The Red Pill

Not only are we having a jobless recovery, but many of the job losses are permanent. However, rather than being due to U.S. economic policy, it is a worldwide situation. This is an excerpt from an email list from InvestorsInsight.com.
THE ECONOMY, STOCKS & THE OTHER GARY HALBERT

by Gary D. Halbert
October 21, 2003Over the past two years, the media has continually told us that the roughly two million factory jobs that have been lost in the US were due to companies moving production offshore. Meanwhile, our soaring trade deficit means that Americans are consuming more foreign products than ever before. All of this would suggest that while US employment has declined over the last two years, foreign employment should be soaring. Not so, according to a new study.

The investment house Alliance Bernstein recently studied employment trends in the world’s 20 wealthiest nations, and some interesting findings emerged. Most importantly, the study found that the loss of factory jobs has been just as bad overseas as it has in the US.

According to the Labor Department, the US has lost 1.95 million factory jobs, apprx. 11.2% of our total factory workforce, since 1996 at the peak. During the same period, the 20 wealthiest nations – including China and Mexico - lost 22 million factory jobs, also apprx. 11% of their total factory workforce.

Manufacturers around the world have learned to do things better, cheaper and with fewer workers. How? Productivity has soared by over 30% during the same period that factory jobs fell by 11%. This is largely due to the quantum leap in technology in recent years.

While this is bad news for those who have lost their jobs, it is good news in the long-run. Higher productivity means cheaper goods, and better ones. Workers who have skills and education will see more opportunities, not less.

The point is, the media would have us believe that the loss of US jobs is almost entirely due to US manufacturers moving production offshore. While that is true in some cases, the employment trends are affecting almost all of the wealthiest nations. The technology revolution is to blame in the short-run, but it will be a good thing in the long-run.