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.
Thanks for the additional comments.
As long as they don't change the methodology drastically, and they're comparable over time, I don't see why we have to be suspicious on the more recent/later data. People have used CPS (usually the one in March) all the time, and compare the numbers overtime.
or losing their homes yet
Yes, the foreclosure rate is now increasing rapidly. All of those people who took out ARM's, and specialty mortgages, like no down payments, or speculators buying homes, are now paying the piper as the interest rates have gone up.
I am earning 30% less than I was five years ago. I'm an embedded software engineer with over thirty years experience. My skills are still current, the jobs are overseas.
""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""
we havent gutter out manufacturing and if you think services dont count as "real" jobs, you need to take a look at switzerland
what is happening in the US economy is the world is evolving..jobs that were done in New Hampshire were moved to SC, then to Mexico then to China, then Vietnam
Mexico and China arent final destinations for these jobs...extinction is.
i dont feel sorry for you...i went from making 63K a year in 2001, to nothing clawed my way to 30k, 38k, 60k and now higher. I may lose my job again. Ill simply start over.
When it comes to economics, so many "conservatives" here are nothing more than fearful frightened pessimistic losers
Put down the communitso maifesto.....
You should have taken some time to look at the link I provided. Had you done so, you'd realize that homeowner equity accounts for just 21% of our net worth. The average American family has more than 56% equity in their home. From the Fed report, owners equity in household real estate is $11.16 trillion. Just how slow do you think the market is going to get? How much of this wealth are you predicting is going to be wiped out? We haven't had a year over year decline in the aggregate value of real estate in this country since before WWII.
families' imaginary net worth will diminish significantly.
Imaginary? LOL! I guess if you choose to ignore all the evidence to the contrary Mary, you could believe such a thing. Fact is, we're wealthier now than ever which is why we consume so much and act as the locomotive for the world economy.
I appreciate your view. I just disagree with it completely.
Thanks.
Is that really the best you have to offer on this subject Kevin? I think you can do better than that.
Then don't cry when the gravy train loses steam.
What the fact that we don't have a right to good paying job? The fact that I have heard the crap under when Reagan was President? The fact that the economy goes in cycles and yet people complain about it? The fact that some people here claim to be conservatives yet act like liberals when it comes it economics.. I guess so...
Kevin, from what I hear Marx supported the type of internationalist trade we are now practicing. Why would you call us Marxists?
Then you'd expect the delinquency rates on mortgages, credit cards and autos to be increasing. It's not happening.
Having more government control on the economy...
Hmmm. Your chart certainly shows that the delinquency rate on mortgages has gone up in the past five years.
I have little respect for your kind. You can't even find the SHIFT key. I still make more money than you, and always will. Furthermore, I will always perform useful work. I am a degreed Engineer. When we are "gone" and all engineering is outsourced, you will be living in a third world country. I will be dead. You will have to live in the cesspool you helped create.
My observations are intended to show the unknowing what this Nation is losing through gross mismanagement of American manpower. Mark Twain said he never gave advice because "wise men don't need it and fools won't heed it". You identify your own category with razor-sharp clarity.
You could regain some respect by showing some respect and foresight. You can't pretend that "United We Stand" stance, then act so smug at the misfortunes of your fellow countrymen. I seriously doubt if you will ever understand this, however.
Kevin, didn't we have a pretty rip roaring economy in the Reagan days? Well we weren't experiencing $800 billion dollars worth of trade deficits to get it, and were not turning our nation's R&D developed over the last centry over to achieve it. We didn't have to give away missile secrets or integral production steps for our cruise missile to Communist China.
I understand where you are coming from, but like you, I think the other person is dead wrong on this topic.
I appreciate your response.
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.
