings, now mostly in India. Service levels, both within and without IT have in the meantime been going down, down. But costs? Wall Street analysts rejoice! Stock price? Hasn't moved in a year.
Most people's net worth comes from the value of their home. Homes which they most likely could not afford to buy in today's market. When the housing market slows within the next few years -- as is likely to happen -- families' imaginary net worth will diminish significantly.
"I don't like what I see and the caption that I copied at the top of this response should cause any honest person some sobering thoughts on this subject."
I'm with you, DoughtyOne. I don't like what I see either. Too much of our economy is either a Ponzi scheme, or a stream of outsourcing, or an influx of H1-B visas, or a loss of manufacturing jobs (great for when another war comes along and half of our manufacturing base is decimated). Plus too much of our real estate, Treasury bonds, etc. are now owned by foreign entities. Plus our workers are losing their pension plans, medical plans, and any security for their old age.
This globalism stuff is not at all to my liking, and major corporations in this country are acting more like internationalists, and less like American companies. Does not bode well for the future. Yes, I know the stock market is up at the moment. But it can come down just as easily, as it did during the stock market bubble that burst not that many years ago. Countries can't survive on being service industries alone. Without a decent manufacturing base, we put ourselves at jeopardy in times of crisis, just like the pickle we are in right now because of our oil needs while being at the mercy of unfriendly countries who control most of the world's oil. Pretty soon we won't have much of a U.S. car industry, and so many manufacturing companies have now left this country, or the manufacturing work is being done elsewhere in the world. This can't go on indefinitely without bad things happening to our country.
I often hear the mantra that "only low-paying service jobs" are being created. But the dramatic growth in these sectors infer that there are a whole bunch of people who are buying things, going out to restaurants and on top of that, having additional money to go bar-hopping.
Where are those people coming from?"
They are working at other service jobs. It's a Ponzi scheme. Service jobs supporting more service jobs. At some point the house of cards will collapse.
As far as I remember, the data is based on survey, as they do survey every month (like Current Population Surveys, etc.) As it is a survey, not census, they don't try to "find all people" in gathering the data. Based on sampling design, etc., they estimate the numbers for national figure, using some statistical model. But this is how survey works. I believe they have been doing the same thing since early 1960s quite consistently. This is a quote from BLS website:
Each month the Current Employment Statistics (CES) program surveys about 160,000 businesses and government agencies, representing approximately 400,000 individual worksites, in order to provide detailed industry data on employment, hours, and earnings of workers on nonfarm payrolls.
"but the reality is that foreign automakers are boosting our economy by building new plants in corporate friendly states"
Yes, worker bees are being hired here in the U.S. to do the work; however, where is the profit going? To another country, not to a U.S. company.
So what...
It's a HUGE problem.
With how the public school system dumbs down kids ... it's a scary future.
illegals are one problem, but it would sound to me that the marketpalce isnt working iof there is a shortage and yet wages are falling..perhaps too much govt intervention in the market?
--i am earning more than ive ever earned in my life.
Same here and got two huge raises this year.
good analysis..how many employees dont put into a 401k
Ping
I think there is way to much government intervention in the market....
i am sick ot FReepers who whine and moan about the economy..they can be losers if they choose, ill control my own fate
Well, that's the way I see it. I still ask this one simple question.
If our nation was able to develop into the nation it was in 1990 without doing what we've done since, why was it necessary to gut our manufacuring base on the alter of service sector jobs, outsourcing and the largest illegal immigration scandle in the history of our nation?
Presently we're approaching $800 billion in yearly trade deficit dollars. If that business was being conducted on U.S. soil, we'd have anywhere from $4 to $8 trillion in multiplier effect dollars pumped into our economy yearly.
Evidently we don't have 1000 communities that could use between $4 and $8 billion dollars pumped into their economies yearly.
What really cracks me up are the folks who claim that our market is doing great today as if that proves anything. What would it have been doing if we had pumped all this money into our own economy? Would there still be profits? Would wages have suffered? God forbid we consider the answers to those questions.
The one hard and fast rule of job growth under any republican president is that they're simply "burger flipping jobs". Those of us who paid attention during Regan could see this one coming a mile away.
It's actually worse. You can't even get a "burger flipping job" if you are a U.S. citizen these days. Minorities, primarily Hispanic, need only apply. Been to a McDonald's lately? Seen their paper cups that are now written in both English and Spanish?
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