Creating Jobs in the United States

18

There are several problems with the current jobs situation and those are in addition to the fact that one out of approximately 8 people you see walking down the street is either unemployed or has only a part-time job. Of course, for some people, the idea of a part-time job is difficult to imagine, as these kinds of permanent part-time jobs did not exist 30 years ago.

But now, with a largely service economy and contract workers in major corporations–two tier employment–we have these precarious employment situations. The good news is that at least two of these problems can be alleviated by electing a new and stronger Democratic Senate and House of Representatives than we have now.

The first problem is outsourcing of jobs. The United States employs roughly 130 million non-farm workers. Approximately, 12% are government workers. So that leaves 115 million in the workforce. Of those, 80% are in service jobs. That leaves 25 million manufacturing, construction, and other non-sandwich-slinging jobs available to the market place.

That is not enough jobs in this country, good domestic jobs, to fuel a recovery or to sustain our current lifestyle over the next 20 years let alone the next 100 years.

You can survive for a long time on service industries, but eventually someone has to make something or find some resource that can be mined, drilled or otherwise transferred from its natural state into something of added value. It is not enough for someone to rid your house of pests and you pay him and he goes to the bank and then takes out cash and buys a meal at your restaurant. It all starts with someone, somewhere who created the initial income from which the pest control, the bank and the restaurant are derivative beneficiaries.

A strictly service economy is an economy in decline. Unless you want to go into a very extensive analysis, or a philosophical treatise on why we are now a service economy…suffice to say we need to restore manufacturing to the domestic economy or we will continue to slide into economic oblivion.

It has been happening. Real wages have not gone up for the middle and lower classes basically at all in the last 30 years. We have become credit consumers. In 2005, after several years, each year setting new records for personal bankruptcies, a new, tougher law was introduced by the Neocon Republicans and in advance of that, we set an all time record for personal bankruptcies…even higher than now in a huge Recession.

The reasons for it are pretty clear. A large part of the community lives beyond its means, not deliberately but because their paychecks do not keep up with the cost of living, so they borrow. Others, fully half of them, were bankrupted by medical bills. That’s not a small number of people. It is about 10,000 people per state per year….just medical bankruptcies. And the health care companies spent $400,000,000 in 2009 to keep you from getting affordable health care.

Along with the silly idea that tax cuts create a large, more vibrant economy, for the last 30 years we have heard that outsourcing jobs makes American Industry “more productive.” It is simply not true. In the first instance, all the tax cuts do is create deficits, like the $13 trillion deficit we have now. It is like borrowing money every year and spending it and telling yourself that you got a raise. The tax cuts do not increase productivity.

And as far as outsourcing jobs to other countries is concerned, it is almost astonishing to think that people believe that it is more productive. Do you think that an ignorant Chinese peasant without education, working for 50 cents an hour is more productive than a trained automotive worker or steel worker from Detroit, Michigan, Pueblo, Colorado or Birmingham, Alabama?

Nonsense. This is all economic mumbo-jumbo made up by U.S. international corporations to get cheap labor to increase their profits to pay CEOs and their top executives’ bonuses that are 300 to 400 times what the average worker makes.

For many years, we have used “increased productivity” to justify the loss of jobs. That has actually been dispelled for a long time by economists. The evidence is really quite clear, that replacement of higher labor costs by foreign labor costs…which represent near zero labor…also represents zero benefit to the U.S. economy.

The benefits society gets from removing a job paying $17 an hour, from a very productive U.S. worker and substituting a worker far less sophisticated for 50 cents an hour are basically two fold. We get some cheaper Walmart, Kmart and Target products, and a much bigger profit spread. The former are not really big savings…you save $2 on a pound of coffee and $50 on a set of tires.

Is that worth 10% unemployment, a million people a year going into bankruptcy and a $13 trillion dollar deficit?

And as far as the profits are concerned…how does that help the average citizen? We have fewer people with good jobs. We have corporations using their profits to destroy unions who are trying to keep people in good jobs. And 80% of the profits are going to the top 1% who actually do own two-thirds of all the corporate stock in the country, plus their investment firms, plus top executives who get multi-million dollar stock options in order to do the bidding of those billionaires who own the corporations.

So why do people continue to support Neocon Republicans who are paid through campaign contributions, basically bribes, to support this kind of legislation? The reason is that a large segment of the population never gets the truth.

