Posted on 04/08/2005 11:00:44 AM PDT by churchillbuff
In March, the U.S. economy created a paltry 111,000 private sector jobs, half the expected amount. Following a well-established pattern, U.S. job growth was concentrated in domestic services: waitresses and bartenders, construction, administrative and waste services, and health care and social assistance.
In the 21st century, the U.S. economy has ceased to create jobs in knowledge industries or information technology (IT). It has been a long time since any jobs were created in export and import-competitive sectors.
The Bureau of Labor Statistics forecasts no change in the new pattern of U.S. payroll job growth. Outsourcing and offshore production have reduced the need for American engineers, scientists, designers, accountants, stock analysts and other professional skills. A college degree is no longer a ticket to upward mobility for Americans.
Nandan Nilekani is CEO of Infosys, an Indian software development firm. In a Feb. 18 interview with New Scientist, he noted that outsourcing is causing American students to "stop studying technical subjects. They are already becoming wary of going into a field which will be 'Bangalored' tomorrow."
Bangalore is India's Silicon Valley. A 21st century creation of outsourcing, Bangalore is a new R&D home for Hewlett-Packard, GE, Google, Cisco, Intel, Sun Microsystems, Motorola and Microsoft. The New Scientist reports: "The concentration of high-tech companies in the city is unparalleled almost anywhere in the world. At last count, Bangalore had more than 150,000 software engineers."
Meanwhile, American software engineers go begging for employment, with several hundred thousand unemployed. I know engineers in their 30s with excellent experience who have been out of work since their jobs were outsourced four or five years ago. One is moving to Thailand to take a job in an outsourcing operation at $875 a month.
A country that permits its manufacturing and its technical and scientific professions to wither away is a country on a path to the Third World. The mark of a Third World country is a labor force employed in domestic services.
Many Americans and almost every economist and policymaker do not see the peril. They confuse outsourcing with free trade, and they have been taught that free trade is always beneficial.
Outsourcing is labor arbitrage. Cheaper foreign labor is being substituted for more expensive First World labor. Higher productivity no longer protects the wages and salaries of First World employees from cheap foreign labor. Political change in Asia has made it easy to move First World capital and technology to cheap labor, and the Internet has made it easy to move cheap labor to First World capital and technology. When working with First World capital and technology, foreign labor is just as productive -- and a lot cheaper.
This is a new development. It is not a development covered by the case for free trade.
Outsourcing's apologists claim that it will create new jobs for Americans, but there is no sign of these jobs in the payroll jobs data. Moreover, it doesn't require much thought to see that the same incentive to outsource would apply to any such new jobs. By definition, outsourcing is the substitution of foreign labor for domestic labor. It is impossible for a process that replaces domestic employees with foreigners to create jobs for domestic labor.
Now biotech and pharmaceutical jobs and innovation itself are being moved offshore. The Boston Globe reports that Indian chemists with Ph.D. degrees work for one-fifth the pay of U.S. chemists. American chemists cannot give up 80 percent of their pay to meet the competition and still pay their bills. Rising interest rates will make it difficult enough for Americans to make their mortgage payments, and the dollar's declining exchange value will raise the prices of the goods and services that have been moved offshore.
Americans are unaware of the difficult adjustments that are coming their way. By the time Americans catch on to outsourcing, its proponents will have changed its name to "strategic sourcing" or "partnering."
Corporations, economists and politician have written off American labor. No end of the job drought is in sight.
Yes, but who is doing the work here? Chances are it will be other Indians.
Rather than read the whole thing, let's just look at a nugget:
"I know engineers in their 30s with excellent experience who have been out of work since their jobs were outsourced four or five years ago. One is moving to Thailand to take a job in an outsourcing operation at $875 a month."
There is no way an engineer with excellent experience would have to go to Thailand to get a job paying less than 12,000 a year. Any competent engineer could take a job at McDonalds and make more. Or at Walmart. Or simply become a consultant.
I know a competent engineer in her 40s out of the job market for 14 years who took a part-time job for fun in the field and makes more than that.
Hard to describe the job market today. It is much easier to be your own boss than it was 10 years ago. A couple of years ago the president of E-Bay said that they had over 400,000 people running businesses off the web. I heard somewhere else that at least 40,000 of those are full-time jobs (and none of these show up on the producer reports).
When HOUSEHOLDS are surveyed, employment is at an all-time high, with hundreds of thousands of new jobs. It does seem that more companies are arranging their workforce as consultants, especially in the technical fields, which could explain some of the weak numbers.
So???
Just look at their car designs...
To quote the great philosopher Hank Hill:
yup
This is not the way it had to be. Americans will do these jobs, but they will cost more. If we want to close the borders, as we should, we need to be prepared for some inflation. Perhaps a lot of inflation.
Many are hurt by inflation, but among the many are lenders. lenders do not like to have loans repaid with vastly less valuable money. Do you think that banks and other lenders's desires could be driving our government policy. I know the restauranteurs and contruction companies want cheap, hard-working labor, but I have to think that banks have just as much clout with the federal government. Retired folks also can be ruined by inflation, so there is another powerful interesat group that might want to keep borders open to keep inflation down.
Low unemployment, high growth, increasing wages, low inflation. That's a good economy. You can always dig down and be negative about something.
You're right! We don't need decent paying jobs in the US!
If they are here legally and can do the work and pay taxes, so be it. Fair competition can be a good thing to motivate you to do better.
Funny, I just read an article on wednesday that said we are already in the beginning stages of a job glut. The article basically said that is is quickly switching back from an employers market to the employees market like we had in the mid- to late-1990's.
I guess we'll see.
I agree, just stating the facts.
Several of my friends have had job offers for IT work in India and China. I have had offers in Russia, personally, but decided to stick it out here and finish my MBA.
Not in any of the software companies I've been in or seriously involved with. Not even the one owned by a Mexican immigrant (100% legal).
There is some blow back of out sourced jobs to the U.S. Nonetheless, there is great momentum to move jobs overseas. I am in the high tech industry and although it is disturbing to see jobs being outsourced, I don't think the true culprit is every discussed -- government. The biggest gorilla is this equation is government. If our local, state and Fed governments could be truly cut back significantly it would alter the equation somewhat. The EU is screwing itself with the elite parasite class in Belgium writing more rules than there are people in the entire EU. What is astounding and sad is that our weak minded Republicans in Congress are doing NOTHING and I mean NOTHING to reduce governments interference in our lives. If the damn government would get out of the way, we could create many more high paying jobs. Our economy is being held back mainly by the government class using the rule of law to take a large portion of the earnings of the truly productive in this country. If we don't stop the slide towards Socialism, nothing else will matter.
The only difference is that there was a Rat in the White House.. Since is it a Republican doom and gloom.
So you want ther Government to protect jobs?? How would you suggest they do it? Outlaw new technologies?
My guess is that you have not actually spent much time in the Third World.
The essential question. Where are all those good high-paying jobs that free-trade deals were to create here?
Inflation is returning, but not because of job cost and commodity costs. Inflation as we have seen in the late 70's is caused by one entity - the Federal Reserve printing paper. They government always seeks to monetarize the debt -- another cruel tax. The only think holding inflation down is competing currencies.
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