What Happened to the Jobs?

What happened to the jobs?

1. The low point of unemployment was 5% in January '08. The high point was 10% in October '09, 21 months later.

2. We must use annual 12 month average data, because monthly data is not available. Average annual data shows a job loss of 4.4%, rather than the actual 5% for 21 months.

3. In 1 year, we lost 6.0 million jobs (4.4%). What were they?

4. Construction job loss was 1.1 million (16% of Construction jobs). Construction is internal; it cannot be exported.

5. The largest loss was 1.6 million Manufacturing jobs (11.6 % of manufacturing jobs).

6. Next largest losses were 1.4 million in Trade jobs (5.3% of trade jobs) and 1.2 million in Professional jobs (6.5% of professional jobs)..

7. The lost 1.6 Manufacturing jobs were mostly transferred to Korea, Taiwan, China and various Pan American Countries. We have seen the names of these countries on much of our US purchased goods.

8. Trade jobs include various sales ancillaries, such as customer service, brochures and instruction booklets. The lost Trade jobs were moved to India, China, Taiwan, Korea, and other countries. Most of us have had the experience of trying to deal with foreigners on customer service and have seen the sometimes stilted writing of foreigners in brochures and instruction booklets.

9. Professional jobs include accounting, architecture, design, R&D, and others. These activities were also moved to the same countries mentioned in #8. We don't see much of these activities but have heard about them.

10. It is not unreasonable to suppose that we have lost 12% of our manufacturing jobs, 5% of our trade jobs and 6% of our professional jobs to other countries. These collectively amount to a loss of 4.2 million US jobs.

11. Why were these jobs lost to other countries?

12. Company executives are primarily interested in holding their own jobs and maximizing their salaries and bonuses.

13 The executives understand that the best way to accomplish their objectives is to maximize company profits, because the boards of directors, who control the top company jobs, are mostly large stockholders who are themselves interested in stock value appreciation and dividends.

14. The few ways to increase company profits are to reduce manufacturing cost per item, sales and administrative costs, and taxes. This not only gives an increased profit per item after taxes, but gives an opportunity to boost item volume sales through competetive price advantage.

15. Most less developed countries have lower labor costs than the US. In most cases, the labor is sufficiently capable of producing quality products at rates equivalent to the US, which reduces cost per item. The leadership of most less developed countries have an interest in manufacturing US type goods to improve their countries' economies.

16. To attract US manufacturing, less developed countries use fewer government restrictions, and lower company taxes. In many cases, foreign governments will give a corporate tax holiday.

17. The free trade policy of the US allows the US company foreign manufactured goods to easily flow back to US markets.

18. For Trade and Professional work, the situation is somewhat similar. Contracts for supply of sales service, brochures, instruction booklets, computer programs, computer designs, accounting services, architectural documents, etc, are almost always less costly when supplied by India or China.

19. The collective low labor costs, tax advantages, friendly foreign government attitude and US free trade were strongly recognized and acted upon by US companies in shipping jobs overseas in the 21-month period between January '08 and October '09.

20. Labor costs in the foreign countries continue to rise, which tends to reduce the incentive for foreign operations by US companies, but foreign tax benefits and restrictions for US companies have not. Free trade persists.

21. US jobs can be returned from abroad by addressing and correcting each of these entities: low foreign labor cost, company taxes, operating restrictions, and free trade.