uh okay, so what were these people earning before?

and is it a good thing for the economy to be so dependent on wal-mart?

are you comparing a pretty much mono-culture of jobs stocking shelves using wal-marts innovative use of IT and inventory control with prior jobs making, building, designing, marketing, and producing these products and services?

you write about how we are becoming a nation of b arkers and we should be grateful.

Walmart jobs pay considerably less than many of the manufacturing/high tech jobs that are leaving.

There's also a lot of anecdotal evidence that Walmart stores drive small local competition out of business, so the new Walmart jobs aren't pure growth.

Really, outsourcing may be inevitable. It may be the least of all evils. But to date, it's hard to see how it's been a net gain (for the US anyway).

The previous two comments cover my reaction, but I wanted my reaction so noted. Though my deep hatred is reserved for the crooks who "financed" (pumped-&-dumped) the so-called IT boom of the 90's.

- michael, unemployed sys admin

The old deal was that labor was losing manufacturing jobs overseas, and theoretically was supposed to be getting hi-tech and service jobs here. It worked. For a while.

Now, even the hi-tech jobs and middle of the road call center type jobs are getting shipped overseas.

And by "shipped" that doesn't mean that there is some sort of simplistic deduction from one column and added to the next one over.

As a recent study comes out shows, the current recession is being driven by a lack of job creation. Where are new jobs being added once demand picks up? You got. Overseas.

It is the reallocation of capital investment and expansion overseas to meet new demand that "loses jobs". It's not the ones they fire. It's where they hire.

Stocking shelves at Wal Mart at minimum wage with no union representation and no healthcare benefits. Yippy skippee....the free market at work. (and I am NOT a diehard union supporter)

Er, why are manufacturing jobs leaving?

Ford, GM, and Daimler-Chrysler compare the offerings however you will – price, quality, styling – and you’ll find that them stinking foreigners are beating US manufacturers fair and square. American management of these outfits is more focused on credit operations, pleasing some perceived interest group, or figgering out their bonuses than on producing exciting vehicles. US manufacturers’ share of the auto market is falling because of inept management.

Motorola has missed the beat again and will have no fancy cell phones to compete with the European or Asian competition this Christmas season.

There still are stellar US manufacturers, but there are a bunch who seem bent on driving themselves out of business.

On the other hand, there are probably factors (primarily manufacturers outsourcing non-manufacturing functions to service companies) that overstate the job loss. If John Deere hires Aramark to run its cafeterias, the same number of folks may be employed at the same hourly rates, but in the stats the transferred positions show up as lost manufacturing jobs and increased service jobs. Ditto for IT or any other non-product function.

What we’re seeing is efficient allocation of capital. What do you want, France?

And what’s the beef with Wal-Mart? Overall it increases efficiencies by forcing competition to get more efficient or die. Consumers can afford to improve their lot because they get a bigger bang for the buck.

Where I live the textile mills are going under, throwing hundreds out of work. Should all US consumers pay more for their clothing to save the mills? Or should the owners re-direct their capital into something where they can get a decent return while competing? Over ten years ago South Carolina saw the mills’ closings as an opportunity to attract manufacturers to an area where a skilled and motivated workforce was located. BMW bit and has proved a boon.

Life is tough - wear a helmet. We certainly don't need central planning; we need smart, rich entrepreneurs.

The Kid,

I agree with much of your last statement.

Nevertheless, I call shenanigans. I am suspecting you actually have nothing to back this up with apart from anecdotal evidence. I say to you, you have no evidence and your belief system is merely religious.

I ask of you, have you studied the free market system, can you tell me if there are other free market systems that start from different axioms than are own? Have you proven that starting from different axioms, you can or cannot reach the same endpoint, more or less as efficiently?

In particular, can you tell me there is no such thing as a free market system that encourages more central planning and less entrepreneurship?

If that is your thesis, than please explain to me, why I, as systems engineer, study of positive and negative feedback systems, analyzer of systems in terms of the mathematical analysis of la place transforms, why the mathematics I have learned is not applicable to the creation of any amount of a central planning organization.

In short sir, you advocate that only a chaotic unpredictable path can lead to the most efficient outcome. This may be, but where is your evidence?

When you say that what we are seeing is the efficient allocation of capital, I again call shenanigans.

Proof! Data! Observables!

