Thursday, March 3, 2016

Bloomberg News' Paula Dwyer Misreads The U.S. Jobs Picture - Big Time!

Bloomberg News' Paula Dwyer exemplifies the Neoliberal's warped perceptions on the state of labor and the economy. She claims in a recent piece ('What Trump, Sanders Don't Get') that the "forces holding back the economy are structural and internal" as opposed to arising from globalization and its wholesale betrayal of indigenous  labor in favor of cheap external labor. This has been the case since NAFTA and CAFTA and will be reinforced with TPP passage.

People under the WTO-GATT- CAFTA- NAFTA etc. hegemony were thereby rendered pawns and serfs to global capital. (See e.g., William Greider, 'One World Ready Or Not - The Manic Logic of Global Capitalism', 1996). Greider makes clear the millions of American jobs dispatched to low wage nations overseas not only hollowed out our industrial cities and eliminated living wages but created a vast service sector for which the pay can't meet basic living obligations (rent, utilities, insurance etc.). 

Given a choice between paying an American college-educated person $45,000/ yr.  starting salary - with benefits tossed in -  and an Indian from Delhi only half that and zero benefits, what do you think the big cheese in a global company is going to do? With no penalties for sending jobs to Indians (i.e. a tax surcharge of 10% on every job dispensed there) that's where the jobs will go, the lowest priced, least regulated markets!

Dwyer claims that workers - young and old - are "abandoning the work force" and this is responsible for the current low unemployment rate of 4.9%. This is mostly flat wrong.  As reported in the Feb 22 WSJ: How Older Women Are Reshaping the U.S. Job Market

"a wave of older American women are working or seeking work longer, and more than any previous generation as they look ahead to more years of life than men their age and with less accumulated wealth."


"Since the start of the most recent recession in December 2007, the share of older working women has grown while the percentage of every other category of U.S. worker—by gender and age—has declined or is flat. In 1992, one in 12 women worked past age 65. That number is now around one in seven. By 2024, it will grow to almost one in five, or about 6.3 million workers, according to Labor Department projections."

So, in other words, Dwyer's claim of a uniform American worker "abandonment" of the job market is plain poppycock. In addition, older workers in general are keeping the jobs they have as well as taking new ones. Why? The WSJ again:

“As older workers keep a tight grip on their jobs, the proportion of Americans ages 25 to 54 who are working or looking for work has slipped to the lowest level in three decades. Many of these younger Americans fell out of the labor force in the recession: Some retired or enrolled in school. Others weren’t able to work or had to care for relatives at home. Many gave up looking.
Economists are closely studying what happens in the U.S. and abroad as workers stay on the job years past their expected retirement age."


"Older men and women are leaving the workforce more slowly than in the past, suggesting a greater potential labor supply—and more slack—than an unemployment rate below 5% would typically imply. Such economic slack must be cinched—by finding jobs for discouraged younger workers, for example—before wages can rise more broadly."

Why does this economic "slack" exist? It isn't simply because the workers don't want jobs but because the job eligible population (mainly Millennials) has been increasing by nearly 220,000 a month every year since 2005. Unless jobs are created at this labor population eligible rate then there will be "slack" and a growing labor surplus. This stuff isn't rocket science and it's incredible a Bloomberg News person wouldn't be aware of that. Consider then the months in the Bush administration where there was in fact negative job growth - jobs lost, not added - and you have another contributory factor to labor slack.

In terms of lack of adequate job creation, well it's because employers, corporations refuse to invest the money, the capital they have to launch jobs. They are instead using the money to buy back shares.
The WSJ's Greg Ip recently (Jan. 29)  observed that since 2009, U.S. firms - entrenched in their own myopic interests- boosted capital investment by only 43%, dividends by 67% and stock buybacks by a whopping 194%. This according to Jason Thomas of Carlyle Group. In addition, rather than investing in new plants for new jobs, businesses have squandered $2 trillion on mergers and acquisitions - a third more than the previous annual record in 2006. This is what has directly led to a distortion in the economy and the failure to grow more decent paying jobs.

The reality is American business has become self-invested, self-gratified and fat off its own capital and no longer willing to invest in the American worker. Put succinctly, people (younger ones) have ceased looking for jobs because they simply aren't there - not of the numbers and quality needed for them to advance or even afford basic food and rent in most cities (like Denver where one needs a $150,000/ yr. salary just to qualify to own a new home and rents start at $1900/mo.).  It makes more sense for them to seek disability and bail out entirely with nothing forthcoming - or just live with mom and pop.

This then exposes Dwyer's blame game as misplaced i.e. "improved living standards require economic growth and one way to achieve that is more people producing more goods and services"

But that only applies if companies, corporations are more interested in investing in the production of those goods and services - by investing in more plant and labor - than in stock buybacks and mergers.

That is not happening. Nor will her solution of "bringing in more immigrants" solve the problem because again, it is not that there is a dearth of workers but a dearth of decent paying jobs. Thus, the slower growth is not a result of too few workers but too few jobs produced by the corporate sector which would rather sit on its capital..  The worry about immigrants "taking away jobs" is also misplaced because most of the jobs immigrants take are in agriculture and landscaping. As for tech jobs, most of those - including customer service - were long ago dispatched to Bangalore and Delhi.

Dwyer asserts that "the only other way to increase living standards is for workers to increase their output" but this also is bogus. The untold truth is that is that productivity in relation to GDP has increased more than 40% in the interval since 1973 even as wages-salaries have remained almost stagnant. Of course, one major reason is how "greater productivity" is now attained. Often by firing a number of workers ("downsizing" or "rightsizing")  and ditching their benefits, and making the remaining force do their work plus that of the downsized ones. OR- tossing out 80% of a workforce and replacing them all with automation.

As for living standards, she appears to be unaware that enhanced productivity isn't going to get it done. Northwestern University economist Robert Gordon has chronicled the history of America's heyday and argued that advances in our living standards between 1870 and 1970 aren't likely to be repeated. A lot of this has to do with the fact that in that interval growth reflected a sweeping series of innovations from indoor plumbing, to air conditioning, refrigeration. Gordon sees little evidence that similar innovations (i.e. of analogous magnitude) will emerge to deliver gains on the same scale.

Then again, there is the retreating, diminishing EROEI of petroleum - meaning that it now requires much more effort to extract energy to drive our energy-intense civilization and it is nowhere as cheap as it used to be  - and getting dearer (never mind the temporary oil glut that has driven oil prices down,) See e.g.

Dwyer in her Neoliberal myopia addressed none of these, nor did she even appear to be aware of them.

Bottom line, if people, so called economists and other media experts,  wish to see the labor participation rate increase then they need to find a way to spur aggregate demand via corporations investing in new jobs. Produce the jobs and then they - the workers - will come.

This is the real "megatrend" affecting society but alas, it's one Ms. Dwyer is totally blind to, so eager is she to blame workers-citizens as well as Sanders and Trump for erroneous perceptions of our rigged economy.

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