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Saturday, April 28, 2012

Here's why you're not feeling the recovery
Posted by Jill | 6:06 AM
Because while companies ARE adding jobs, they just aren't doing it here:

A Wall Street Journal analysis of 35 companies based in the United States that employ more than 50,000 people found that they collectively added 446,000 jobs between 2009 and 2011, around three quarters of which were overseas. During that period, 60 percent of their revenue growth came from overseas.
Labor economists say this presents a mixed bag for American workers. The approximately 334,000 jobs created overseas aren't coming at the expense of the domestic labor market, as in the case of offshoring. They were probably responsible for some job creation here.
"Jobs will be added both places and not at the expense of each other," said Hal Sirkin, a senior partner at Boston Consulting Group. "A lot of the know-how is in the United States, so it will create domestic jobs because you'll hire people to manage" the overseas expansion, he said.
While other countries, such as Germany, tend to produce goods in-country for export, the United States has traditionally established outposts in local markets to produce goods for those markets. While those new facilities obviously are employing few if any Americans, opening stores or plants in other countries generally means hiring more people in the United States to provide management and other support for that growth.
"The hope is that if U.S. companies do well, they'll bring their profits back home to the United States and invest in expanding," said Howard Rosen, economist at the Peterson Institute for International Economics. Unfortunately, this usually doesn't happen. The downside to American companies' foreign growth is that they tend to plow their profits back into those overseas operations rather than reinvesting them here.
Rosen said American companies' investment in domestic plants and equipment as a percentage of GDP is 10.3 percent, low by historical standards. "At barely above 10 percent, the ratio of private investment in P&E to GDP helps explain why the ratio of total employment to the working age population remains low," he wrote in a recent paper. This ratio is up slightly since the first quarter of 2010, when it was 9.3 — the lowest it had been since 1964.

So maybe a few people will get jobs managing the people overseas who now have the jobs their neighbors used to have.  But if you're not a manager, too bad for you.  But hey...you can always borrow money from your parents to start a business.
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2 Comments:
Blogger PurpleGirl said...
I'm about to have some dental work done. My dentist told me that many labs are sending their work to China to have dentures and such made. He is still using the lab tech he's worked with for about 15 years. (The guy's an immigrant from the Soviet Union and does really good work.)

They keep changing what you think wouldn't be able to be outsourced.
4/28/12, 9:19 AM  
Anonymous Anonymous said...
PG,
The only thing that can't be outsourced is anything actually built "in the back room". If it's "sent out" to be repaired or manufactured, it can just as well be sent out to China.
Your dentist's Russian tech is obviously still sufficiently inexpensive that he and your dentist can still make a profit on dentures you're willing to pay for..
But let's face it, the ONLY reason NOT to outsource is for an assurance of approved materials and methods of manufacture. And we already know that the Chinese sell poisonous cat -- and probably people -- food, poisonous sheetrock, exploding batteries.
So if you Russian tech manufactures in the US -- and isn't working in some illicit lab somewhere [he is working in sterile conditions, isn't he!?] -- he's likely using approved stuff....
4/29/12, 9:13 AM  
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