More Jobs Hype
Careless journalists and
commentators are hyping the
274,000 new April payroll jobs as evidence of the
health of the US economy. An examination of the details
of the new jobs puts a different view on the matter.
April`s job growth is consistent
with the depressing pattern of US employment growth in
the 21st century: The outsourced US economy
can create jobs only in domestic nontradable services.
Of the 274,000 April jobs,
256,000 were in the private or nongovernment sector, and
211,000 of these were in the service sector as follows:
58,000 in leisure and hospitality
(primarily restaurants and bars), 47,000 in
construction, 29,200 in wholesale and retail trade,
28,000 in health care and social assistance, 17,300 in
administrative and support services (primarily temps),
11,700 in transportation and warehousing, 8,800 in real
estate. A few scattered jobs in other service categories
completes the picture.
Americans regard themselves as
“the world`s only superpower,” but the pattern
of American job growth in the 21st century is
that of a third world economy. The US economy has ceased
to create jobs in high tech sectors and in export and
import-competitive sectors. Offshore outsourcing of
manufacturing and of engineering and professional
services is dismantling the ladders of upward mobility
that made the American Dream possible.
Not only is the US economy
creating third world jobs, according to analysis by
Edwin S. Rubenstein (vdare.com,
April 2, 2005), it is creating the jobs for Hispanic
immigrants. Rubinstein examined job growth by ethnicity
and found that Hispanics (13 percent of the work force)
are gaining 60 percent of the new
Until recent years American jobs
had nothing to fear from low-wage foreign labor.
Americans` high pay reflected their high productivity
from working with the most capital and best technology.
world socialism and the rise of the high speed
Internet forced Americans to compete head to head in the
same global labor market with low wage foreign labor
working with identical capital and technology. When US
and European corporations move their
manufacturing, research and development offshore or
contract with offshore producers to supply the products
and services that they market, the jobs and associated
incomes are also transferred abroad.
Americans and Europeans cannot
compete in labor markets with Chinese, Indians, and
Eastern Europeans, because the cost of living in North
America and Europe is so much higher. In addition, there
is a vast excess supply of labor in China and India that
overhangs the labor markets there and keeps wages low.
The claim by outsourcing`s
proponents that outsourcing creates new and better jobs
for Americans is pure fantasy. This claim can find no
support in job and income data. Moreover, the same
incentive to outsource that is sending so many jobs
abroad applies equally to any new replacement jobs.
The only American jobs that are
safe are in domestic nontradable services that cannot be
outsourced, and even in these domestic services, such as
school teachers and nurses, foreign workers are being
imported via work visa programs.
Outsourcing`s proponents claim
that it benefits corporations and their shareholders.
This is true only in the short run. The substitution of
foreign labor for American labor allows executives to
reduce costs and increase profits, thus producing large
bonuses for themselves and capital gains for
shareholders. The long run effect, however, is to
destroy the US consumer market and to reduce US
corporations to a brand name with a sales force selling
foreign made products to Americans employed in third
Offshore outsourcing is a new
phenomenon that has received little attention from
economists, who mistakenly view offshore outsourcing as
just another manifestation of the beneficial workings of
free trade and comparative advantage. In fact, offshore
outsourcing is the flow of resources to absolute
advantage. Economists have known for two centuries that
absolute advantage does not produce mutual gains. Unlike
the operation of
comparative advantage, absolute advantage produces
winners and losers.
China and India are winning. America is losing. It
is as simple as that.
Craig Roberts, a former Reagan Administration official,
is the author of
The Supply-Side Revolution and, with Lawrence M.
The Tyranny of Good Intentions : How Prosecutors and
Bureaucrats Are Trampling the Constitution in the Name
for Peter Brimelow`s
Forbes Magazine interview with Roberts about the
recent epidemic of prosecutorial misconduct.