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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: loantech who wrote (6141)	1/25/2004 5:55:39 PM
From: Jim Willie CB	Read Replies (1) \| Respond to of 110194

CNN's Lou Dobbs on US jobs and outsourcing Washington is beginning to make the connection between a record trade deficit and the loss of millions of American manufacturing jobs. Since July 2000, 2.7 million manufacturing jobs have been lost as the result of layoffs and outsourcing of work to cheap foreign labor markets. And despite strong 3.1 percent second-quarter growth in gross domestic product, a pickup in manufacturing, and strong corporate earnings, many companies are continuing to take a wait-and-see attitude toward domestic hiring. When it does come time to add workers, companies are too often opting to outsource both manufacturing and service jobs to less costly foreign labor markets. A February survey of 145 U.S. companies conducted by Forrester Research found that 88 percent of the firms that look overseas for services claimed to get more value for their money abroad. Forrester also estimates that in the next 15 years, $136 billion in wages will move offshore to countries including India, Russia, China, and the Philippines. China, for instance, a country that enjoys an $11 billion monthly trade imbalance with the United States, is now taking an active role in recruiting American jobs away from U.S. workers. An American corporation can hire 10 software engineers in China for each one it hires in the United States. And China's manipulation of its currency is at the root of our trade problems with that country. Last week four congressmen pushed a bipartisan resolution accusing China of manipulating its currency and urged the Bush administration to threaten retaliation under the Trade Act of 1974. Jobless. At home, CEOs are still saying that they are reluctant to hire. Richard Yamarone, director of economic research at Argus Research, who surveys CEOs each month, says chief executives are still saying that hiring is not one of their top priorities and may not be for quite some time: "What they're saying is that we'll have some very low increase in capital spending to the tune of 5, maybe 6 percent. But as far as hiring goes, it doesn't seem to be in the tea leaves at this time." Chief executives may be exercising great restraint when it comes to adding to their domestic workforces, but they are not exhibiting similar caution in regard to their own compensation. According to Business Week's annual CEO compensation study, CEO pay packages were 200 times as great as that of the average worker in 2002. And the CEOs who cut the most jobs are often the most richly rewarded. U.S. corporations' desire to drive the bottom line at the expense of U.S. jobs comes with a hefty price tag. William Hawkins, senior fellow at the U.S. Business and Industry Council, says, "If you're substituting foreign employees for American workers to satisfy the American market, then the repercussions are fewer good job opportunities for Americans [and] lower income for Americans. This translates, of course, into slower economic growth in the country as a whole." Companies are ultimately forfeiting long-term prosperity for some short-term gains, and U.S. trade policy has been their greatest accomplice. The U.S. current-account deficit of goods and services, the broadest measure of foreign trade, stood at an astonishing $503 billion in 2002. Half of the imports into the United States come because of decisions made by American corporations. "We imported last year almost $1 trillion worth of foreign-produced manufactured goods; $1 trillion of the U.S. market lost is to imports," says Hawkins. "There's no market overseas anywhere that can replace $1 trillion lost in our own market. The end result is lost American jobs and lack of job creation." Commerce Secretary Don Evans wants to develop a team to "track, detect, and confront unfair trade competition." Evans told me that this administration is committed to rooting out the worst offenders and taking action. But skeptics worry that expanding U.S. access to foreign markets alone will never be enough to close the gap. U.S. corporations must take the lead here. Unemployed Americans translate into a weaker economy and will ultimately damage the corporate bottom line. As Yamarone put it, "When you don't have a job, and job creation is not in the near-term outlook, well then you stop spending, and when you stop spending, by definition that slows economic growth." And that slower economic growth will eventually drain corporate earnings. It is time for American businesses to begin adding American jobs. They can afford it and, more important, they can't afford not to. The future they save may be their own.