For a number of years I reported on the monthly nonfarm payroll jobs data. The data did not support the praises economists were singing to the “New Economy.” The “New Economy” consisted, allegedly, of financial services, innovation, and high-tech services.
This economy was taking the place of the old “dirty fingernail” economy of industry and manufacturing. Education would retrain the workforce, and we would move on to a higher level of prosperity.
Time after time I reported that there was no sign of the “New Economy” jobs, but that the old economy jobs were disappearing. The only net new jobs were in lowly paid domestic services such as waitresses and bartenders, retail clerks, health care and social assistance (mainly ambulatory health care services), and, before the bubble burst, construction.
The facts, issued monthly by the US Bureau of Labor Statistics, had no impact on the ”New Economy” propaganda. Economists continued to wax eloquently about how globalism was a boon for our future.
The millions of unemployed today are blamed on the popped real estate bubble and the subprime derivative financial crisis. However, the US economy has been losing jobs for a decade. As manufacturing, information technology, software engineering, research, development, and tradable professional services have been moved offshore, the American middle class has shriveled. The ladders of upward mobility that made American an “opportunity society” have been dismantled.
The wage and salary cost savings obtained by giving Americans’ jobs to Chinese and Indians have enriched corporate CEOs, shareholders, and Wall Street at the expense of the middle class and America’s consumer economy.
The loss of middle class jobs and incomes was covered up for years by the expansion of consumer debt to substitute for the lack of income growth. Americans refinanced their homes and spent the equity, and they maxed out their credit cards.
Consumer debt expansion has run its course, and there is no possibility of continuing to drive the economy with additions to consumer debt.
Economists and policymakers continue to ignore the fact that all employment in tradable goods and services can be moved offshore (or filled by foreigners brought in on H-1b and L-1 visas). The only replacement jobs are in nontradable domestic services, that is, those jobs that require “hands-on” activity, such as ambulatory health services, barbers, cleaning services, waitresses and bartenders–jobs that describe the labor force of a third world country. Even many of these jobs are now filed with foreigners brought in on R-1 type visas from Russia, Ukraine, Thailand, Romania, and elsewhere.
The loss of American jobs and the compression of consumer income by low wages has removed consumer demand as the driving force of the economy. This is the reason expansionary monetary and fiscal policies are having no effect.
The latest jobs report issued today shows that America’s transformation into a third world economy continues. The economy lost 95,000 jobs in September, mainly due to cuts in local education and federal employment. Part of the loss of 159,000 government jobs was offset by 64,000 new private sector jobs.
Where are the new jobs? They are in nontradable lowly paid domestic services: 32,000 were in health care and social services, and 33,900 were in food services and drinking places.
There you have it. That is America’s “New Economy.”
Over 20 years ago I went into the Information Technology field primarily because *everyone* was saying that this was the work of the future for Americans: as in “get into this field and you won’t have to worry about employment ever”. Corporations, the business press, the U.S. government, school guidance counselors… EVERYONE was saying this. *Even today* publications like the Wall Street Journal and US News & World Report are printing things along these lines (although now it’s usually followed by a hundred user comments telling them that they’re idiots for printing it).
Well, as of 2010 an American practically has to be a graduate of MIT or Stamford – or a Mensa genius – to get and keep a software engineering/computer programming job at a middle class salary. Most new jobs are either being offshored or are taken by Indians on H-1B and L-1 visas. Indians on H-1B visas have also been put into a large number of IT management positions. Due to the huge new supply of workers that has been opened up by unfettered globalization, power in the employer/employee relationship is now almost totally in the employers’ hands. Every worker is an expendable commodity: and as such this has become one of the most dead-end careers out there.
In the end, I blame Congress. They are the body that is supposed to check capitalism when it goes too far. Through greed and/or through a delusion that this unfettered globalization would somehow “raise all boats”, Congress has given U.S. manufacturing over to China on a silver platter, and similarly with India and IT.
@US Software Engineer is about the software field. I have given up on a legislative solution to this problem. Maybe we need to try a judicial solution instead?
Any hungry lawyers out there looking to make a percentage of BILLIONS?
Pursuing the following idea would even be socially useful, not like those lawyers you read about suing companies for having an expired patent number printed on their products.
Improving the U.S. education system, while a laudable goal, does NOT fix this problem. There are a million or more un-or-under employed engineers and IT people that are already very well educated.
A better fix would be for someone to initiate a class-action lawsuit challenging the constitutionality of the H1B visa under the 13th Amendment to the U.S. Constitution (the amendment that freed the slaves).
