Badnews:http://www.nydailynews.com/news/ideas_opinions/story/161031p-141229c.html
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The U.S. job machine's broken
Largest net loss in jobs since the Depression
80% of manufacturing jobs gone for good
Median earnings in 2001 were just $33,636
The Bush administration has a big problem. Last year, the President and his aides promised that their tax cut would give America what it needed most: jobs. Never happened. Total job creation was supposed to average out at 306,000 a month, but not even a third of that has been achieved. The numbers clearly undercut the Bush claim that tax cuts for the wealthy would generate jobs for the middle and working classes.
The jobless recovery we're now in is unlike anything the American economy has ever seen. Typically, the Great American Job Machine energizes our economy. New jobs beget more income, which begets more spending, which begets more hiring, incomes and spending. What we're seeing now, however, suggests that there may be something fundamentally wrong in the engine room of the American economy.
In the recoveries of the mid-1970s and 1980s, America was generating about 300,000 new jobs a month within six months of cyclical upturns. In the early 1990s, this expansion slowed to about 200,000 a month, and we had to wait a full two years for that.
This time, we have seen not a deceleration in job creation, but a net loss - the sharpest in any period since the Great Depression, especially in manufacturing. No work and not much in the way of wage increases either. Ouch!
What's going on? International competition and outsourcing have hit some sectors hard. In the past decade, China became the world's workshop. In this decade, India is becoming the world's back office. Cheap bandwidth and the Internet permit companies to tap into a huge supply of English-speaking, educated, dedicated workers, happy to take knowledge-based jobs for 10% to 20% of what American employees receive.
"Offshoring" is moving up the food chain of services to include professions like engineering, design, accounting, legal work, actuarial and insurance work, medical services and financial analysis.
That's why virtually all the jobs created in the latter part of 2003 were concentrated in the most sheltered segments of the workforce. It also explains why some 80% of the 2.5 million manufacturing jobs lost are gone for good. The result is that too many of America's jobs today cannot support a full household, at least at the level that most people feel appropriate to a middle-class lifestyle.
This has profound consequences for America's politics. They are outlined clearly in a new book, "Downsizing in America," by William Baumol, Alan Blinder and Edward Wolff. Of the 100 million men and women with full-time jobs in 2001, the authors note, more than half earned less than $35,000; 84% earned under $65,000; 10% made between $65,000 and $100,000; while only 5.7% made above $100,000. Overall median earnings were a mere $33,636. Most middle-class families would feel that $65,000 is needed to maintain a family in a middle-class lifestyle. If you lower the bar, only 32.8% of jobs paid more than $45,000 annually.
How are people coping? Not easily. The authors say that in two-thirds of households with wage earners, the workers hold two or more jobs. Even for families with kids, two-thirds of the mothers work, although fewer than half the households have adults with two full-time jobs.
There is no doubt that the Great American Job Machine has simply not kicked back into gear. The optimists hope businesses will soon deliver on job creation. But that has not happened, and it won't happen. What is happening is a spectacular improvement in productivity that has more than accounted for the economy's total growth since the recession ended.
Productivity gains, alas, are also the cause of so many jobs disappearing. As long as far fewer employees can churn out more and more complicated products than before, the number of workers or the hours they work simply has to fall.
Productivity has at least succeeded in lifting profits and stock prices. This has produced a boom on the capital side of the economy, but not on the labor side, for it has not yet increased either jobs or workers' pay. This has been masked in part by tax cuts, by a huge buildup of personal debt and by the extraction of money from the increased value of assets, especially homes, made possible by record- low interest rates.
To continue our tradition of creating more new jobs to replace the old ones we destroy, we'll have to rely on more than dramatically stimulative fiscal and monetary policy. We must do a better job of preparing more and more of our citizens for knowledge-based employment, especially through increased K-to-12 education.
Happily, there is reason to hope. We have a hardworking, entrepreneurial population and a bottom-up economy responsive to energy, talent, effort and new ideas. Our universities are the envy of the world. Our post-university, on-the-job training in business is unsurpassed.
But it is clear that we are going to have to think hard about jobless economic growth. How that is managed will be critical to our nation's economic policies, including its trade policies. As New Hampshire demonstrated, it also will be a critical component of our politics.
According to the polls, New Hampshire voters supported John Kerry because they felt he was the best man to be able to stand up to Bush on issues of national security. But look closer and you'll see they really want someone to challenge the President on the gut issues they really care about: jobs and health care. As New Hampshire goes, so goes the nation.
Originally published on February 4, 2004 |
