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.
Sorry our economy is in fine shape.. Our economy is made up of winners and losers.. Winner takes all..
Kevin, I know the stock market looks good. Please read my post # 59.
"" still make more money than you, and always will""
are you sure youre not a smug liberal?
no country in the history of the world has ever gone from first world to third world status...and your understanding of economics is pathetic....if that were to happen all the manufacturing and engineering jobs would leave india, China etc and come back here.
"Even in a moderately recovering field like IT, the total employment count has not recovered completely. Its just the IT employment has stopped falling like a rock."
The real reason IT jobs fell like a rock is you don't need as many IT people to do the same work. Hardware is hugely faster and requires less replacement. Software like Office has peaked (Office 2000 is jim dandy, Vista brings no productivity improvement, a server can use Linux).
It's more complicated than just looking at jobs, gotta look at productivity too.
Really? I'd love to see a link to that.
""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""
our trade deficits were about 3-4% of GDP then..today they are 6-7%.
That difference is explained by the fact that Japan was growing at 5% annually in the 1980s and today has been stagnant for years. EU was growing at over 3% in the 1980s with West Germany at a rip roaring 5%, even the French had growth above 3%. When your trading partners dont grow, you wont be exporting to them.
our trade deficit is a sign of other countries weakness, not ours.
Rome, Greece, China ... just to name a few.
The well-being of those countries you see at this time was regained following "The Dark Ages". I suspect you are the one with the lack of historical and economic perspective.
So you'd basicly say that China is experiencing weakness in it's economy right now. Interesting...
It ain't happening in the grandscale you seem to think it is.
http://www.realestatejournal.com/buysell/markettrends/20060417-reed.html
Hardly what you claim them to be.
""So you'd basicly say that China is experiencing weakness in it's economy right now. Interesting...""
China has a trade deficit with nearly all its trading partners except one.
And yes, Chinese consumers are weaker than american consumers.
There are two jobs figures.
One asks established companies if they are hiring or firing. It is best at finding union losses, or problems with large "dinosaur" companies.
The other does a survey of households. This finds new start ups, small business growth.
The unemployment rate is 4.7 percent. That means that anyone who wants a job, can get one. Anyone with a job, that is not paid at market rates, can get a better one.
What do employers do when they need more work done, and can't hire people? Either you hire illegals (with the security problems associated with that) you invest in capital improvements (that makes your exisiting workers more efficient) or you move what work you can offshore.
Japan doesn't care for illegal aliens, so they have many many robots. Problem: that isn't very flexible. When the market changes, you are stuck paying off your loan on machinery. That accentuates the normal business cycle into a boom-panic cycle.
The US hires many illegal aliens. I don't like that, because I see it as a security vulnerability. A lot of US companies also work with foreign companies in India and China. WalMart in particular buys lots of stuff from China. Apple for years built their computers in Singapore.
Each has difficulties. There is a lot of work that has to be done. The US GDP is very very large. So long at US productivity is high, US living standards will be high. I don't mind it when other democratic nations such as India increase their productivity. I get concerned when China, which is not democratic, increases productivity, but eventually it will be hard for the Chinese gerontology to order a war against their customers or suppliers. The more that China is integrated into the world economy, the more the "communist" theory will become irrelevant.
Greece a third world country?
China a first world one?
Rome fell, but even after its fall, was its standard of living lower than the rest of western europe or the middle east? Not really.
That's terrific, but if you can, try to put even more away, especially into funds that won't penalize you if you need to withdraw them before retirement age as well. Preferably ones that will have minimal tax impact on you.
At my old job, I was maxing out my 401K, but I could have put away another $400 a month pretty easily, if I had wanted to. Big mistake for me not to.
Mark
Correct me if I'm wrong, but isn't the bottom line jobs?????? I for one certainly don't care who profits from what just as long as I can profit from my job!
So tell me, do you now discriminate against employers based on who their profiteers are? If you're like me (which I now doubt) you don't care where you invest just as long as you return a profit on your investment. For you the uninitiated, that means saving your money and putting it into 401-ks or whatever that invest in "PROFITABLE" companies no matter where they are located. Over time, that company expands and grows and so do the monies you or I invested in them.
Somehow I think you have wandered onto the wrong forum and have completely closed your eyes to all that you can learn here........
BZZZZZZZZZZZZZZZZZZ
We manufacture and export more now than at any other time in our history. We manufactured $3 trillion last year alone. That's more than every other countries total GDP except Japan.
Presently we're approaching $800 billion in yearly trade deficit dollars
If net exports are equal to net capital outflows, and they are, then the whole idea of a trade deficit is nonsense. That they choose to save and invest in our economy is good in that it supplies the capital necessary to grow our huge economy. We've run a current account deficit for the past 30 years. The last time we had a surplus was during a recession. Historically, as our current account deficit increases, our GDP, manufacturing and employment expand. These same economic measures contract when the trade deficit shrinks and trade becomes more balanced.
i thought 15% was the max.
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