Business Doesn't Need American Workers
Once again, the job numbers are dismal. In January, the U.S. economy created just 36,000 domestic jobs, far below the roughly 145,000 that economists had forecast. The unemployment rate fell, to 9 percent, but only because more and more discouraged workers are giving up and leaving the workforce.
The U.S. still has a jobs gap of about 14 million jobs, and that number is increasing as the labor force grows. Counting people who've given up, or who are working part time when they want full time jobs, the real unemployment number is around 17 percent. America now has about 25 million people either out of work or underemployed.
Meanwhile, corporate profits continue to set records. Profits in the third quarter of 2010 were 1.659 trillion, about 28 percent higher than a year before, and the highest year-to-year increase on record.
What's going on? Very simply, America's corporations no longer need America's workers.
As Harold Meyerson documents in a brilliant piece for The American Prospect, our most admired corporations -- GE, Apple, Hewlett Packard, Intel -- are creating ever more jobs overseas and relatively fewer at home. This has the double benefit of taking advantage of cheap labor abroad and disciplining workers to accept low wages at home. Along with the high unemployment rates have come declining earnings. Meyerson writes:
"In 2001, 32 percent of the income of the firms on Standard & Poor's index of the 500 largest publicly traded U.S. companies came from abroad. By 2008, that figure had grown to 48 percent."
This record contrasts dramatically with that of the right's favorite whipping boy -- Western Europe. Germany is gaining jobs at a rapid clip. Its industrialists are committed to producing at home, and just in case they get ideas of making outsourcing a way of life, they have strong unions who negotiate agreements on where production is located.
Germany's labor costs are the highest in the world, but Germany nonetheless runs the world's largest export surplus -- 7 percent of GDP -- while America runs chronic trade deficits.
Barring drastic policy changes, our jobless recovery is likely to continue. There are three parts to the problem.
First, while the economy is still in deep recession, both the administration and its Republican critics are already talking about steeper budget cuts. President Obama talks a good game about infrastructure spending, but it's hard to see where the funds will come from as deficit hawks in both parties prevail.
In Sunday's New York Times, Jacob Lew, the president's budget director, wrote a depressing (in both senses of the word) oped piece on the case for deeper budget cuts. In theory, massive infrastructure spending could create a lot of good jobs, but the Obama budget is likely to offer new spending at token levels to prove his good faith as a deficit-hawk, and the Republicans will likely deny him even that.
Then there is the problem that Meyerson nails. The Obama administration is not about to take issue with American companies that profit from locating ever more production abroad. The corporate elite is fiercely opposed to any limits on its freedom to relocate, and Obama is on a mission to make peace with big business. The administration continues to promote "free trade" deals on the premise that they will create jobs -- but more and more of those jobs get created offshore.
Both political parties are in denial about the plain fact that American industry is competing against an industrial system in China radically different from our own. If a company like GE wants to operate in China, the Beijing regime extracts conditions that violate the spirit if not the letter of the World Trade Organization.
Companies are made to take on Chinese partners, to transfer sensitive proprietary technology, and to shift their production and R&D to China. In exchange, they get government subsidies and docile workers. Eventually, much of their production is displaced by their Chinese partners, but in the meantime they make a lot of money.
In the past two decades, company after company concluded that the U.S. government didn't really care if we lost our manufacturing base. The Chinese government was making them an offer they couldn't refuse, so one by one they made a separate peace with Beijing.
Glenn Beck, Fox News, Limbaugh and the right-wing pundits can all scream their socialist Muslim birth certificate conspiracy theories all day. Its all smoke and mirrors to distract from the real problem. American business is killing the American middle-class and the Republican party is dedicated to helping them do it. Obama and Democrats think the road to success is compromise, but they are only compromising away more jobs.