Most economists know that foreign outsourcing does not work, but until recently the way the government (Bureau of Labor Statistics) reported industrial statistics, it did not have a way to factor in so much foreign labor. So it was simply calculated as increased productivity. Naturally, big international corporations would never argue with that because it was to their benefit.

In addition the process happened over a period of time. In the period of the Reagan and first Bush Presidencies, there were about 20 million jobs created. That was not a tremendous amount because Reagan had also caused a recession in order to justifiably allow Paul Volcker to stamp out inflation. But the key number was manufacturing jobs. Of those 20 million jobs, none were new manufacturing jobs. In fact, during that period, the country actually lost 625,000 manufacturing jobs.

But in what should have been an omen, we gained 1.5 million jobs in the fast food industry. In the next phase, while President Clinton’s policies were creating 22 million new jobs over 8, rather than 12, years, we actually lost another 1.2 million manufacturing jobs.

And under Bush the Lesser, once appointed and once having stolen the Presidency, we created a grand total of a net…are you ready…seems impossible but true…1.2 million jobs in 8 years. But, during that time, the loss of manufacturing jobs accelerated to 3.8 million jobs. That totals 5.6 of the 15 million jobs we need right now. But you don’t get those kinds of jobs back overnight. Corporations know this.

Corporations, who profit greatly from cheap foreign labor, have literally funded dozens of organizations like the Cato Institute and American Enterprise Institute to create studies favorable to foreign outsourcing from doctored facts. In other words, they create the premises that they know the corporations want to promote, like outsourcing labor to foreign countries. Then they do the research and structure the results to make a favorable case.

The American people, unions or government departments or the Democratic Party (some of whose members themselves are “on the take” from corporations) do not have the resources to get the truth out. So many other American people buy into the false economics. It is made to sound reasonable only because they create their own facts.

How could they do that, one might ask? How can they make up research reports and broadcast them to everyone stating that shipping jobs to China is actually a good thing? We know that the manufacturing job was paying $17 an hour and the subsequent job the American can find, after losing the job to China or India is paying $7.25 an hour?

How can it be when we can see that the job markets have become very difficult and our credit card bills are going up and that all we get out of it is $50 on a set of tires?

Well the best way to answer is with a question. How can a national television network that reports the news and then offers commentary hire the former head of the Republican Party and then hire an entire staff of Republican commentators and propagandists and still be regarded as a “news organization?” The answer is that we Americans allowed them to get away with it.

How does an Australian like Rupert Murdoch, universally scorned as being a “trash man,” a purveyor of supermarket tabloids, build a media empire and use American media to create Fox News Channel to hire propagandists who try to bring down the government 24 hours a day? The most vile, crude, anti-American propaganda is spewed out by commentators with no consciences, like Sean Hannity and Bill O’Reilly and Glenn Beck who are paid between $10 million to $20 million per year to push the Murdoch anti-middle class message.

You would think that a television commentator would not be allowed to call a sitting President a “racist,” (even though he is half Caucasian and half African-American) or a “Nazi” (even though he was elected by 54% of the People higher than any Republican in memory) or “Communist” even though he would not even let the Congress push through a public option on a health bill! But this is America today and it is reprehensible.

Jobs come from corporations. The most number of jobs come from the largest corporations. Take the Fortune 500 as an example. Of the top 10 on the Fortune 500 list of largest corporations, 3 are oil companies. They employee people all over the world and have a steady, relatively well-paid workforce here in the United States but are in a declining industry and one that will ultimately be largely overseas except for automotive and fuel oil refining here in the U.S.

The green energy jobs that they and the utility companies could be creating, such as wind and solar energy and battery technology…are being created in China. As one example, a Michigan company bid on a job for General Electric components for green energy equipment. General Electric backed out of the deal and 302 American jobs were lost.

After oil companies, the next largest group on the top ten is banks, with Bank of America the largest and J.P. Morgan/Chase coming in next (and with Citigroup not far off at number 12.) Banks do contribute to the economy in that they hold deposits, facilitate the flow of currency and provide loans. But they don’t make anything. They simply earn commissions on transactions that they facilitate.

Banks have been farming out their back office jobs to India at a staggering pace. There are at least 1 million IT outsourced U.S. jobs in India, and another 2.3 million who are indirectly affected by those jobs. How many support American financial firms is conjecture, but most financial firms rely heavily on IT for operations.