To the kid:
Do you think those overseas factories have OSHA, EPA, F.I.C.A. taxes, and other assorted regulations to deal with? If not, do you still think "them stinking foreigners are beating US manufacturers fair and square"? It's not all about us "lazy", "coddled", "overpaid" americans.

I'm waiting for the day when we see C.E.O.s outsourced on a consistent basis. I have a feeling that's when it'll start to be a "problem".

"When the United States was formed in 1776, it took 19 people on the farm to produce enough food for 20 people. So most of the people had to spend their time and efforts on growing food. Today, it's down to 1% or 2% to produce that food. Now just consider the vast amount of supposed unemployment that was produced by that."

-- Milton Friedman

The jobs will come.

Since I work in IT, my first response to the idea of outsourcing was slight concern. But as I think about it, I have to ask "What will all these Indian/Asian/etc. IT workers be doing with all the money they're now making?" Well, the answer is: "Spending it on goods and services!" Some of which will probably be made by the United States. As their opportunities improve, some of these overseas workers may choose careers as programmers rather than as garment workers. I realize this is perhaps an exaggeration, but over time, we could get back some of those manufacturing jobs.

Boo-hoo; all those foreigners taking our jobs. Pity us, the richest country in the world.

You know what, get over yourselves. You voted for OSHA etc.. If that is holding you back, then get rid of those onerous regulations. This world is competitive and the US still wins most of the competition. I feel sorry for anyone who lost their job - but I feel good for the Indian who is now firmly in the middle class because of that job. And he did win that job fair and square. He's charging less for the same service - that's the same reason people go to Walmart - they too are providing the same services for lower prices and beating up the competition fair and square.

What's more, stop buying imported goods!

Look the reason jobs are being outsourced is because it is cheaper. The company can make their product for less, maintain their profit margin, and sell for a lower price. People buy more at a lower price. If you stopped and bought the more expensive American made goods, then the jobs would not go overseas.

If you price yourself out of the market, you have no one to blame but yourself. If you complain about outsourcing but are still buying foreign products, you are contributing to the very same problem you are complaining about.

Sheesh

Girish, spare your sarcasm.

People in other countries don't win work 'fair and square'. For instance, a Russian who wins an outsourced tech job doesn't have to worry about health care costs, because his state takes care of it for him. As an American worker, I have to take health care into account when I compute my desired wages. 'Fair and square'? Hardly.

They have to buy WalMart stuff since on WalMart wages that is all they can afford. They are a self-fulfilling entity of continued indentured servitude work. The more people that work at WalMart the more they have to shop there. You notice you do not see many BMW's lined up in the lot. Those that have the ability to, leave the area immediately.

Interesting points all - and that fits with the growth in the low-wage sector adn the disappearance of jobs in the middle tier.

Something that hasn't been mentioned is the management fad of "Max Weber"-like view of labor. Management has become addicted to MS Project and Powerpoint presentations. As the Columbian Accident Report notes, Powerpoint played a significant role in the loss of important warning signals that management should have caught through its over-distillation of complex concepts into overly-simplified phrases that will fit on a slide.

Management is doing the same thing -reducing American professionals into single line "resources", forgetting the very training and job requirements they demanded upon their hiring. This gets passed up the food change to the point where an IT programmer in Chennai with 2 years of Java at $20/hour looks like a better value than a Silicon Valley IT pro with Java, systems analyst, and RUP experience at $75/hour.

Theoretically companies should suffer from the ignoring of this in-house talent, but the management structure itself prevents conflicting data from reaching the top - making it harder for management to realize that outsourcing has failed.

This makes sense since the anti-Weberian management style witnessed during the Dot.Com boom has gone out of fashion in a reaction to the excesses of that era. However it is an over-reaction. The problem was not with the creativity and productivity of dot.com professionals: it was the mismanagement of companies themselves (losing touch with the bottom line).

In SoCal, many of the jobs lost by the major manufacturers are actually being picked up by the small to medium sized firms (which are largely "mom and pop" type of companies). These are the relatively high skill manufacturing technician jobs -- the low skill stuff is gone and isn't coming back. But there's growth happening in at least one part of the manufacturing sector out here, and it's real because these firms (and the companies that use them as vendors) are coming to us (I work at a community college) saying that they can't find sufficiently skilled workers to fill vacancies and can we help them do something about it. This might be an anomaly, since many of these vendors work with aerospace/defense firms that cannot outsource certain classified system manufacturing overseas. But it's a significant amount of jobs we're talking, and it seems to be happening "under the radar" so to speak.

