President Obama is correct to be going after Mitt Romney's questionable record at Bain Capital. As fellow blogger Robert Scheer pointed out, 90% of the deals at the end of Romney's tenure involved dismembering once-thriving industries and selling off the parts, destroying jobs in the process.
But Obama's got to go one better and figure out how to tackle America's job crisis. Neither Reaganomics nor Keynesian approaches to our stagnant economy will work. Economist Paul Krugman's contention that "If we were to ... rehire the schoolteachers (and) firefighters ... we would be a long way back towards full employment" is dead wrong. Stimulating spending simply keeps Wal-Mart checkout clerks and Chinese factory workers on the job instead of creating well-paying American factory jobs.
Tackling the job crisis is the single most important issue facing Americans. The proportion of Americans in their prime working years who have jobs is smaller than it has been at any time in the 23 years before the recession, according to federal statistics. Projections for overall job growth by the Bureau of Labor Statistics look pretty grim when it comes to well-paying jobs. According to its 2012 Occupational Outlook Handbook, the occupations with the fastest growth -- adding a mere 1.3 million jobs between 2010 and 2020 -- are personal care aides and home health aides, with a median wage of about $20,000.
Here's what Obama needs to do:
Step One: Bring well-paying American jobs back home: Despite Bill Clinton's claim back in 2000 when he signed the legislation permitting China's entry into the World Trade Organization that it was a "great day for the United States," it's been a disaster for the U.S. economy and employment. While the U.S. trade deficit with China was $6 million back in 1985 last year it has ballooned about $300 billion -- the largest in the history of the world.
China's entry into the WTO has been the major driver in the loss of more than 56,000 U.S. manufacturing facilities since 2001. In its 2008 report "The China Trade Toll," the Economic Policy Institute estimated that 2.3 million U.S. jobs were lost between 2001 and 2007 alone and most of the laid off folks who were lucky enough to land new jobs lost an average of more than $8000 a year in wages. And it's not just factory jobs that are affected; in 2009 employment among U.S. scientists and engineers fell by 6.3% compared to the overall drop of 4.1%. Alan Blinder, a former vice chairman of the Board of Governors of the Fed, estimated that between 30 million and 40 million high-end U.S. service sector jobs could be outsourced. Incredibly, there is no government agency that monitors plant closures and offshoring/ outsourcing of jobs.
The other huge and rarely discussed job-killer is automation. Computers do everything from processing airline tickets to analyzing medical images. Even jobs that automation experts didn't think could be automated -- like driving cars --have been mastered by Google and the Defense Advanced Research Project (DARPA). Not only does your iPhone's Siri feature understand commands but Lionbridge's Geo-Fluent translates written words (as does Google Translate) and search software analyzes legal documents at law firms. As a result of automation, the U.S. produces almost one quarter more goods and services today than it did 13 years ago with almost the same number of workers. It's "as if $2.5 trillion worth of stuff -- the equivalent of the entire U.S. economy in 1958" -- has vanished.
We need to convene a Build a Future for American Jobs task force comprised of labor leaders AND manufacturers that would address this issue: Along with Alan Blinder, it should include Richard McCormack, the author of "Manufacturing a Better Future for America," published by the Alliance for American Manufacturing, a partnership of manufacturers and the United Steelworkers; fellow blogger Leo W. Gerard, President of the United Steelworkers and a member of President's Advisory Council on Trade Policy and Negotiations; Andrew Liveris, CEO of Dow Chemical and the author of "Make it in America: The Case for Re-Inventing The Economy;" and Andy Stern, former president of the SEIU and a member of the National Commission on Fiscal Responsibility and Reform as well as the Council on Foreign Relations U.S. Trade and Investment Policy Task Force.
Step Two: Invest in training workers for 21st century jobs: According to Manufacturing a Better Future, the U.S. spent a paltry 0.02 percent of GDP on workforce training and education in 2007, the lowest among OECD member countries.
Step Three: Stop dithering about whether to lower the interest rates on student loans for college degrees. Aim to ELIMINATE student debt by increasing taxes on the rich so we can at a minimum triple the typical Pell Grant -- a "GI Bill for Everybody." Here's the irony -- while recently students in Quebec went on strike over the province's plan to increase tuition -- to a measly $2465 from a measly $2144, l American students are saddled with more than $1 trillion in student loan debt. As I pointed out in my book, America, Welcome to the Poorhouse, of the 30 OECD countries, the U.S. is the third lowest spenders when it comes to higher education. More generous college subsidies will increase the spending power on the part of recent college grads who will no longer be saddled with student debt along with encouraging more blue collar kids to pursue a college education.
Step Four: the Department of Labor should be assigned the responsibility of creating a Household Wealth Index. Somebody's got to take the job of measuring America's household wealth away from the Fed, given its abysmal job at interpreting/reporting its grim findings when it conducts the Survey of Consumer Finances, as I pointed out in a previous blog. The Household Wealth Index would be published annually and measure outsourcing and automation's effect on job growth, along with overall wage growth, 401(k) asset growth -- and whether Americans are on target for adequacy -- the decrease in household income spent repaying student loan debt and the increasing number of college graduates.
