Sunday, September 11, 2005
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The New York Fed tackles offshore outsourcing
The following is excerpted from Erica L. Groshen, Bart Hobijn, and Margaret M. McConnell, "U.S. Jobs Gained and Lost through Trade: A Net Measure" in the August 2005 edition of the Federal Reserve Bank of New York’s Current Issues in Economics and Finance:
This is the part I found of particular interest:
I'm always encouraged when people with very secure jobs (government and academia largely) conclude that destroying American jobs is not such a big deal.
I'm really stunned that these folks don't understand that extractive jobs cannot be outsourced, and therefore are not really a valid item for comparison with manufacturing (sure, we could import extracted resources to some extent I suppose).
At least they admit the recovery was slow.posted by: save_the_rustbelt on 09.11.05 at 12:27 PM [permalink]
To that I'll add that the unemployment rate dropped to 4.9% last month, well below what it was during the length of the 1990s. Having lower unemployment rate on an ongoing basis also means that job gains will be lower; if the unemployment rate were 7%, then an equal number of job gains per month would not be considered as good. In a healthy economy jobs are constantly created and destroyed ("job churning"), but the bottom line is that there is no job problem to begin with.posted by: Kirk H. Sowell on 09.11.05 at 12:27 PM [permalink]
It is the lack of innovation among American business that is the problem. More jobs would be created but for lack of this. As it is, most of jobs created are in construction, real estate, finance, and healthcare. With low interest rates going away, many of these will as well. When the job statistics are as phony as they are these days, any problem can be made to go away.
You probably don't want to hear this, but destroying jobs is the ONLY way for the economy to grow.
Think about it, if mechanized, GMO-usin' farmers hadn't found a way to put 98% of other farmers out of business, we'd still be living an agrarian lifestyle just to feed ourselves.
Producing more with fewer people means (1) wealth, and (2) Joe doesn't need to come back tomorrrow. Joe better find something else to do with his time.posted by: Brock on 09.11.05 at 12:27 PM [permalink]
Oh, what baloney.
Let's see, our incomes are going down and the middle class is shrinking just as manufacturing and IT jobs are going overseas. Coincidence - must be! Gosh darn it, our country wouldn't let the middle class shrivel up, now would it?
On the other hand, people with some sense might be interested in the Ritholtz post over at Big Picture, link:
"Median income fell most sharply in the Midwest, where it dropped 2.8% to $44,700, though it remains $300 higher than the national average. The drop -- accompanied by a rise in poverty in the Midwest -- partly reflects the disappearance of high-wage manufacturing jobs.
Across the country, the Census Bureau said, median earnings for full-time workers employed year-round dropped significantly last year. Men's earnings declined by 2.3% to $40,798 and women's 1.0% to $31,223. The data, which don't reflect employer-provided health benefits, measure pretax income.
The fraction of Americans living below the official poverty line -- $19,307 for a family of four last year -- rose for the fourth consecutive year to 12.7% in 2004 from 12.5% the year before, the bureau said. Last year, 37 million Americans were living in poverty, about 1 million more than the year before and 5.4 million more than in 2000 when poverty bottomed out as the economy peaked.
If it walks like a duck, and quacks like a duck, it must be an outsourcing apologist economisty Republican.posted by: camille roy on 09.11.05 at 12:27 PM [permalink]
The unemployment rate is down because a few millions people seem to have disappeared from the job market, I'm a GOP and I don't believe that for a moment. Something is smelly about the labor force participation rate. I don't trust Bush or his toadies.
No one is advocating that we return to making buggy whips, but the people who live secure on the government dole are quite cavalier about destroying someone else's job (why don't we do away with tenure and civil service and let everyone enjoy the free market?).
Bill Clinton and George Bush have both promised that trade would cause this country to be flooded with new high-value service jobs. What a crock.
"Fries with that?"
"Do you need a cart today?"posted by: save_the_rustbelt on 09.11.05 at 12:27 PM [permalink]
> To that I'll add that the unemployment rate
Anecdotal evidence from my middle-class neighborhood is that a very high percentage of those who lost their jobs during the 2001-2003 time period have either left the workforce (early forced retirement; suicical levels of depression preventing continued job search) or are counted as employed becuase they are now working at Wal-Mart (a dozen or so ex-mainline pilots I know). That doesn't give me a lot of comfort, Schumpter or no.
Crankyposted by: Cranky Observer on 09.11.05 at 12:27 PM [permalink]
SaveTheRustbelt, even as a card-carrying Democrat, I admire your attempt to craft a stance as an honorable Republican, though I'm sure we would disagree on the basic policy components of such a stance.
I find it unfortunate -- for the country -- that your party has been taken over by incompetents and cronies. I trully do not think people who wish the best for this country can now find a home in the Republican party.
Back to oursourcing, Roach at Morgan Stanley had this to say today:
Despite sharply higher energy prices that will most assuredly boost headline inflation in the months ahead, the upside to core inflation should remain limited by the ever-powerful forces of globalization. That’s especially the case on the labor cost front -- the dominant component of business cost structures. In fact, barring an outbreak of protectionism, I remain convinced that the global labor arbitrage will continue to exert a powerful restraint on wage pressures.posted by: camille roy on 09.11.05 at 12:27 PM [permalink]
While Bill Gates publicly laments young Americans' lack of interest in computer science careers, Microsoft hired only 500 net new U.S. workers between June 2003 and 2004. During the same period, Infosys hired 11,000 new workers, most of them in India. The thousand or so positions Infosys filled in the U.S. went mostly to foreigners on H-1B visas. And according to a press release and leaked internal documents, IBM is reducing headcount in Western Europe
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