Laurie K.

You are missing a whole other data point. Walmart is doing more than just creating new jobs. It's business model is about scale and the use of that scale to undercut other retail competition. It is eliminating jobs from its competitors as it grows. I have no idea at what rate but that needs to be part of the calculation.

Americans cannot go on believing that there is one rule for them and another for the rest of the world. If you believe in free trade, then you live with the benefits and the downside adjustments of free trade. If you believe in free markets, then don't complain when oil prices top $30/barrel - that's the free market.

As for outsourcing, look at everyday products. My Motorola wireless handset says "Made in China". If Motorola didn't do it, they would lose market position to Nokia, Samsung, Siemens and a whole host of foreign competitors.

That's what free markets are all about - creative destruction. That's what makes the American economy resilient.

People in other countries don't win work 'fair and square'. For instance, a Russian who wins an outsourced tech job doesn't have to worry about health care costs, because his state takes care of it for him.

His government takes care of it for him, using magic money that grows on trees.

They certainly don't pay for that health care with taxes and fees taken from the workers. Pshaw! That's the "old" way of thinking about the economy, that says that money has to actually come from somewhere.

[... This might be an anomaly, since many of these vendors work with aerospace/defense firms that cannot outsource certain classified system manufacturing overseas. ... ]

Yep, it's called military Keynesianism. Defense spending is the only hope for America's manufacturing.

All others can apply at WalMart or seek work as restaurant workers or private security guards or suchlike in the service sector.

[ In SoCal, many of the jobs lost by the major manufacturers are actually being picked up by the small to medium sized firms (which are largely "mom and pop" type of companies). These are the relatively high skill manufacturing technician jobs -- the low skill stuff is gone and isn't coming back. But there's growth happening in at least one part of the manufacturing sector out here, and it's real because these firms (and the companies that use them as vendors) are coming to us (I work at a community college) saying that they can't find sufficiently skilled workers to fill vacancies and can we help them do something about it. This might be an anomaly, since many of these vendors work with aerospace/defense firms that cannot outsource certain classified system manufacturing overseas. But it's a significant amount of jobs we're talking, and it seems to be happening "under the radar" so to speak.

Laurie K. ]

... Know what needs outsourcing and exposure to the bracing breeze of competition? Tenured perfessers' chairs such as Dr. Drezner's.

Would it be bad manners to ask what stocks the good professor personally holds, in addition to inquiring about his university's portfolio?

It may be that Dr. Drezner et al. aren't disinterested bystanders observing the fortunes of WalMart and other publicly traded firms from the grove of academe on Mt. Olymous.

David,

You're a very bitter individual, but more importantly, you appear to be illiterate.

See the tagline on the upper right-hand part of your computer screen? See the "...all from an untenured perspective" part? That means I don't have tenure.

Will I get tenure? There's a decent chance. But if you think that getting tenure does not involve competition and market forces -- particularly at a place like the University of Chicago -- then you're badly, badly misinformed about the way the academic world works.

I, too, think we'll see a different perspective on outsourcing once they figure out how to do it to middle management. For that matter, Prof. Drezner must hope he gets tenure before they perfect (and it's close) the software that will allow his class to be taught by telecommute from the Econ Dept at the University of Pune.

Protectionism is greedy and heartless. To those of you griping about outsourcing, would you complain about a monopoly gouging you? Would you complain about a company town, in which the workers relied upon the company for everything?

If so, why complain about outsourcing? The emplacement of captive markets, be they in labor, capital, production, etc. destroys wealth. And you protectionists appear to desire a captive market of jobs -- especially reserved for proper thinking Americans, and screw the rest of the world and their relative poverty.

The only way to build a better world is to ensure that the rest of the world gets to participate in open economies. The transition from closed to open economies is painful for all sides concerned. We have a social safety net that, while neither as bountiful nor as unsustainable as many European models, keeps people in better shape than in less developed countries. Our education system, FOR THOSE WHO CHOOSE TO USE IT FOR SOMETHING ECONOMICALLY USEFUL, supports unmatched labor flexibility in this country.

