The job market is terrible, and the situation isn’t getting any better. The U.S. national unemployment rate is stagnant at 9.1% in September, and the jobs picture across America at state level didn't change much either, according to the Bureau of Labor Statistics. .
Bloomberg lamented "Unemployment has exceeded 8 percent since February 2009, the longest stretch of such elevated joblessness since monthly records began in 1948." NPR quoted the Economic Policy Institute that the country needs to add at least 100,000 jobs a month just to keep up with population growth and drive down the national unemployment rate. So far, new job adds by domestic companies have fallen far short of that benchmark.
Meanwhile, according to another report by Challenger, Gray & Christmas Inc., employers announced the most job cuts in more than two years in September, led by planned reductions at Bank of America Corp. and in the military, and by the Army’s five-year troop reduction plan.
So where will the new jobs be coming from? A new analysis by the Boston Consulting Group (BCG) finds that U.S. could gain 2 to 3 million jobs and an estimated $100 billion in output in seven industry clusters via a U.S. manufacturing renaissance starting by around 2015. These seven sectors include the follow:
- Transportation goods
- Electrical equipment/appliances
- Plastics and rubber products
- Fabricated metal products,
The job gains would come directly through added factory work and indirectly through supporting services, such as construction, transportation, and retail.. According to BCG, year 2015 is the time frame when China’s shrinking cost advantage should prompt companies to rethink and shift production back from China or choose to locate new investments in the U.S. The U.S. is also expected to become a more competitive export base in these sectors for Europe and Canada.
According to the BCG,
"Together, these seven industry groups sectors account for about $2 trillion in U.S. consumption per year and about 70 percent of U.S. imports from China, valued at nearly $200 billion in 2009. This U.S. manufacturing renaissance not only could add $100 billion in output to the U.S. economy, but also could lower the U.S. non-oil trade deficit by 20 to 35 percent."
EconMatters' take is that there are indeed some indications that insourcing is gaining popularity, particularly in the IT related job functions, mostly due to logistic and quality control issues, but by the same token, outsourcing is not going away any time soon as the U.S. has long lost its manufacturing base and evolved into a service and technology oriented economy. Without some major shift of the nation's economic structure, and revamp in the U.S. tax and policy system, it would be difficult for the U.S. to out-compete countries other than China in the manufacturing goods producing sectors. .
Furthermore, regardless whether the manufacturing renaissance occurs or not, fundamentally, the U.S. economy would have to grow around 4-5% range to have a significant impact on the unemployment rate. Based on the recent economic data, the overall U.S. economy should improve by mid 2015, and unemployment rate could go down to perhaps below 8% range, if no new crisis strikes. However, it remains to be seen if the BCG prediction--2 to 3 million manufacturing related jobs by 2020--would come to pass.
Before the end of the economic tunnel, for those pounding the job hunting pavement each day, keep your chin up and take a weekend break with this infographic.