Any more ideas for getting America back to work? I'm all ears!
http://www.brookings.edu/research/papers/2011/06/manufacturing-job-loss
Responding to Manufacturing Job Loss: What Can Economic Development Policy Do?, the impact of GATT and specifically the Uruguay Round from 1986 to 1994 had a devastating impact on manufacturing jobs in the USA. A quote from the report confirms the destructive impact of free trade agreements. “For furniture and related products, the Uruguay Round reduction of tariffs on furniture led to sudden increase in international competition in the furniture industry. Unlike the fabricated metal manufacturing industry, the furniture industry was not as well-positioned to adjust. Furniture and related product manufacturing in Grand Rapids suffered the steepest jobs decline over 2000-2005, with a 36.3 percent falloff.” Almost all manufacturing jobs for office furniture in Western Michigan were destroyed by the Uruguay Round of free trade agreements. Unlike many other regions in the USA, manufacturing jobs (for office furniture) had seen large growth in the tens of thousands in Western Michigan from 1985 until 2000. Apparently, economists that argue for free trade never look at or mention reality.
But as a manufacturer with plants in five countries that has been creating jobs overseas but not in the US, not one of your suggestions would have any bearing whatsoever on where I create new jobs.
"Bring well-paying American jobs back home." Great. Do it. But clearly you don't understand how. You haven't shown that you understand the decision process involved in locating newly created jobs and how to change the factors that influence those decisions.
Do you really believe that the president of the United Steelworkers union and the former president of the SEIU have any knowledge on the process of determining the locations of jobs? Really?
Invest in training? Go ahead if you like. But you most likely won't be training for the skills I need. I'll train all of my new hires from the ground up. I expect to do so to get people the skills they need to be high performers. Both in the US and overseas. I'd much rather you fix our primary and secondary education systems in the US.
Only a realtively small portion of the shop floor employees need a college education. Why not address the reason that tuition is so high? Easy loans allow applicants to far outnumber positions in the public and private universities eliminating competition. Get the government out of the student loan business. Get the government in the scholarship and grant business to a greater degree. Merit based scholarships and grants.
Are the H1B/L1B visa programs monitored or audited? I suspect not, and also believe that there are no penalties for abusing them either. Corporate business as usual, nothing to see here, right? Wrong.
But the biggest adjustment people have to make is that corporations are not the be all and end all. That the communities we live in, state and country also play a very important role in our ability to raise our families.
Because in the end a corporation is nothing more than a delivery system. It's job is to provide value to it's investors and service to it's customers and not to create jobs. The ability of it's employees to raise families is a by-product.
Maybe its time to change the whole pay your bills with your paycheck routine. The promise of the machine was to free people of druggery so they would have time for higher pursuits, wasn't it? So let them do it and just send checks out to people to pay bills with and forget the whole work thing. Being stuck on some boring job wasting away a perfectly good day is a drag anyway.
Rethinking Free Trade
"by Robert Kuttner
WHEN PAUL Samuelson, the dean of American economists, begins questioning the benefits of free trade, it is a bit like the pope having doubts about the virgin birth. But Samuelson, a Nobel laureate and the author of America's best-known economics textbook, has reopened a debate on the most settled issue in economics. He's done it with a stunner of an article in the Journal of Economic Perspectives that has created immense controversy -- and an opportunity for Americans to rethink previously unchallenged assumptions.
[snip]
But here Samuelson dissents. What if the lower-wage country also captures the advanced industry?
If enough higher-paying jobs are lost by American workers to outsourcing, he calculates, then the gain from the cheaper prices may not compensate for the loss in US purchasing power. In other words, the low wages at Wal-Mart do not necessarily make up for their bargain prices.
"Free trade is not always a win-win situation," Samuelson concludes. It is particularly a problem, he says, in a world where large countries with far lower wages, such as India and China, are increasingly able to make almost any product or offer almost any service performed in the United States.
If we trade freely with them, then the powerful drag of their far lower wages will begin dragging down our average wages..."
It's actually time for everyone to actually read the rest of Adam Smith's works where he advocated to invest locally first.
http://www.nd.edu/~druccio/Samuelson.pdf
Free trade is a false theory that Alexander Hamilton understood was destructive to the USA and USA manufacturing. Milton Freeman got it wrong. For 150 years, the USA had the right policy up to about 1920 when it began to slide into fantasy.
As I said in my comment, the answer to bringing jobs back to the USA is to support innovation for competitiveness by passing new laws that would effectively tax foreign licensing or foreign use of intellectual property (IP) developed and patented in the USA. If a product uses any IP developed and patented in the USA, the product using that IP must be designed, developed and manufactured in the USA or the business must pay 25% of the product or service revenue received over the next 15 years to federal, state and local governments as a return on indirect and direct subsidies received in the USA from such things as federally funded university research, federal labs, nonprofit status of universities, R&D tax credits ...) . We have laws that prevent licensing technology that threatens national security but now national security includes economics.
The internet has allowed the offshore outsourcing of any job performed at a desk or a computer:
o call center worker
o software developer
o accountant
o engineer
o architect
o radiologist
o legal services
http://www.liveleak.com/view?i=4ea_1195705444
LiveLeak.com - "30 Days: Outsourcing" (2006) (Part 1/2)
The "star" is Chris Jobin, a programmer whose job was outsourced to India. He traveled to India and stayed for 30 days as an employee of a call center.
http://www.manufacturingnews.com/news/10/0126/outsourcing.html
Outsourcing Firms And Foreign Countries Target More American Service Industries, Especially U.S. Law Firms
Most people are unaware of offshoring because it gets so little media coverage.
But me?
human: carbon-based cost unit.