Quit yer belly-aching, and protest foreign barriers to open economies. And while you are at it, protest American farm subsidies. They are killing poor people planet-wide.

MG

[ ... See the tagline on the upper right-hand part of your computer screen? See the "...all from an untenured perspective" part? ]

Sorry Danny, I read only the comments section of your blog. Really. I mean, why bother to read an imitation WSJ editorial?

[ ... But if you think that getting tenure does not involve competition and market forces -- particularly at a place like the University of Chicago -- then you're badly, badly misinformed about the way the academic world works.]

Getting tenure in at a place such as U. Chi. is a contest to see who's the biggest slave, stooge, and sycophant to the departmental party line, which at Chicago is the transcendent truth of neo-classical economics.

There would be more diversity of thought in American humanities and so-social sciences academia if tenure were abolished.

[ ... The only way to build a better world is to ensure that the rest of the world gets to participate in open economies. The transition from closed to open economies is painful for all sides concerned. ... ]

So why don't you free free free marketers demand that China unpeg its currency? A pegged currency is a de facto export subsidy and import on tariffs.

OK, I read the top of Dan's blog. Among other things, it says:

[ ... UPDATE: In September the U.S. economy shed another 17,000 jobs in manufacturing, according to CNN at the horrible cost of creating 74,000 new jobs in services, most of them in the "professional and business services" category. Oh, wait...

posted by Dan on 10.02.03 at 04:47 PM ... ]

To which I reply, oh, wait again:

"... James Glassman, senior U.S. economist at J.P. Morgan Chase Securities in New York, said the revision is equivalent
to about 12,000 fewer jobs a month than originally thought in the March 2002 to March 2003 period. ..."

[Data revision confirms weak U.S. jobs picture

Friday, October 3, 2:47p ET

WASHINGTON, Oct. 3 (Reuters) -- A warning by the U.S.
Labor Department that it expects to revise down past
employment data pours cold water on the view of some
economists who believed the jobs market had been
improving for some time, analysts said on Friday.

Statisticians at the Labor Department said they expect to
revise down U.S. payroll employment by about 145,000
for the March 2003 reference month -- effectively showing
even greater weakness in the sluggish labor market than
previously thought.

The downward adjustment surprised Wall Street, which had
been rife with speculation this week that Labor would adjust
the figures up, bringing payrolls more in line with another
survey which has shown a recent improvement in the job
market.

"The expectation was that this revision would be positive,
that we would be looking at a number in excess of 300,000,"
said Anthony Chan, chief economist at Banc One
Investment Advisors.

An upward revision would have brought the so-called
establishment survey, a poll of businesses that has shown
a loss of 1.0 million jobs since the recession ended in
November 2001, more in line with a smaller household
survey of employment which has shown a 1.4 million job
gain.

Both surveys are part of the department's closely
watched monthly employment report. Markets tend to focus
on the payrolls count from the establishment survey, while
the unemployment rate is derived from the household survey.

The discrepancy between the two surveys has been a hot
topic of late, even though veteran economists believe much
of the discrepancy can be explained away by differences
between the methods used in the two surveys and monthly
volatility.

Chan, who believes the larger establishment survey provides
a more accurate picture of the job market, said the downward
revision douses the argument that Labor was underestimating
the job recovery with its establishment survey.

"That gives more credence to the view that the weakness
in the establishment non-farm payrolls is real," Chan said.

James Glassman, senior U.S. economist at J.P. Morgan Chase Securities in New York, said the revision is equivalent
to about 12,000 fewer jobs a month than originally thought in the March 2002 to March 2003 period.

"Whichever survey you look at, employment has been pretty
flat in the last two years, and there is no mystery why -- the
economy has not grown" fast enough," said Glassman.

Like many economists, he argues the discrepancies between
the two surveys can be largely explained by the different
methods used. Unlike the establishment survey, the household
survey includes farm workers, the self-employed, unpaid family
workers, private household workers, and people on unpaid leave
among the employed, possibly boosting its count.

"When you make adjustments to compare apples to apples,
the differences between the two surveys are really quite small,"
Glassman said.

The so-called "benchmark revision" is an annual exercise
by the Labor Department, designed to adjust historical data
using more exact records that have come in since the
preliminary results were released.

