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Sorry, Jobs Are Not Coming Back
This is from Stone Street Advisors
Unless we, as a Country, decide to "go Luddite."
Contrary to claims by Unions and other pro-labor groups, "offshoring"
is not the obvious and primary cause of job loss in the U.S;
productivity improvements and shifting business dynamics are (among
other things). This chart, from the Atlanta Fed proves the Unions/labor wrong, rather conclusively:
In
the 10-year period from 1998-2008, we saw 1.9 million manufacturing job
"losses" domestically, while only 242,800 such jobs were "created"
abroad by U.S. multinational firms (i.e. this ignores multinational
firms based in other countries). Many groups - and let's be honest, all
of us at one point or another - have blamed services companies for
off-shoring the majority of their customer service and
administrative/operations, but again, the above chart shows this is
largely a myth. Of 335,000 jobs "lost" in financial institutions (many
of them operations/administration/service jobs), only 13,400 were
"created" in other countries.
Some skeptics may look at the "Other
Industries" line and question why only 234,200 jobs were "created" in
the U.S. while over 1.6 million were "created" abroad. Unfortunately
for such skeptics, this is easily explained (emphasis mine):
Sixty-nine
percent of the foreign employment growth by U.S. multinationals from
1999 to 2008 was in the "other industries" category, and 87 percent of
that growth was in three types of industries: retail trade;
administration, support, and waste management; and accommodation of food
services. Some fraction of these jobs, no doubt, reflect "offshoring"
in the usual sense. But it is also true that these are types of
industries that are more likely than many others to represent production
for local (or domestic) demand as opposed to production for export to
the United States.We certainly don't present this
information as a definitive answer to the question about the role of
offshoring in the slow U.S. jobs recovery. But if you forced us
to choose between global or domestic factors as the place to look for
solutions as we struggle with persistent underperformance in U.S. labor
markets, we'd choose the latter.
In other
words, all the American companies that've expanded into Asia and South
America have hired ALOT of local workers, they have not, at least not
anywhere close to the degree alleged by labor groups, took our jobs...
- advertisements -
mises.com will do hows that...
The jobs will "return" once we contract gdp to a point the politicians get really worried and protectionism starts, until then its all rhetoric.
I don't know about many jobs--but I certainly hope that the job of financial analysis currently being done by the poster is off-shored. And soon.
I've seen better analysis by a Luddite economist. Uses a wood block copy of Mises on Money.
Are you sure that you're wanting to hand the sovereignty of the US off to a hostile country, much less an incompetent one?
im not dumb im smart
When somebody reads 330.5 (in thousands) from a table and writes 335,000, ignore them. I am surprised they can handle Tyler's math questions. Great topic...uneducated writer!
it's the federal reserve notes, stupid.
Tylers:
You are destroying your cred by posting such nonsense. Please stop.
This goes for 100% FREE SPECIAL REPORT guy too.
Mature companies don't create jobs, they cut them. It's part of being increasingly efficient. New jobs are created by new companies. And new companies are created by investment. And investment comes from the savings of the Nation. And if everyone is spending their 'savings' on 'bubbles' in order to keep ahead of the erosion of inflation, there is no savings, and there is no investment, and there are no new companies. Consiquently, there are no new jobs. It's elementary, it's economics 101.
So it's no surprise that Chairsatan Baranke and his University educated demon Edomites have long forgotten everything they learned in econ 101. It's so passe' and has nothing to do with being a part of an ongoing Racketeering, Influence, & Corrupt Organization (RICO).
That's for suckers..... just ask his boss, Hyme Dimon and his Edomite fiends.
This is a great point. The three great post WWII industrial powers, Germany, Japan, and China have huge internal savings rates-and we used to as well. (This allows Japan, for example to finance nearly its entire 200% of GDP debt internally). Social safety nets like Medicare and Medicaid started in the 1960s are a great impediment to savings-they are in effect a hammack encouraging sloth. The 1960's were the start of the American decline-we masked it via the fraudulent "jobs" in the FIRE economy.
Burn it all down. Hit the reset button. That is my campaign promise to you. Put it on a bumper sticker. Gold 36000 for president.
When I look over my shoulder at our in house IT group. They are 99% H1b visas. No need to outsource jobs, just bring them here.
