Global markets, technology mean slower job growth
Politicians, from President Barack Obama on down, talk about creating jobs. But politicians cannot create jobs, at least not jobs outside of government. And beyond the limitation of government to create jobs, there are some characteristics of today’s job market that make this recovery more difficult.
While unemployment remains stubbornly high, there are reasons jobs are not quickly returning, even if some statistics say the recession is over.
One troubling fact, which emerged earlier this month in a federal report, found that more jobs are being created in foreign countries by U.S.-based companies than here at home. It’s simply because of weak demand in the United States and stronger demand overseas.
Another troubling fact in the jobs report is that the jobs being created overseas are higher-skill and higher-wage jobs. The old image of low-wage foreign workers making T-shirts is being replaced by skilled foreign workers producing high-end electronics and software.
Many U.S.-based multinational companies are shrinking the size of their domestic workforce while at the same time increasing the number of employees in foreign countries where the growth is expected.
The conditions that have caused weak consumer demand in the U.S. are not expected to change quickly, with consumers properly being more cautious about credit card debt and paying down home mortgages. And the savings rate in the U.S. is rising, which is good in the long run, but hurts U.S. economic recovery in the shorter term.
Because nearly two-thirds of the U.S. economy depends on consumer spending, still-weak demand means that better job figures are not coming soon.
Another factor hurting the job market is technology. This trend has been going on for decades, but is important to understand.
Many functions that decades ago were handled by a person are now handled by computers and software programs.
Internet commerce eliminates people in stores. Ubiquitous ATM machines have slashed bank teller jobs. Accounting and order-processing departments have shrunk as computers handle more and more work. Even steel mills, such as AK Steel’s operations in Butler, produce more steel with fewer workers, thanks to technological advances.
Since technological advances usually help improve company profits by reducing labor costs, this trend will continue.
Because technology has eliminated some jobs forever, new industries are needed to produce new jobs. A national industrial policy should be developed to boost job creation, possibly through promotion of exports and tax breaks for U.S.-based manufacturing jobs.
Energy technology could be one of the new fields that creates new jobs to replace the ones lost to technology. Though controversial, so-called green energy technologies and products do represent a new market that could grow as global economic growth, particularly in China and India, increases demand and prices for conventional, mostly fossil, fuels.
Another area for possible emphasis in boosting domestic employment is infrastructure. Gov. Ed Rendell has pushed this plan, arguing it’s a matter of the U.S. keeping up with foreign competitors. It’s also worth noting that the jobs created — building roads, bridges, railroads and light-rail systems — cannot be shipped overseas.
So, a massive investment in the United States’ infrastructure could boost domestic employment while also updating the nation’s aging transportation, energy and information systems, making the country more efficient and competitive in the global marketplace.
Obama’s goal to double U.S. exports in five years could help employment in manufacturing, since actual products, and not services, are involved. Tied to this, Congress could do more, through the tax code and other methods, to promote the creation of well-paying manufacturing jobs in the United States.
Hopes of a quick employment recovery are unrealistic. Technological advances and the competitive global economy have created a new landscape, which requires new approaches to job creation.