Posted on 01/14/2004 8:39:18 AM PST by looscnnn
The current economic recovery has not been good for employment. Despite 25 months of "recovery," the economy has 2,944,000 fewer private sector jobs than in January 2001. American manufacturing has experienced the largest job loss, with 2,559,000 fewer jobs today than 35 months ago when President Bush took office.
These figures include the losses of the 2001 recession. The really scary part of the story is that, far from recovering these job losses during the past 25 months of economic recovery, the economy has continued to lose jobs. During 25 months of recovery, the economy lost another 1,321,000 jobs in the manufacturing sector. A small gain in poorly paid areas of non-tradable services leaves a net loss of 907,000 private sector jobs during 25 months of economic recovery.
This is unprecedented poor performance, especially in the face of unprecedented expansionary monetary and fiscal policy. With interest rates near zero and 6-year interest-free auto loans, with fiscal policy expansionary, whether measured by tax cuts or the record size of the budget deficit, 25 months of economic recovery loses almost a million jobs?!
Much hope was attached to October's "turnaround" job growth of 116,000 private sector jobs, even though about half were in lowly paid temporary help and retail, and none were in high-value-added tradable goods and services. This "turnaround" job growth number has now been revised down by 37,000 jobs. Revisions have reduced November's paltry 50,000 gain (also in lowly paid service jobs) by 51 percent.
December's job gain is 1,000 jobs, or practically speaking, zero. Obviously, U.S. job growth is far from enough to absorb the monthly inflow of immigrants or the inflow of young people into the job market looking for their first jobs, much less to reduce the unemployment from the 2001 recession.
Some economic recovery it is.
Trying to put a good face on disaster, some claim that overtime has cut into employment growth, with businesses working existing workers longer in place of new hires. This argument is contradicted by the empirical evidence. During the past 25 months of recovery, total hours worked have declined by 1.7 percent, with manufacturing hours declining by 7.7 percent.
When pressed on the point, apologists for the recovery say that fewer people and hours are needed because of increased productivity.
There is another explanation, one much less reassuring: As a result of outsourcing, offshore production and Internet hires, the U.S. recovery is creating jobs for foreigners, not for Americans.
Every day, we read about another corporate giant replacing thousands of American jobs by moving operations to India, China or another foreign country where skills equal to those of Americans can be purchased at a fraction of U.S. wages and salaries. Economists, determined to keep their heads buried in the sand, dismiss report after report as "anecdotal evidence," as if facts don't count unless they are in an economist's study.
Economists and policymakers continue to ignore -- indeed, they are in outright denial of -- two fundamental changes that are disconnecting the U.S. economy from U.S. employment: the collapse of world socialism and the rise of the Internet.
Until the collapse of world socialism about 15 years ago, the international mobility of First World capital and technology was confined to the First World. This limit on capital mobility ensured that First World labor would have productivity advantages over much lower paid Third World labor.
The new global mobility of capital and labor has stripped away the protection that high productivity gave First World wages. Indian and Chinese labor employed by First World capital and technology is just as productive as First World labor. Moreover, due to large excess supplies of labor in those labor markets, Asian labor can be hired for less than the value of labor's contribution to output.
Capitalism works by finding the lowest cost. Thus, First World labor is being substituted out of First World production functions by outsourcing, offshore production and Internet hires.
The business press has been full of stories, example after example. When will policymakers notice?
When will economists notice? They will never notice as long as they believe they are witnessing the beneficial effects of free trade.
But are they? American economists seem to have forgotten that free trade rests on a case. They have forgot the necessary conditions under which free trade produces mutual gains to the participant countries. They have not noticed that these conditions have been destroyed by the international mobility of factors of production.
The economic case for free trade rests on shared gains. Shared gains depend upon countries allocating within their borders factors of production to where they have comparative advantage. For there to be comparative advantage, factors of production cannot be as mobile as traded goods.
Today, factors of production are as mobile as traded goods, indeed more mobile. Capital, technology and ideas can move with the speed of light, as can Internet labor, whereas goods must be shipped.
What we are witnessing is not trade patterns based on the flow of First World factors of production to comparative advantage within their own countries, but the flow abroad of First World factors of production to where absolute advantage is greatest. The productivity of capital is highest where labor is most abundant.
The flow of factors of production to absolute, in place of comparative, advantage vitiates the economic case for free trade. What we are witnessing is the redistribution of First World income and wealth to developing countries blessed with excess supplies of labor.
If the United States is to remain committed to free trade, we must give thought to figuring out how to recreate the conditions under which free trade produces mutual gains to the participating countries.
Like that will stop him. Consider with whom you speak. Blackbird.
Every day, we read about another corporate giant replacing thousands of American jobs by moving operations to India, China or another foreign country where skills equal to those of Americans can be purchased at a fraction of U.S. wages and salaries.
I also think the author's "First World" to "Third World" points make some sense...
However, this being a topic of such concern to everyone, what I would really like to see is a detailed list of specific "corporate giants" who haved moved US jobs to other countries, including how many jobs were moved, which countries they went to, and whether the companies also created any new jobs here (like a "net" gain or loss of US employees in all jobs, per company)
That information would be more "productive" to the discussion than simply saying "Every day we read about another corporate giant..." etc. etc.
And yet we're going to grant another amnesty?
I'm going to have a very hard time voting next November.
Get a flat tax - everyone in the top bracket.
Pay off the debt - with worthless dollars.
Fund the 'entitlements' - 100¢ on the (hyper inflated) dollar.
Make 'Social Security' payments - we'll get every penny we've ever put in...
I don't have all of the specifics, but this is what I was able to find. Exporting America
Corporations exporting jobs overseas.
3Com 3M A Accenture Adaptec Adobe Systems AMD Aetna Agere Systems Agilent Tech. AIG Alamo Rent A Car Albertson's Alliance Semiconductor Allstate Alpha Thought Global American Express American Standard Amphenol Corp. Andrew Corp. AOL Applied Materials AT&T AT&T Wireless A.T. Kearney Avery Dennison B Bank of America Bank One Bechtel BellSouth Best Buy Black & Decker BMC Software Boeing C Capital One Carrier Cendant Cerner Corporation Charles Schwab ChevronTexaco Ciena Cigna Circuit City, Inc. Cisco Systems Citigroup Coca-Cola Comcast Holdings Computer Associates Computer Sciences Corporation Continental Airlines Convergys Cooper Tire & Rubber Cooper Tools COVAD Comm. CSX Cummins D Dell Computer Delta Air Lines Direct TV Discover Document Sciences Corp. DuPont E Earthlink Eastman Kodak Eaton Corporation EDS Electroglas Electronics for Imaging Eli Lilly EMC Emerson Electric Ernst & Young Expedia ExxonMobil F Fedders Corporation Fidelity Investments First American Title Ins. First Data Fluor Ford Motor Franklin Mint G Gateway General Electric GlobespanVirata Goldman Sachs Goodrich Google Greenpoint Mortgage Guardian Life Insurance H The Hartford Financial Services Group HealthAxis Hewitt Associates Hewlett-Packard HSN I IBM IndyMac Bancorp Intel Intl. Paper Intuit ITT Educational Services J Jacuzzi JDS Uniphase Johnson & Johnson JPMorgan Chase Juniper Networks K KANA Software Kaiser Permanente Keane KLA-Tencor L Lehman Brothers Levi Strauss Lexmark International Lifescan Lillian Vernon Linksys Lockheed Martin Lowe's Lucent M Maritz Marshall Fields Mattel Maytag McDATA Corporation Mellon Bank Merrill Corporation Merrill Lynch Metasolv MetLife Microsoft Monsanto Morgan Stanley Motorola N Nabco National City Corporation NCR Corporation Network Associates Newell Rubbermaid New York Life Insurance Co. Northwest Airlines O Office Depot ON Semiconductor Oracle Otis Elevator Co. Owens Corning P palmOne Parker-Hannifin Parsons E&C Pearson Digital Learning Pericom Semiconductor Perot Systems Pfizer Planar Systems Portal Software Pratt & Whitney Primus Telecom Procter & Gamble Providian Financial Prudential Insurance Q Qwest Comm. R Rainbow Technologies Raytheon Aircraft Regence Group Rohm & Haas RR Donnelley & Sons S SAIC SBC Comm. SEI Investments Siebel Systems Sikorsky Solectron Sovereign Bancorp Sprint Sprint PCS State Farm Insurance StorageTek SunTrust Banks SurePrep The Sutherland Group Sykes Enterprises T Target Tecumseh Telcordia TeleTech Texas Inst. Thrivent Financial for Lutherans Time Warner Triquint Semiconductor TRW Automotive Tyco Electronics Tyco Intl. U Unisys United Online United Tech. V VA Software Veritas Verizon W Wachovia Bank Washington Group Intl. Washington Mutual West Corporation Y Yahoo!
They find life on welfare and food stamps and free health care a bit nicer and easier than moving to China --- which most likely has a some control over immigration there. The Mexicans here didn't even follow their jobs back into Mexico --- when NAFTA sent their textile jobs over to Mexico, they stayed and started collecting "NAFTA displaced worker" benefits. Los Trabajadores Fronterizos sued the federal government for extensions of those benefits --- the last thing they would consider doing is moving to where their jobs are.
Not really --- that might contribute significantly to the corporate decision to move operations to states with Right to Work laws and little union organization. Moving operations out of the country is a different matter. Besides American interest in unions has been low and fading for decades.
"The economy" doesn't create any jobs -- it never has, and it never will. Companies and individuals create jobs. If there is a "lack of jobs" in this country, then the best way the address the situation is to sit down with a bunch of potential employers and ask them what keeps them from hiring additional employees right here in the U.S. From my experience, the answers in most cases will have nothing to do with "cheap Third World labor" or anything of that sort -- India and China simply serve as convenient targets for people who don't want to address the real impediments to job growth:
Consider these answers that I would provide to such a question -- and I serve as an excellent case in point because I have never been in a position where "outsourcing labor" was an option:
1. Infrastructure costs. For one of our offices, we are operating at nearly 100% capacity and could easily add several additional employees. But the incremental cost of acquiring additional space for that office is enormous; we would either have to pay very high rent on the larger space (the high rent makes me wonder just how much of the "lost jobs" story is true to begin with -- one would think that office rents would decline as more space becomes available due to layoffs, etc.), or we would have to give up our location in close proximity to a number of our best clients (in which case the need for additional employees might disappear anyway).
2. The cost of training new employees is very high. The basic problem I face is that hiring a new employee is pretty much an adventure, because the credentials they have acquired don't really tell me anything about what they know. The system of higher education in this country has reached a point where my best employee is a high school graduate, and the ones with the most credentials (graduate degrees, etc.) are often the least productive and least flexible.
3. Let's face it -- Hiring employees is a major pain in the @ss. Payroll taxes, insurance paperwork, administrative nonsense, etc. add an enormous cost to the company above and beyond their direct salaries. I read somewhere that payroll taxes and administrative overhead costs in France add $40,000 per year to a typical $40,000/year employee's salary. We aren't there yet, but there's no doubt in my mind that we draw closer to that figure by the day.
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