How about just killing the entire set of regulations that are responsible for H1-b's (20 CFR 655/20 CFR 656)? Bring the jobs here as a long-term investment in actual US citizens, instead of fly-by-night H1's. Those regulations are an unnecessary set-aside that encourages job-killing fraud.
WANT SOME BETTER JOBS BACK? JOBS ONLY AMERICANS CAN HAVE & CHARGE CHINA, ET AL, CONFISCATORY PROFITS ON?
WANT THE AMERICAN ECONOMY TO GET RIP-ROARING, UBER-DYNAMIC, AND CREATING MASSIVE WEALTH?
Then have that pantywaist Obama exercise our rights per article 16 of the Outer Space Treaty of 1967 and unilaterally withdraw, and go back to the Moon, declaring national sovereignty for American explorers & their property rights to whatever they find, develop, or commercialize.
You cannot do it now (Article #2). Time to put the "reward" back into the "risk" of returning to the Moon.
The problems with the banker class is somewhat seperate from globalization. I don't think we should lump them together. Globalization and technological (productivity) progress are linked by the fact that technology no longer knows any boundaries. The world is connected to a degree as never before. You can bitch about off-shoring jobs all you want but it was destined the minute we had a cheap instantaneous worldwide communications platform. I could go on and on, but a couple other people have explained it better. Check out my blog post about technology taking my job away which includes a great quote at the end from Hans Moravec: http://addins.waow.com/blogs/weather/2010/10/information-as-cheap-commodity
Another interesting story which covers this topic is Manna by Marshall Brain: http://www.marshallbrain.com/manna1.htm
The bankster pilfering is depressing. Off-shoring is difficult. However, they are both nothing compared to the onslaught of technological progress. The jobs are not coming back. We have to figure out how to deal with it.
IMPORTANT ANNOUNCEMENT:
ALL CITIZENS MUST TURN IN THEIR COMPUTER EQUIPMENT IMMEDIATELY TO THEIR POSTAL OFFICE.
HAIL VICTORY!
THIS IS NOT A DRILL
There is no doubt that China is becoming the lowest cost manufacturing hub for the global market place except for a few defense related industries [aerospace] and industries of mass scale where high investment costs slowdown transition [Catapillar , Deere] . Over time, application technology and research will follow trend overseas to manufacturing locations. Other industries such as chemicals are forced to locate closer to source of raw materials and feedstocks [ Saudi Arabia, Kuiwait ]. Bottom line is USA will continue to lose jobs with financial sector and high tech unable to create enough jobs to make up for losses---besides, all the I-phones and gadgets will be manufactured overseas. So USA is left with a consumer economy[70%] kept afloat by deficit financing which also undermines finacial industry and entire solvency of country . Politicians are in idiological denial, industrialists are caught in a trap of maximizing this quarter profits by outsoursing and soon the ponzi will implode or when US$ collapses or China unloads cheapening $ for hard assets. Stone Street Advisors employees will then be part of the unemployment line
In a first time China didn't take away US jobs. They were given to them by US multinationals...Today they start to create their own brands and products and shift to the domestic market... In the meantime multinationals have discovered Vietnam and Bangladesh as even cheaper labor platforms...
I partially agree with many of the posts here, mainly about exporting manufacturing and some of the structural problems but no one really addresses the "Why?"
Why do so many companies want to move out of the U.S.? Most of the leadership is American so we cannot assume they hate America and Americans. Many of them are in fact jerks with short term foci, but that doesn't explain it.
I submit in the most general sense that it is primarily because America is becoming a really bad place to do business. It's a terrible place to make things but a good place to sell things. If you wanted to start a large scale, brand new, state of the art manufacturing facility making high value products where would you put your money and time? If you had a huge capital outlay with a delay on the return (time to build, set up equipment, train workers, establish distribution, etc.) and a whole lot of money at stake...your money, where would you go for the least hassles and expense?
We have a 40,000 page tax code, 80,000 page Federal register, highly manipulateable environmental, building code, licensing, permitting, wage/benefit laws, employment laws, fees, zoning, EPA, Health, EO, etc. laws. Hostile unions might stall you or make demands, environmentalist groups need payoffs (that's how they work), you need a bank of lawyers, Congressmen want a piece of the action, administrations might be hostile, etc. It would be a huge huge risk even if you love America passionately.
Go to China and they will probably welcome you, level a town if you need it and people who oppose you will disappear in the night. The commies even have lower corporate and individual tax rates!