The benchmark change will be instituted when a final
measure of the revision is revealed in February. In the
past, it had taken the department until June to make
the changes.

Labor said the 0.1 percent adjustment this year was
small by historical standards, with benchmark revisions
averaging 0.3 percent in the past 10 years."]

http://www.prudentbear.com/bearschat/bbs_read.asp?mid=143322&tid=143322&fid=1&start=1&sr=1&sb=1&snsa=A#M143322

From Offshore Outsourcing d0n1wag

NEW 10/3/2003 9:58:07 PM


Bush Administration Won't Impede Offshore Outsourcing

http://www.computerworld.com/governmenttopics/government/policy/story/0,10801,85468,00.html?SKC=policy-85468

"All of you IT workers can find exciting new careers in the exploding field of airport security!"

RE: Offshore Outsourcing bluebear

NEW 10/4/2003 1:26:05 AM


There is also a tremendous shortage of $8 an hour house painting jobs, especially in the Winter. Here in the Topekan Mid-West I would say there there are at least 20 jobs for each applicant. That should really be just the ticket for all those ex-IT Software Engineers and Executives to keep paying their $2,000 a month mortgages. What about jobs in the off-shore Industry as American co-ordinators or Seminar consultants. This is sure an exciting country to plan your future in.

RE: There's plenty of jobs... maxb3535

NEW 10/4/2003 9:16:05 AM


Plenty of jobs in IT jobs in India

The really disturbing thing about all of this is how many CEO's/VP's/Anal-ysts keep saying this is good for America. I fail to see how anything positive can come from shipping jobs overseas on a permanent basis. These jobs are never coming back.

RE: Good for THEIR America !! ...nm MountainBiker

NEW 10/4/2003 10:25:10 AM

RE: There's plenty of jobs... bluebear

NEW 10/4/2003 4:35:04 PM


What I dislike also is the clandistine nature of it. Until recently, the subject of 'off-shoring', and phoney H1-B arguement was taboo, (could next years's election have anything to do with it ?). The logical end result of all this is that we shut down all the Engineering and Computer Departments, and replace them with Mud-Jacking, and House-Painting degrees. What kind of a future is this ?

That's from the PrudentBear.com chat room, a website I visit every day. I only click on Dr. Drezer's site when the mighty Instapundit gives it a link and an mention.

Prof. Reynolds is big on self employment and neo-cottage industries as the cure for corporate downsizing in America:

Meanwhile, here's an interesting bit on the growth in self-employment, with a striking graph. This seems to fit with what I wrote here. It also fits with what Dan Pink says in Free Agent Nation, about which I'll be writing more at some point.

UPDATE: Here's something else interesting on outsourcing.

Message to Instapundit: the alleged self-employment boom is mostly bunk. Everyone outside the woozy, la-la land grove of academe knows that a self-employed consultant working from his home office is actually a poor unemployed dude desperate for work.

Likewise for the former corporate woman who has started her own catering business or graphic arts business. They're even worse, cuz they want me to buy something from 'em. It's sad.

Yeah, sure, a lot of people will claim to be self-employed if they are surveyed. The soi-disant self-employed probably cause a lot of the gap between the US gov.'s household and business employment surveys.

But describing oneself as self-employed is not the same as making a living from self-employment. Free Agent Nation = to proud to tell the truth.

... If self-employment is such a hot idea, why don't more academicians try it?

Very well said David, thank you.

Good morning, friends, plutocrats, and apologists for great wealth!

Here's a Wal-Mart job anecdote:

... A single mother, Summers most regrets the impact the loss her $18.67-an-hour job has had on her 21-year-old daughter, who was away at college studying nursing when the pink slip came. She now works at Wal-Mart to pay for her part-time studies at Wichita's local community college.

"That's one dream you're always saying -- 'My child is going to go to college'," lamented Summers. "All my American dreams just seem to (have been) written on a pink slip." ...

http://www.prudentbear.com/bearschat/bbs_read.asp?mid=143407&tid=143382&fid=1&start=1&sr=1&sb=1&snsa=A#M143407

RE: Job report..a country built on lies and fraud 123bear

NEW 10/5/2003 12:51:35 AM


NY TImes - October 5, 2003

A Missing Statistic: U.S. Jobs That Went Overseas

By LOUIS UCHITELLE

The job market finally showed some life in September, but not enough to sidetrack a growing debate over why employment has failed to rebound nearly two years after the last recession ended. The debate intrudes increasingly on election politics, but in all the heated back and forth, an essential statistic is missing: the number of jobs that would exist in the United States today if so many had not escaped abroad.

