Tuesday, December 28, 2010

Goods won't get cheaper, but we'll still hemorrhage jobs

I've read two particularly disturbing pieces of economic news recently:

1. While US businesses are now booming...they're creating most of their jobs overseas, 1.4 million new jobs outside the US vs. 1 million jobs in the US.


2. Most of the goods created by those 1.4 million new jobs from US companies won't be sold to or in the United States...

The first figure is bad enough.

The second one, though, is the blow to the skull. Not only are the jobs not being created here...but we may have maxed out whatever improvements in purchasing power parity that have been the only, meager benefit from shipping jobs overseas: the promise of cheaper goods.

As in, goods aren't going to get any more cheaper, but jobs are going to still bleed out of the country.

But the jobs are going elsewhere. The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute's senior international economist.

"There's a huge difference between what is good for American companies versus what is good for the American economy," says Scott.

American jobs have been moving overseas for more than two decades. In recent years, though, those jobs have become more sophisticated – think semiconductors and software, not toys and clothes.

And now many of the products being made overseas aren't coming back to the United States. Demand has grown dramatically this year in emerging markets like India, China and Brazil.


No comments: