Why millions of jobs aren't coming back
The era of big labor is over.
By Kevin Mellyn
Though recent jobs numbers seem to suggest improvement, the underlying data tells a different story. The official statistics vastly underestimate real lack of work that Americans are feeling.
One of the key issues in November is which candidate can credibly promise the voters he can create jobs. The problem is that anyone making such promise is not telling the truth.
One of the odd notions that both political parties pay homage to is that government at any level can “create jobs” other than by hiring people itself or subsidizing others to do so. The historical fact is that our modern concept of employment only dates back to around 1880 and has been dying since about 1980, along with the industrial economy that brought it into being in the first place.
The model of full-time secure employment in the private sector (it had always been common in the public sector) grew up in the late 1800s along with heavy manufacturing industries and utilities that needed skilled labor (like machinists or railroad engineers) rather than “hands” to do low-skill tasks (mill girls, longshoremen). Political institutions adapted to the big public companies that employed more and more of the population through both regulation of labor conditions and support of unionization. Companies tried to keep workers cheap and docile but in the end had to bargain with labor and appease politicians.
The result was an Iron Triangle: big business, big government, and big labor. The Iron Triangle focused on the political process in Washington to divide the loaves and fishes brought forth by unquestioned American dominance of the world economy. Conflict and compromise in Washington assumed that most people would work in large, regulated enterprises that could be compelled or induced to provide them with things like pensions, health insurance (a relic of World War II wage-and-price controls), and other protections. The list could always be expanded because American enterprises (and, indirectly, labor) were really only competing against other high-cost developed countries, most with higher taxes and more elaborate social provision and protections for workers.
In fact, only about a third of mankind was involved in the global market economy until the late 1980s when countries as diverse as China, India, and the former Soviet Union became to one degree or another market economies. Technology had in the meantime greatly enhanced worker productivity and, crucially, the ability of firms to contract for inputs on a global basis. The good news was that over a billion people worldwide escaped grinding poverty. The bad news was that for the first time since World War II, American workers faced a vast “reserve army of labor” capable of driving down their living standards to a global norm. This of course is why so many people in the developed world hate and fear what in loosely called "globalization."
Logically, these profound changes in economic reality should have led us to think beyond a political and institutional framework formed in the New Deal. In a dynamic world of global competition, high-cost producers are doomed. U.S. industry painfully restructured to confront this reality a long time ago. High wage union jobs in the private sector have been declining for a generation. However, the massive growth of consumer credit since the 1980s served as a huge bandage to cover the loss of earning power by American workers.
Basically, consumer debt and a huge run-up in house prices fed by cheap and easy mortgage finance became a substitute for real income, sustained a consumption driven economy and created an illusion of prosperity. Blame the banks for our troubles if you must, but the credit-driven economy that blew up in 2008 suited everyone in the old Iron Triangle just fine. The financial market meltdown of 2008 however ripped the bandage off a very old and deep wound of a hollowed-out economy and a profoundly unequal and divided society.
In this election year, both contenders talk as if Washington can restore the world we have lost, the brief century when secure, well-paid employment was both possible and expected. What is really needed is a complete rethink of our Iron Triangle era institutions, from public education to retirement and everything in between, especially government itself. For what’s coming is a world in which most workers will be in effect contractors or temps, and self-employment will become the norm.
Kevin Mellyn is an international banker and consultant at MasterCard Advisors. He is the author of Broken Markets: A User's Guide to the Post-Finance Economy (published by Apress, July 2012).
This is relatively old news in regards to the end of the manufacturing jobs.
Now they claim you need a certificate or degree to perform typing work.
This of course is to shut out a large segment of the unemployed as well.
The cost of education is going up like everything else.
If only there were leaders that really had the interest of the working person
getting back to work on their agendas.
Obama nor Romney or their teams are those leaders!
Any educated person would know that a President cannot and does not control the jobs creation in America. The Blue Bloods of today were given their wealth by their hard working parents who believed in and cared about American workers.
The good ole boys who actually built the industries in America are gone. Now we are left with their selfish and spoiled offspring who couldn't care less.
