[looscnnn]

I am a little unsure where you are getting the 5+/- million. If employment is up 2.5 mill. and unemployment is up 2.4 mill. that means that a net gain of only 100,000 jobs. 2.5-2.4=.1. So technically, the rate is down. However, if less people are needed to do a job (they are more productive) and there are few new jobs available, were do the people that are unemployed go? Also, you assume that workers overseas are less productive. Take a look at Japan, they are effiecient in their work and work for less. Effieciency is an item that can be moved as easily as money.

[easytree]

Your 100k gain makes sense when you look at unemployment in Jan 2001 at @ 4% versus Dec 2004 at 5.7% unemployment. Economists have said that 4% is full employment because of job movement within the country.
Where do workers go? They do what I have had to do. Be flexible, continue to get more education and experience and look for opportunities. Our market economy is tough on folks who only want to do one job for x dollars, when the market leaves them.
Your Japan analogy is tough to follow. Japan has been in a slump for 10 years because they can copy and make products cheaper, but they are not good at innovation and small businesses. The situation is compounded by woman entering the work force and very monolithic culture. Manufacturing decisions are based on cost, and customer location in most cases. If shipping is too high then best to locate your factory close to the customer. Wages represent a smaller % of total cost due to productivity gains due to technology.
US workers now work more hours than even the Japanese. I am not sure that is good long term, but it makes the US very competitive.