Money always seeks it's best return and it is completely egalitarian in where it goes.
We need to make America a good place to do business on multiple fronts. The money, jobs, skills and people will stay here, then.
You get rid of hellholes like China, not encourage them. What you encourage is a return to times when business had a more complete lockdown on goverment, where they could issue death warrants for for opposing a business. They are just despots who are willing to cater to business while denying regular individuals freedom.
Start playing more hardball with business, and turn the screws harder if they complain. If they try to go offshore, enclose a copy of OBL's proof of death, with a letter explaining the consequences of going offshore. If they're willing to destroy the US unless they get what they want, it is only valid to thwart it.
Reward companies that hire directly in the US, are wholly US-based(read: not a foreign subsidiary or front) entities, and not hiring in one specific region. Reward those that want to contribute to the long-term prosperity of the US; allow those who want to work, to find work not based on desperation.
Great - Go to China, take your capital with you and your board of directors and your investors.
BUT..... Don't call the US Governemnt or the U.S. Navy to bail your ass out, if the Chinese nationalize your business or steal your intellectual property.
They probably will nationalize your business. If Uncle Sam defaults on his obligations.
Those are good points, in part. My point is that there are multiple factors in deciding where manufacturing or even some service jobs are created or moved. There are BMW and Toyota plants here in the U.S. It is not all one-way. There are many negatives to most all countries. Nationalization is a big one in about 2/3 of the world.
All of these factors get weighed and balanced. We need to make it an easy calculation to do business in the USA.
Let me know when Honda isn't the only one doing automotive manufacturing for a foreign company on the North side of the Mason-Dixon. Those CKD plants in the South don't really help.
They like the south because it's anti union I believe.
Where did off shoring start? The way I see it, a few early adopters did it and saw cost benefits, and then gained an advantage. After awhile others caught on and did it too.. eventually it hit a point of no return where you had no choice but to offshore or be priced out of the game.
I say that impoverishing a large part of the population and financing consumption with debt is quite a failed experiment, obviously. Now the globalist model is being exposed as the fraud it is.
I do believe that most people, given the chance, want a decent job, want to take pride in their work and in their community and want to be productive, and they want a government that doesn't aid and abet the few from screwing them over constantly.
I agree with you more than I would disagree. My point is that no multinational would do what they have done in off shoring without the implicit consent and approval of the US government. They have moved out because they can have their cake and eat it too. They have embraced globalism with government approval, knowing that US institutions, be they legal, military or civil will back them all the way.
History has proven that the US will go to war to protect American Business Interests. The corporations know this and act accordingly. The individual American worker gets the short end of the stick, but so what? Other than having the vote every 2 years he/she does not matter.
In my experience, there are cultural issues and there are structural issues holding the US back from creating jobs.
Cultural issues:
- There are generational expectations. The first generation is labor, the second are designers and the third tend to be useless parasites and live off the first two unless they have motivation ...
- IMO, there has been a concerted action by those who are looting the US balance sheets to distract people so that they are consumed with other forms of conquest and satisfaction: entertainment, sports, gambling, video games etc. etc. etc. People who are not hungry to achieve wither and die. For those in power it ensures they stay in power and for the nation and people it is a withering death. We need a crisis to change the negative inertia.
- People have become overly dependent and expectations that the nanny state will save them. This is good for those in power, who want passive people, but bad for those not in power. There is an expectation by those who lose their jobs that it is someone else's responsibility to create them and that if they are hungry or thrown out of their houses that it is someone else's responsibility to feed them ... and given that those in power have been put and kept there mainly through fraud, it is not entirely unexpected.
Structurally:
- Too many takers / leeches are living off the effort and of those that contribute. This is most apparent in those in government living off the people without having the responsibility to contribute anything useful.
- It is also apparent on Wall Street which has had to resort to balance sheet raping, creating excess leverage out of thin air, pulling years of earnings forward through derivatives and of course FRAUD.
- mountains of taxes, regulations and excess money costs (from people who get the money from free), manditory insurance, executive looting, a broken tort and criminal system all contribute to excessive overhead.
It can be reversed of course to create an environment where business thrives in the US, but those in power have a vested interest in maintaining the status quo and draining the US to death.
