Posted on 09/20/2004 1:45:17 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
The U.S. Department of Labor´s new report, “America´s Dynamic Workforce,” could and should have provided a serious look at the many changes in the rapidly globalizing U.S. economy. The report is a major missed opportunity.
The department´s Bureau of Labor Statistics is a gold mine of information. No private sector or academic economist can do any serious research without the mountains of data made available by the BLS. Unfortunately, though the new DoL report is filled with colorful graphs and tables, it was clearly produced as a campaign document meant to boost the re-election efforts of President George W. Bush and not as a serious assessment of the challenges facing the American economy.
Secretary of Labor Elaine Chao opens the report by proclaiming, “America´s workers are the most dynamic and productive in the world. They are the backbone of the American economy, which is constantly evolving and producing new jobs and new opportunities.” This tribute to the American worker sounds good, but has not been matched by policy. Indeed, the Bush Administration in general and Secretary Chao in particular have shown no interest in advancing the living standards of employees. And in the matter of job opportunities, President Bush will be going into the election as the first president since Herbert Hoover at the onset of the Great Depression to see the number of Americans working actually decline during his term in office.
Secretary Chao´s background may have suited her to manage a large organization like the DoL, but not to make policy. She has an M.B.A. from the Harvard Business School, and was Vice President of Syndications at BankAmerica Capital Markets Group and a banker with Citicorp. To bankers, workers are considered merely “factors of production” whose cost must be kept to a minimum. No wonder she shows so little concern about the outsourcing of jobs overseas, or the movement of production to foreign lands. It is all quite natural to her, and just adds more “dynamic” elements to the U.S. labor scene.
To its credit, the DoL report faces the most grim of facts on page 1: “Manufacturing employment increased by 91,000 since January 2004. Before the recent gains, manufacturing employment had declined for 42 consecutive months, and the industry lost 3 million jobs from July 2000 to January 2004.” But then the spin begins.
On page 2 is a chart unlike anything that the BLS in its professional capacity would create. It compares the unemployment rate of one month, July 2004, with average unemployment rates for three past decades. A month versus decades? To say this is apples and oranges is too kind a criticism. And the use of decades as a measurement of anything is meaningless. Economic events do not occur in synch with the calendar.
Unemployment in the 1970s averaged 6.2 percent, but within that decade it fluctuated from a low of 4.9 percent in 1970, when the labor market was tight due to military conscription and higher defense production during the Vietnam War, to a high of 8.5 percent in 1975 as the economy reeled under the impact of energy price hikes when OPEC tried to use oil as a weapon.
Unemployment in the 1980s had its own pattern. It hit highs of 9.7 and 9.6 percent in 1982 and 1983 as a deep recession put an end to years of high inflation. Unemployment then started a long fall through the rest of the 1980s, reaching a low of 5.3 percent in 1989. The 1990s were calmer. There was a mild recession in 1992 which sent the rate up to 7.5 percent, but by 1999 it had fallen to an exceptionally low rate of 4.2 percent. The DoL report says average unemployment for the 1990s was 5.7 percent, but only one year was actually near this number: 1995 at 5.6 percent.
The political purpose of comparing the lowest month of the Bush Administration with the average of past decades is to make the current number look better. If one wants to look at averages for political purposes, they should be collected by presidential terms, not decades. Looking back at the last 20 years using this method yields the following: Reagan 1st term (1981-84): 8.6 percent. Reagan 2nd term (1985-1988): 6.5 percent. Bush I (1989-1992): 5.8 percent. Clinton 1st term (1993-1996): 6.0 percent. Clinton 2nd term (1997-2000): 4.4 percent. Bush II (2001-July 2004): 5.5 percent. With the exception of Clinton´s second term (which we now know was built partially on a speculative bubble), President Bush does not fair badly in this comparison, which is a more valid calculation than the one used in the DoL report. By overreaching, political hacks only lose credibility.