Its' not going to happen. Even the "Buy American" bumper stickers are made in China now.
My boss just came back from Vietnam. She was there on business.
Usa Inc? We had a few drinks and a few laughs but its over. The only one doing well will be the wealthy and the single, lonely guy.
It is untrue that you can't find Americans to do the jobs of illegals. Ask yourself if you would pick tomatoes for $3/hr.
Now ask yourself if you would pick tomatoes for $5000/hr.
Now we are just haggling over price.
I voted for H. Ross Perot in 1992 and against "the great sucking sound of American jobs leaving".
Who did you vote for?
Defeatism is exactly what the Multinationals and 1% want us to buy into. But it's not true, the United States IS still the greatest economic engine in the world. If we return to pre-reagan era policies; enforce the Sherman Anti-Trust laws, withdraw from all the so-called "Free Trade" treaties we've entered into, re-instate protective tarrifs and make them extreemly punitive for goods manufactured under slave labor and Eco-unfriednly condidtions, re-regulate finance and multinational corporations, force business doing business in the USA to manufacture in the USA and allow Unions to unionize those businesses'. We'd probably have to pass a Constitutional Amendment that would reverse the Supreme Court's "Citizens United" judgment to do all of that but "WE THE PEOPLE' could and have the right to do it. Then we'll get our jobs back, "THEY" want and need our business.
This is why we MUST bring back all the manufacturing jobs and protect what they make by taxing cheap forign competitors. Workers there make a couple thousand a year.The companies have no o.s.h.a., no e.p.a. standards that cost us a bunch. The mines/utilities/factories/etc are often all owned by their government. WE CAN'T COMPETE WITH THIS! The majority of people here in the states need manufacturing jobs to earn a decent living. We have given away so much thats why 42% of americans are under/un-employed. What good are cheap products if nobody has money to buy them. The only way to start up the economy again IS to get people back to work in a job that pays a decent wage.The best way to do that IS to bring back the jobs that for years this country has given away to slave like labor.Then we MUST tax the cheap foreign product so the equivilant one here in the states sells. This is economics 101 and our dumb polititions can't grasp the concept that is learned in high school!
Let's all become self employed. Doing what?
Millions of out of work Americans running restaurants, fixing A/C units, farming, cutting hair, and on?
First, local markets are not big enough and no one has income to buy the services.
Second, you have to have licenses and have to go into competition with those big companies which already dominate the areas.
Third, you not only have to be able to do the trade skill, but you will also have to have the business sense.
Fourth, if you employ workers, you will have to provide insurance and other government required red tape and costs.
It is easy for the celebrities to push us towards globalization because they have their fortunes to live off of.
Either big business CEOS are going to have to bring our jobs back to America or they will have to suffer when there is no longer an America to give them a place to hide and no longer a society who buy the stuff they make.
Finally, the truth about the Global Economy is becoming apparent. Mr. Mellyn is right on target::
1. The America that "was" is gone. The global economic restructuring that has taken place is not reversible as it now involves countries other than the United States. China, India and Russia have become economic forces to be reckoned with as best we can.
2. No President is going to be able to change this economic catastrophe. It won't matter who is elected now or in the election after this one. The United States is in danger of becoming the biggest welfare State in history; we probably already are. Unless somebody figures out some new economic avenues to create employment for the hundreds of thousands of the unemployed, then society has to figure out what is to be done with this ever growing segment of the population. And what else can be done except to subsidize them with part of the earnings (more taxes) from the people who are employed? The "Brave New World" is coming.
A profound insight... "self-employment will become the norm".
This is remarkably similar to our pre-WWI economy in which 80% of the US population was in effect self-employed.
My take is the USA will be turning away from globalization and focusing internally upon local economies and local trade to remake the "economy" of our nation. And, this is a good thing. The feast and famine (mostly famine lately) of globalization has done enough damage to our nation.
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Breaking up big banks is an untested solution to the too big to fail problem that attempts to isolate and dismantle large, troubled institutions while protecting the rest of the economy.
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