MacDonalds just hired 60K, jobs are coming back but the salaries are not....welcome to globalization
Here at the OTC show in Houston the majors had recruitment booths set up. So damn many jobs available in the oilfield. If you are and engineer and need a job just come here there are jobs galore.
The American economy has created plenty of jobs, unfortunately our govt has obliterated those job creations with mass immigration, it doesn't matter how many jobs "the economy" creates if the state obliterates that number with more imported workers-which is exactly what they've done.
They (the state) has basically obliterated every technological productivity improvement over the last 30 years which should have delivered higher living standards and higher wages with more people.
Imagine the horror of immigration enforcement combined with deportations limited immigration and open trade borders, we'd have inflation in wages and deflation in everything else, everybody in the nation would get a raise, tax cut, a bigger house, a cheaper better car, cheaper food, and cheaper gas.
Simply enforcing immigration law would immediately deport 12 million illegal aliens, and cut our oil import bill by 144 million barrels of oil per year. (12 million illegals X 12/barrels oil per person per year)
America would instantly become "population stable" and we could get back to becoming a net food exporter within a few years, and we wouldn't have to constantly expand infrastructure anywhere, just maintain what we got.
The real question is will the dumbass voters in the unemployed flyover states vote to protect what they still got (what's left of America's sovereignty) or vote for even more invasion and appropriation, we got a long way to go before we drop to Banglidesh living standards.
So you're prepared to pick your own vegetables, bus your own table at restaurants and make your own bed in a hotel? A modern technogical society has a real need for only a fraction of the available population and this I believe is the poorly stated theme of this article. (Hint: its that portion of the population to the right the mean of the bell shaped IQ curve) For all other jobs only immigrants are willing to do them. And that's always been the strenght of the US-ambitious immigrants. I believe the US is only leading the world in BMI (body mass index) currently. We don't have enough American born scientists, for example, requiring us to import them from China and India.
"The American economy has created plenty of jobs, unfortunately our govt has obliterated those job creations with mass immigration."
You don't think there is any realation to the fact that landowners (the top 10%--again!) reap the rewards of population growth...?
You are partially correct SmittyinLA
Open borders immigration is one leg of a four legged stool of our current unemployment problems.
1. We have gone from a closed immigration system in the early 1960s to open borders. Both political parties are culpable. Also, duel citizenship has killed what it means to be an American. To whom does an immigrant pledge allegiance to upon becoming a naturalized citizen? We do not know, nor do we care.
2. Natural technical innovation. I entered the workforce in the late 1970's. Every Fortune 500 company I worked at through 2003 has either closed doors or been acquired/sold. Most were in high tech. At best, only a few % points of those jobs made it past 2 years after acquisition. My 2nd job out of college was at a Mfg plant with R&D, employing 8000 people. I tell people we had an employment office open 10 hours a day for "walk in" applicants and I get lots of laughter in response. As great as those jobs were we still had over 10% annual voluntary attrition which had to be replaced.
3. Employers have been able to convince employees that all unions are bad. They may be in the captured public arena, but I am convinced that the death of unions as a function of business has been negative for this county. The individual cannot stand against a corporation. To believe otherwise is lunacy. The "employment at will" or right to work concept is one of the biggest lies fostered on the American worker.
4. American jobs have moved offshore in great numbers. This was by design. The rise of large American based multinational corporations, able to seek the cheapest labor costs, using cheap energy and whose interests have been protected by the US military, have captured two of the three branches of government. Political contributions and lobby efforts have made a mockery of representative government.
I am sorry to say that things will get worst before they get better and not before we revisit living conditions found during the depression.
All true nwo, and good points.
It's been US government policy, as well. "Bubbles" Greenspan has testified before Congress that the H1B program is good because it keeps costs down for "high" tech employers (i.e. -- keep salaries down). And this policy produces results -- Salaries for the broad category of "software engineers or programmers" have been flat to slightly lower since ~2000 -- not the sign of a shortage of "technology workers".
The (US) National Science Foundation has also long had a policy of open borders and preference for non-US PhD candidates to keep the cost of PhDs down. Best and brightest? not so much
Both policies have been effective -- in the race to the bottom in the USA, it is no longer (hasn't been for a while) a good investment to spend the time or money to get a MS or PhD in a technical discipline.
And for anyone who thinks that China, Russia, India, Brazil, Europe believe in "free markets" and don't protect their national interests... put away your econ 101 text book and wake up. Have a look at Gomory and Baumol, or go read Ricardi's original writings.