Unemployment rates naturally tend towards “full employment” when not subject to external shocks. This is because people have to work to survive, so will take whatever jobs are available. It is the composition of the economy that determines job opportunities and the standard of living workers can obtain. Here the record of the U.S. economy presents a picture far more disquieting than indicated by unemployment figures.
The DoL report (page 9) touts, “High labor productivity is one of America´s strongest assets. Increased productivity benefits workers through high compensation and lower prices.” In other words, real wages should go up as workers become more productive with the application of new technology, better education, and capital investment. Yet, BLS data indicates that real wages have been stagnant for most workers during the last 20 years – a time period when new technologies were providing new tools beyond the imaginations of previous generations.
The BLS uses 1982 as the base year for computing its consumer price index, which is the most common way to figure “real” wages over time. In July 1982, the average person working in the private sector of the economy earned $271.77 in a week. In July, 2004 in real terms (1982 dollars), the average person earned $278.48 in a week. That´s not a real gain considering all the vaunted high-tech productivity amassed over 20 years – only $6.71 per week! In goods-producing industries, where advanced industrial techniques should have had the most impact, real wages have gone nowhere. In July 1982, the hourly earnings were $9.04; in July 2004, $9.08 in real terms. A four cent an hour raise over 20 years is hardly progress.
Material living standards have been improving not as the result of workers being better paid for their greater output, but because families have put more of their members into the workforce. As the DoL report proudly (?) states, “72 percent of mothers with children under 18 are in the labor force today, up from 47 percent in 1975.” And then we wonder why there are so many social problems among children today, so many “latch-key kids,” so many teenage pregnancies, so much drug use and gang violence. Society has been paying a heavy price for the failure of business firms to pass down to workers the value of their greater productivity so that they can afford to improve their living standards without placing the integrity of their families at risk.
Polls have consistently shown that most mothers of young children would rather stay home and raise them than go out and work, but they feel that the family cannot do without the extra income. The DoL reports that a higher percentage of Americans are working than in Europe or Japan as if this was progress rather than a measure of how much harder American families have to work to make ends meet and get ahead.
Instead of using productivity gains to boost wages and reward workers, businesses have used them to compete with foreign rivals, who use not only the same new technologies but also direct government aid (subsidies and protectionism) and very low wages to compete in the open American market. Americans may be the most productive workers in the world as the DoL claims (at best a questionable claim since there are many well-educated workforces with access to the same technologies and capital), but they have been losing market share not just overseas, but in their home market in the United States as well.
The DoL claims that labor productivity gains are at an all time high, but so is the trade deficit, which is on course to top $600 billion in red ink this year. And the projected areas of future job creation in the United States set out in the DoL report – nurses, truck drivers, sales representatives, maintenance workers, and retail sales managers – are all in service slots, which by nature are shielded from foreign competition (but not from our current policy of unlimited immigration). In effect, Americans are being pushed into “non-traded” occupations because they are not able to compete in the global market. And in large part this declining competitive position is the failure of Washington to craft an overall trade policy that would support U.S.-based production.
Secretary Chao is one of those most opposed to doing anything to correct America´s deteriorating international position. She is still aligned with her private sector contacts in the transnational business community and has failed to assume the duties of a national strategist that should be a major part of her government portfolio. The new Labor Department report reflects her alignment and tries unsuccessfully to gloss over her lack of vision.
William R. Hawkins is Senior Fellow for National Security Studies at the U.S. Business and Industry Council.
William Hawkins ping.
.....And in the matter of job opportunities, President Bush will be going into the election as the first president since Herbert Hoover at the onset of the Great Depression to see the number of Americans working actually decline during his term in office.
Pot, meet the kettle.
>.....And in the matter of job opportunities, President Bush will be going into the election as the first president
>since Herbert Hoover at the onset of the Great Depression to see the number of Americans working actually decline during his term in office.
Not true.
It is if you go solely by payroll jobs...
By that measure, my fiance, who started her own business in May, is unemployed. Never mind that her busienss is already doing well, and she will likely hire 1 or 2 people by the end of the year. More "illusory progress" according to the Dems at CrAP, I suppose.