The Labor Department, in its numerous surveys of employers and employees, has never tried to calculate this trade-off. But the "offshoring" of work has become so noticeable lately that experts in the private sector are now trying to quantify it.

By these initial estimates, at least 15 percent of the 2.81 million jobs lost in America since the decline began have reappeared overseas. Productivity improvements at home — sustaining output with fewer workers — account for the great bulk of the job loss. But the estimates being made suggest that the work sent overseas has been enough to raise the unemployment rate by four-tenths of a percentage point or more, to the present 6.1 percent.

That leakage fuels the political debate. The Bush administration is pushing the Chinese to allow their currency to rise in value, thus increasing the dollar value of wages in that country, a deterrent to locating work abroad. The Democrats agree, but some also call for trade restrictions, and they attack Republicans for cutting from the budget funds to retrain and support laid-off workers in the United States.

While most of the lost jobs are in manufacturing or in telephone call centers, lately the work sent abroad has climbed way up the skills ladder to include workers like aeronautical engineers, software designers and stock analysts as China, Russia and India, with big stocks of educated workers, merge rapidly into the global labor market.

"All of a sudden you have a huge influx of skilled people; that is a very disruptive process," said Craig R. Barrett, chief executive of Intel, the computer chip manufacturer.

Intel itself has maintained a fairly steady 60 percent of its employees in the United States. But in the past year or so, it has added 1,000 software engineers in China and India, doing work that in the past might have been done by people hired in the United States. "To be competitive, we have to move up the skill chain overseas," Mr. Barrett said.

The trade-off in jobs is not one for one. The work done here by one person often requires two or three less-efficient workers overseas. Even so, given the very low wages, the total saving for an American company can be as much 50 percent for each job shifted, even allowing for the extra cost of transportation, communication and other expenses that would not be needed if the work was done in the United States. That is the message of the nation's management consultants, who are encouraging their corporate clients to take advantage of the multiplying opportunities overseas.

" 'Encourage' is a difficult way to put it," said Harold Sirkin, a senior vice president at the Boston Consulting Group. "What we are basically saying is that if your competitors are doing this, you will be at a disadvantage if you don't do it too."

The estimates of job loss from offshoring are all over the lot. They are back-of-the-envelope calculations at best, inferred from trade data and assumptions about the number of American workers needed to produce goods and services now coming from abroad, or no longer exported to a growing consumer market in, say, China.

Among economists and researchers, the high-end estimate comes from Mark Zandi, chief economist at Economy.com, who calculates that 995,000 jobs have been lost overseas since the last recession began in March 2001. That is 35 percent of the total decline in employment since then. While most of the loss is in manufacturing, about 15 percent is among college-trained professionals.

Boeing, for example, employs engineers at a design center in Moscow, while having shrunk its engineering staff in Seattle. Morgan Stanley, the investment firm, is adding jobs in Bombay, but not in New York — employing Indian engineers as well as analysts who collect corporate data and scrutinize balance sheets for stock market specialists in New York.

Near the low end of the job-loss estimates sit John McCarthy, research analyst at Forrester Research Inc., and Nariman Behravesh, chief economist at Global Insights. For them the loss is 500,000 to 600,000 jobs over the past 30 months, again mostly in manufacturing — with Mr. McCarthy suggesting that the 600,000 might turn out to be 800,000. His research focuses more on the future: Starting in January 2000 and running through 2015, globalization of American production will have eliminated 3.3 million jobs at home, he estimates.

Some are trying niche estimates. Roshi Sood, a government analyst at the Gartner Group, for example, estimates roughly that state government cutbacks have pushed overseas the work of 3,400 people once employed in the United States, either on public payrolls or on the payrolls of companies that contract with state government.

In Indiana, for example, the Department of Workforce Development recently chose an Indian company, TCS America, to maintain and update its computer programs, using high-speed telecommunications to carry out the contract. The TCS bid was $8 million below those submitted by two American competitors, Mr. Sood said.