Ask Applied Materials or Airbus (or Boeing if they had management bright enough to realize it) about the real price of doing business in China. You pay China for the privilege of doing business there, give up all your IP and trade secrets, *must* build manufacturing plants and employ engineering staff there, and if you're Caterpillar, pay a tariff as well to produce small/medium-sized equipment. You want to fund your future competitors, train them, give them your hard-earned intellectual capital? Only American captains of industry.
If Andy Grove has a "hey, wait a minute" on offshoring/outsourcing and "American" jobs (see his article on Bloomberg a couple months ago), ya think maybe there's a problem?
And for the poor bastards with a BA or MA and two boatloads of student loans for private college tuition -- God help you. W/any luck at all, it's w/a US bank and you can default on the loan.
Isn't it interesting that our best and brightest fail to see the forest for the trees?
Curly, do you remember those days when you applied for a job based on the fact that your skills and abilities would be considered an asset to the company?
When did the other people you toil with every day become a "cost" instead of an asset, anyway?
The dirty little secret about the techonology industry today is this small fact: those "software engineers and computer programmers" who are now flat-lining professionally are being deliberately oppressed. Their role in society today is so important, they can't know or understand that they now hold the ability to stop the world in its tracks, to transform society in ways we can only imagine, and to make our lives simultaneously better and worse. To acknowledge the power of those who understand and can manipulate this information and communication platform of power would be like trying to keep a genie in a bottle after you've lost the capper.
How did employees go from being "assets" to the company to mere "costs"? Attitudes changed.
Self-interest+Money+power+propaganda can change a lot of attitudes fast.
I'm pretty sure it's the dumbass Dimbocrats in the cities voting for open borders, not the moms and pops in flyover country.
Tyler,
Standards are slipping, both content and presentation.
Political correctness extends to economists....
the only way jobs will come back is when the bright guys in USA start thinking strategic and link social engineering into economic value added to derive double advantage in terms of networked industries that require integrated services from local client+consumer+salaried worker+entrepreneur communities all wrapped up in one. Cooperative capitalism..where we are clients and entrepreneurs and have rings of excellence we create/renovate as we bridge technological barriers. This is paradigm change and civilisation redefinition...a big innovative move. It will come through pain and learning.
http://www.youtube.com/watch?v=FeWcTtToVBA
WTF? This is not a real person. Can't be. gotta be one of those "web 2.0" marketing bullshit generator programs. Or are you a Stoned Street Advisor, too?
Hey, fella ! Maybe you didn't notice there is an MAJOR economic problem in the capitalist world. Somebody has to address the issue of reconciling : capital formation, social aspirations, ecological constraints without going over board into a centrally planned economy paradigm like China is. But governments are there to define direction change and encourage debate on strategic issues like energy diversification and job creation. Just saying...
Not me or anyone from Stone Street!
Falak, are you stoned?
Do you know comma's exist?
sorry for bad punctuation.
What a load of crap. As Field Engineer for a capital equipment company I personally dismantled state of the art PCB assembly lines at Honeywell only to install the same equipment plus a bunch more in Tianjin, China. Honeywell at the time had 1100 employees, new factory in China 5k.
Bullshitometer pegged.
n/t
I visited Tianjin in 1989. It was like flying over one big factory for 9 million people.
The airport had three 737s , two being used as parts and one flyable. Electricity was off because of rolling brown-outs. A fog settled in as we left the airport, then, like ghosts we saw thousands of people riding 1950 style black bicycles come out of the fog. All I could think of was "get me the fuck out of here".
Have times changed or what?
Why do you think they moved to Tianjin? What were the long and short term gains?
i agree the jobs aren't coming back. if i were president i can assure you the jobs would be coming back pronto. but that's another story.
where i disagree is on the issue of stolen technolgy from usa companies, then setting up shop in foreign countries and selling back to the usa. was that counted?
also, what about joint ventures with foreign companies. were those workers counted?
and of course all the under the radar jobs offshored which once employed usa workers.
count me unconvinced, and very doubtful.
one thing i can assure the writer about. i'm not surprised the jobs are gone. when the whole offshoring got going in the 1980's article after article, and debate after debate was undertaken on the issue, and the most convincing case was that the usa jobs would vanish to the lowest bidder. and this is exactly what has happened.