ECONOMICS - Another Grim Jobs Report

"Another grim jobs report" by Paul Craig Roberts, CounterPunch

Is your job safe? Not if it can be done abroad. The only safe jobs are in domestic services that require a "hands-on" presence, such as barbers, hospital orderlies, and waitresses.

For a number of years the Bureau of Labor Statistics' monthly payroll jobs reports have been sending US policymakers dire warnings, only to be ignored. The March report repeats the message. Ninety-five percent of the new jobs created are in domestic services. The US economy no longer creates jobs in export or export-competitive sectors.

Wholesale and retail trade, waitresses and bartenders account for 46% of the new jobs. Education and health services, administrative and waste services, and financial activities account for another 46%. (Wholesale and retail trade jobs for March were 40,000. These jobs would be sales clerks ringing up sales on registers, people stocking the aisles at Wal-Mart, Home Depot, etc.

Leisure and hospitality (primarily waitresses and bartenders) accounted for 42,000 March jobs.) In contrast, computer system services accounted for 3,600 jobs.

The biggest item (half) in education and health services is "ambulatory health care services."

This has been the profile of US employment growth for a number of years, along with some construction jobs filled by legal and illegal immigrants. It is the job profile of a third world economy.

Economist Alan Blinder estimates that as many as 56 million American jobs are susceptible to offshore outsourcing. That would be about half of the US work force.

Offshoring has contributed to the explosion of the US trade/current account deficit over the past decade to $800 billion annually and rising. The US has a trade deficit in manufactured products, including advanced technology products, of more than a half trillion dollars annually, a sum far larger than the oil import bill.

Traditionally, a trade deficit might indicate that a country's industries were not competitive against imports from abroad, resulting in a decline in the exchange value of the country's currency. This would make foreign goods more expensive for that country and its goods cheaper for foreigners, thus restoring a balance.

This does not work for the US for three reasons:

1. The US dollar is the world's reserve currency. The dollar can be used to settle all international accounts. Therefore, there is a world demand for dollars. This demand absorbs what would be an excess supply for any other country running such large deficits.



2. China pegs its currency to the dollar, thus preventing an adjustment in the price of the two countries goods and services. Other countries, such as Japan, intervene in currency markets by purchasing dollars in order to support the dollar and prevent its currency from rising in dollar value.



3. Offshoring turns US production into imports. Much of the US trade deficit results from offshoring, not from traditional trade competition. The collapse of world socialism and the advent of the high speed Internet made cheap foreign labor available to US companies. US firms use foreign labor to produce offshore the goods and services that they market to Americans. For example, more than half of the large US trade deficit with China is comprised of goods and services produced by US companies in China for American markets. How can the US reduce its trade deficit when it deprives itself of exports and fills itself with imports by offshoring its production of goods and services, and when the devaluation of the dollar is limited by the dollar's reserve role and by other countries pegging their currency to the dollar or by intervening to support the dollar? Obviously, when balance returns to US trade, it will not come through traditional means.

Most economists are confused about offshoring. They mistakenly think offshoring is an example of free trade bringing mutual benefit through the principle of comparative advantage. It is not. Offshoring is an example of companies obtaining absolute advantage by combining high-tech capital with low-cost labor. The gains from absolute advantage are asymmetrical or one-sided. The cheap labor country gains, and the expensive labor country loses.

So, the question for you (my reader) is, how safe is your job?

The truth is your job is even less safe than normally (all jobs are not guaranteed after all) if you are not in a low-paying "hands-on" sector. So we are supposed to be satisfied with the low-paying or minimum-wage jobs that remain.

America is loosing economically. It's just short sighted Wall-Street that does not see it.