Now political groups are offering estimates. The Progressive Policy Institute, which is affiliated with the Democratic Party, will soon publish its calculation of manufacturing jobs shifted overseas since George W. Bush took office just before the recession began, said Rob Atkinson, a vice president. Not surprisingly, the estimate — imputed from trade data — is on the high side: 800,000 jobs lost to overseas production.

RE: Job report..a country built on lies and fraud 123bear

NEW 10/5/2003 12:52:23 AM


Factory Closures Devastate U.S. Towns

Reuters - Saturday October 4, 3:42 PM EDT

By Andrea Hopkins

WASHINGTON (Reuters) - When Jerry Wilmouth moved to Galesburg, Illinois, five years ago, everyone told him to get a job at Maytag Corp.'s (MYG) refrigerator plant. Maytag paid the best, they said, and the 50-year-old factory was the lifeblood of the city.

Now, Wilmouth and 379 others are spending their first week of life after Maytag -- the first of 1,600 workers to be laid off between now and the end of 2004, when the plant closes for good and Maytag moves the work to Mexico.

The 46-year-old father of three said he has little hope of finding work in Galesburg to match the $15 an hour he made on the assembly line, and now his 17-year-old daughter is thinking about joining the army to pay for college.

"Every decent-paying job in the area is going, going or already gone and I'm faced with taking a job for $6, $7, $8 an hour," said Wilmouth.

The loss of 2.5 million manufacturing jobs since January 2001 has devastated factory towns across middle America, where once-dominant local employers are pulling up stakes and heading to Mexico or Asia in search of lower costs and cheaper labor.

The exodus of 1,600 Maytag jobs is only the tip of the iceberg in Galesburg. Everyone from sheet metal suppliers to local firms providing toilet paper and light bulbs rely on the plant for business in the town of about 33,700 about 150 miles southwest of Chicago

According to a study by the Institute for Rural Affairs at Western Illinois University, the Maytag plant is the dominant industry for nine surrounding counties. For every Maytag worker laid off, nearly three other jobs will disappear as the loss of so many high-paying jobs ripples through the economy -- taking total jobs losses to 4,166.

"Never in my life have I lived in a place that is sort of going backwards like this," said Chris Merrett, an associate professor at the institute.

"Along with agriculture, this kind of manufacturing was the economic base and those jobs are going elsewhere."

PINK SLIP DREAMS

Since the end of the 2001 U.S. recession, job losses have ballooned in many sectors despite economic growth. This "jobless recovery" has drained one in six factory jobs, squeezing many of the nation's more highly paid workers.

Manufacturing pays an average $45,580 in annual wages -- about 17 percent higher than the average U.S. job, according to the National Association of Manufacturers.

The layoffs have carved a swath of unemployment through the Midwest, where cornfields made way for factories after World War II as industry shifted from big cities to comparatively low-cost rural areas.

In Wichita, Kansas, some 11,000 aerospace workers have lost their jobs since 2001 as employers outsourced both parts supply and assembly overseas, sideswiping the local economy.

Carolyn Summers, a 41-year-old mother of two was laid off from her job at Boeing Co.'s Witchita plant (BA) two years ago, and she mourns the devastation she has seen.

"I see so many people that I worked with at Boeing, and they're still unemployed just as I am," said Summers. She blames free trade and President Bush for allowing U.S. companies to outsource overseas.

"I wish the government would really see what it is doing to the American people. We built this country, and I feel that they're letting it turn into almost a ghost town," she said.

A single mother, Summers most regrets the impact the loss her $18.67-an-hour job has had on her 21-year-old daughter, who was away at college studying nursing when the pink slip came. She now works at Wal-Mart to pay for her part-time studies at Wichita's local community college.

Is there a limit to the comparative advantage afforded by better worker productivity? What does it matter if an American worker is as productive and efficient as two or maybe more foreign workers doing the same job, when it's cheaper to hire two or more foreigners?

... The work done here by one person often requires two or three less-efficient workers overseas. Even so, given the very low wages, the total saving for an American company can be as much 50 percent for each job shifted, even allowing for the extra cost of transportation, communication and other expenses that would not be needed if the work was done in the United States. ...

Can the productivity of American workers be further improved? Probably.

Can the productivity of foreign workers also improve? Yes, so who is going to win the worker productivity battle?