July 06, 2004

US Employment Growth Not Part Of Global Economy

By Paul Craig Roberts

The July 2 jobs report ruined President George W. Bush’s holiday.  June’s payroll job growth dropped to 112,000, less than half the average growth over the previous several months. While commentators focused on the aggregate number, the real bad news is that US job growth continues to be concentrated in nontradable domestic services that do not face global competition.

Where are the June jobs?

This June’s graduating class from America’s thousands of colleges and universities competed for 4,000 jobs in legal services, 3,000 accounting jobs, 4,000 architectural and engineering jobs, 6,000 jobs in computer systems design and related, 5,000 jobs in management and technical consulting, 6,000 jobs in financial activities, 7,000 jobs in educational services, and 11,000 jobs in membership associations and organizations. 

Those who didn’t land one of these few jobs competed against the unskilled for 13,000 jobs making beds, serving food and waiting bar, for 11,000 jobs in child day care, 11,000 jobs in ambulatory health care services, 6,000 jobs in hospitals, 12,000 temporary help jobs, 6,000 jobs as couriers and messengers, 3,000 jobs in warehousing and storage, 3,000 jobs in ground passenger transportation, and 6,000 jobs driving trucks.

With the US current account deficit running $1.1 million per minute in the first quarter of 2004, US consumption is very dependent on the global economy. US job growth, however, is disconnected from the global economy. The US is now dependent on imports for advanced technology products as well as for manufacturing goods and is experiencing a declining trade surplus in services.

Charles McMillion of MBG Information Services in Washington DC reports a new move by the US economy into uncharted territory. Total hours worked for non-managerial workers have fallen during the current recovery. There are 0.9 percent fewer total hours worked by private non-managerial workers in June 2004 than in November 2001 when the current “recovery” began. Hours worked in the manufacturing sector have declined 7.7 percent.

Since January 2001 when President Bush was inaugurated, non-managerial private sector hours worked have declined 4 percent, and manufacturing hours worked have declined 17.2 percent.

Declining hours worked during economic recovery is unprecedented.  Republican apologists and free market ideologues attribute the decline in hours worked to productivity gains. However, the unprecedented decline appears to reflect job displacement from the growth in net imports caused by the movement of US production offshore and by outsourcing.

While the US economy ceases to provide employment growth in tradable goods and services, Stephen Roach at Morgan Stanley reports that the industry share of Chinese GDP rose from 41.6 percent in 1990 to 52.3 percent in 2003, accounting for 54 percent of the growth in China’s GDP over the period.

In India, the services share of GDP increased from 40.6 percent in 1990 to 50.8 percent in 2003, accounting for 62 percent of India’s GDP growth over the period.

Mr. Roach’s report notes: “A new IT-enabled connectivity links offshore low-wage knowledge workers to the developed world--transforming nontradables into tradables; this broadens the competitive playing filed and challenges one of the key assumptions of globalization.”

In brief, there are large numbers of low-wage foreigners who can be substituted for an American in every job category that can be moved offshore or performed via the Internet. Until US wages fall, foreign wages rise, or the dollar collapses, the outlook for US employment is poor. In June 2004 Americans have 1.8 million fewer private jobs than in January 2001.

Perhaps the fall in American real wages has begun. The New York Times reports that during the past year average hourly earnings have not kept up with low inflation and that take-home pay as a share of the economy is at its lowest level since the government started keeping track in 1929. The labor force participation rate has fallen 2.4 percent since the spring of 2000.

After identifying the problem, Mr. Roach recommends “education” as a solution. The pretense that the US lacks enough educated graduates to fill high tech jobs and that US employers are “forced” to turn to Third World countries for high tech workers is deception on the level with the claim that Saddam Hussein was linked to terrorism and had weapons of mass destruction.

The US already has a class of university graduates living with parents, waiting bars and contemplating meth production and distribution as a way of making money.

No political party speaks for Americans. American jobs and careers are being sacrificed to “globalism.” American culture is being sacrificed to open borders. Americans’ sons and daughters (thanks to feminism) are being sent to die in foreign wars that increase American insecurity.

We are in a presidential campaign, and no issue is being addressed.

COPYRIGHT CREATORS SYNDICATE, INC.