Secretary Chao´s background may have suited her to manage a large organization like the DoL, but not to make policy...
So Willie; set me straight over here. It's policy that creates jobs? Also, just where does a 5.4% unemployment rate fit in with the historical unemployment rate?
It's funny, but I'm not hearing that "giant sucking sound" that the protectionist talks about...well that's not quite true, I do sort of hear those last gasps of restricted breath that you (and other like you) let out in that "race to the bottom" of your barrel-scrapping arguments.
Ping for Later.
Policy can effect the creation of jobs. If you do not believe that is true, then you are denying the underlying premise of supply side economics.
And if you do not hear a giant sucking sound, I take it you have not recently spoken with a customer service or technical support operator recently.
Along the same lines of Bush's 'seriesness' - anyone hear how his Manufacture Czar is doing these days?
Dubya's drones like to overhype the household data which includes struggling self-employed Americans working for lower pay and fewer (if any) benefits.
I think he's laying low, hoping not to get outsourced to China.
but if you add government jobs I bet the number is different. It would be interesting to do a Pajama survey of all the jobs created by HIPPA.
Willie, it's a shame that you've become totally irrelevant to the current campaign.
This means absolutely nothing to a super-capitalist. It doesn't affect his stock value so therefore it is meaningless.
I agree. The same corrupt cabal that killed the Contract with America has made this election a total farce.
Your response: Policy can effect the creation of jobs. If you do not believe that is true, then you are denying the underlying premise of supply side economics.
Yeah, I can see that you didn't take any liberties with my statement (LOL). I will not deny that policy can - and to be sure, does - affect the creation of jobs. But, I will deny that in a free society it is the policies that are the underlying premise of supply side economics. No, it is the entrepreneurial nature of risk takers that bring their goods and services to market to meet a consumer demand (perceived or not) that creates the jobs.
As far as customer service:
I bought a Dell laptop two years ago for $1200 and spoke to an American voice when I ordered it. Six months later - when my motherboard fried because I spilled wine on it - I spoke to someone who was probably from India...there was a language barrier to overcome, that's for certain, and I was a little disappointed.
Today, I couldn't even purchase that same Dell laptop if I wanted to. Why? Well, it's because they do not make newer laptop computers with processors that slow any longer (MHz) and and with so little RAM. I also probably couldn't get one with just a DVD player that wasn't also a combo CD Writer either. And you know what, the price for one of these better computers is much lower now then when I forked over my twelve hundred bucks.
I'm sorry that the the consumer's search for better value and product has put an American out of his/her phone answering job. Perhaps with the right drive and determination they can do something even more meaningful. But I guess that's just too much to ask of someone. After all unemployment "benefits" don't last nearly long enough, huh?
Spoken like I true "have-not"!!!
And we're disagreeing where on this one?
I think of it like farming. Soil conditions (or policy) greatly influence what can be grown and the bounty of the yield. Can a fart mer go against bad soil conditions and grow things in bad conditions? Of course. But more likely, that farmer will simply abandon the bad soil and put his efforts elsewhere. Thus, the policies enacted by the government are quite important for the "farming" of jobs.
I thought that when the farmer's soil is bad that they just ask for subsidies and protections...oops, silly me, you were making an analogy.
And as to the loss of phone answering jobs, which you seem to deem inconsequential, these are the type of entry level positions that once taught teens the first principles of a work ethic, allowed folks to work their way through school or allowed folks on welfare to transition into productivity.
I'd like to see some empirical evidence of "phone jobs" being staffed traditionally by teenagers. I don't buy this! Typically "phone jobs" were used to make sales or to answer questions (of varying complexities) about their firms products or services. This skills are not typically possessed by teens.
Teens now turn their noses up at jobs that have had their wages pushed to an artificial low.
If so, the market for labor would correct and wages would increase to attract new labor. Maybe it's older, retired Americans who are willing to perform these jobs while the youth aims a little higher by acquiring some human capital - stuff that will pay off for society down the road (as long as we don't remain so shortsighted).
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