An H1B employee is “out of status” if they are laid off, and is required to leave the country immediately. There is no statutory “grace period”.
This gives an employer the power to threaten an employee with IMMEDIATE DEPORTATION. The employer is not, of course, directly ordering the deportation, they are merely making the employee subject to immediate deportation by the U.S. government.
In United States v. Kozminski, 487 U.S. 931 ( 198 ), the Supreme Court of the United States ruled that the Thirteenth Amendment circumscribed involuntary servitude to be limited to those situations when the master subjects the servant to:
1. threatened or actual physical force,
2. threatened or actual state-imposed legal coercion or
3. fraud or deceit where the servant is a minor, an immigrant or mentally incompetent.
The federal anti-slavery statutes were updated in the Trafficking Victims Protection Act of 2000, P.L. 106-386, which expanded the federal statutes’ coverage to cases in which victims are enslaved through psychological, as well as physical, coercion.
Being put “out of status”, subject to immediate deportation, is a form of “threatened or actual state-imposed LEGAL COERCION”.
If you dig through the libraries, you’ll find there were similar claims 30 years ago, 40 years ago, 50 years ago, 60 years ago…
In 1900 many Americans were making good middle-class livings as farm laborers. In the 1940s Americans were making a good middle-class living as construction laborers, then as machinists and other manufacturing workers.
They were saying that, yes, those agricultural, construction, manufacturing jobs are going away, but science, engineering, and then computer wrangling were going to take their place, and since there was a “turrrrrible talent shortage” in the cutting edge field of the day, as long as you engaged in continuous learning, and worked those 30 hour shifts and 60 and 80 hour weeks, you were set for life… and they gave out lots of attaboys, right up to the day the floor was ripped out from under you.
When asked what people with these cutting-edge skills and knowledge should do next, Alan Greenspan said he didn’t know, but made the stupid remark that maybe we should take some introductory juco class we’re actually capable of teaching blind-folded.
We already have had a surplus of unemployed US citizen Mensa genii for the last couple decades, thankyouverymuch, just as we have even longer had a surplus of capable manufacturing, construction and farm workers.
And what’s with all the anti-Semitic blather in your head-lines down the side?
In the short term the US education problems will not have an immediate effect.
However, this is a short, medium and long term issues and the US MUST focus more resources on the required Higher Education issues pertaining to the decline of Americas education system (our future workers and leaders)
If we do, then we might have a chance of securing an innovative, educated and talented work force in the future. US graduate levels have declined from number 1 to number 9 in the world. That is a HUGE decrease and it is likely to keep decreasing which only worsens the overall problem.
Until then we have no option to rely on Globally talented and educated workers to help us. The fact is that many have the required education and experience to help our Companies get back on their feet and grow Now. Otherwise US companies will just keep offshoring – you do the math and figure what is most detrimental to our economy in the short term and to the future of our great Country in the long term.
When we say that there are many unemployed US workers – do these workers actually qualify to the high levels required to obtain an H1B visa ? – NO, the fact is over 80% of ‘unemployed America’ does NOT qualify to those high levels and standards. And in tough times Companies want and need the best of the best to help them (wherever they come from), not just employ unemployed workers for the simple reason that they are American.
All of the currently-unemployed software engineers that had to train their H1B replacements (or do without their severance package) are already fully educated, and yet still unemployed. Improving the US education system is a great goal and ought to be done, but it is NOT the solution to THIS problem of lack of jobs.
“””Where are the new jobs? They are in nontradable lowly paid domestic services: 32,000 were in health care and social services, and 33,900 were in food services and drinking places.
There you have it. That is America’s “New Economy.”””””
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so true …so true
@ Steve “When we say that there are many unemployed US workers – do these workers actually qualify to the high levels required to obtain an H1B visa ?”
Steve, you may not know this, but the only level needed to obtain an H1B visa is a bachelor’s degree from just about anywhere. Or even “equivalent experience” I believe. And it helps if you know another H-1B already in the U.S. who will recommend you to his boss. And in high volume years having luck in the “H-1B lottery” helps too.
What if someday it dawns on us that losing over 5,000 American military personnel in the Middle East since 9/11 is not a fair trade-off for the loss of nearly 3,000 American citizens, no matter how many Iraqi, Pakistani, and Afghan people are killed or displaced?
Video: http://www.youtube.com/watch?v=E2k7xXxdUJ0