In the Fortune top ten of the top 500, there are only three that could be considered manufacturers. General Electric, Ford Motor and Hewlett-Packard. All three have large domestic work forces—GE has 300,000 employees. But they have plants that manufacture their products all over the world rather than in the U.S. They even have their customer service and IT functions for the domestic operations in foreign countries

The largest company in the U.S. does employ many Americans…over 1.4 million. Walmart does have 2 million employees world wide. But it also has three distinct characteristics, in addition to being a service business, a retailer. It refuses to allow unionization of the workforce or to provide health care to the work force (the largest workforce in the country.) It retails products, the prices for which it drives so low that the only place they can be manufactured is in Asia. And finally, wherever the company goes, it succeeds by driving out other businesses solely on the basis of price.

Does it say something—it should—that our largest corporation targets cheap products to people of lower income and that it creates more customers for itself by creating more lower income people? Walmart is the perfect example, the metaphor that defines American service economy today…cheap goods, cheap labor….or perhaps just cheap.

But if you extend this to the top 25, it is even more interesting. In the 11th to the 25th largest corporations you have a couple of big banks, the largest insurance company, another couple of discount retailers, a communications company and a computer company. All but the discount retailers outsource huge numbers of jobs abroad.

But here is the interesting part. This group also contains the 5 largest health industry corporations. So a third of the second group are in the health industry, drugs, health insurance, hospitals and supplies. Your health care is their business. It is a business.

As a group, the health industry—who fought so hard to keep Americans from having fair and reasonable health care—make up an even larger segment of the top 25 corporations in the country than do the oil companies or Wall Street. With huge profits and control of health care possibly slipping from their control through health care legislation, it is no surprise that they would spend $400 million over a three-month period in 2009 to fight the right of Americans to have some control over our health care costs and availability.

The problem with the Fortune 500 companies is that they hold the key, because of the consolidation of industries into a handful of corporations, to American jobs and prosperity. In the case of almost every corporation on the list, cheap foreign labor takes up a percentage of their employment. Some of it is foreign plants selling products in foreign countries. But much of it is simply outsourcing jobs.

Jobs are needed here. With 390,000 workers laid off this year, which is down from last year but still a huge number, one would think that the government would work to establish jobs here.

But just days ago, in August of 2010, it was announced that 400,000 workers would be added to a Taiwanese corporation to manufacture some models of the Dell Computer and Apple’s Ipad and Iphone in China. Microsoft will also add workers through Chinese contractors. Have you noticed a great drop in the price of the Ipad or the Iphone?

It may be only a coincidence, but this company, Foxcomm, was founded the same year that George W. Bush was elected (or appointed if you prefer) President. And they have been exclusively in the business of making American communications products, replacing American workers.

Our most important objective right now is to create new industries and new jobs right here in the United States. And we must create those as manufacturing jobs. Even if the economy were to grow quickly, say by 200,000 jobs per month, only about 24,000 of those jobs would be in manufacturing. The other jobs…and this is why we will not have a recovery any time soon…will be in the service sector.

The service sector by the very nature of what it does, feeds off people who have needs but also the income to pay for those needs. The service sector cannot jump-start itself. Fortunately, we have about 85% of the workforce employed, and a larger number at the top end of the income scale still employed.

This group, from affluent to just getting bye, are not enough to jump start a sluggish and already depressed economy. It is the difference between electricity and a light bulb. Electricity powers things. You cannot start an electric oven with a light bulb.
Only when you have electricity will the bulb perhaps grow brighter and brighter.

Don’t be fooled by the concept of free trade. The fact is that there is no free trade. What corporations have done is to call something free that is anything but free. Corporations simply want to take jobs overseas to take advantage of cheap labor.

It is not more complex than that. It is simply the idea that corporations can gain by exploiting the difference in U.S. labor costs and Chinese labor costs. This differential, huge amounts by the way, goes directly into the pockets of corporations in the form of profits and CEO wages, which are once again in the range of 300 to 400 times the wage of the average worker.

The average citizen sees very little benefit from the outsourcing of jobs to foreign workers. We lose large numbers of complete jobs, experience reduced wages, gain very little in reduced prices on products we buy, feel no benefits from taxes to the government and have lost a large segment of the population who no longer have those important manufacturing skills should we need them. It is a “lose-lose” situation.

The People need to fight for legislation that will bar outsourcing to foreign countries. It is bad policy and it is bad economics. More importantly, it is bad for the future of this country.