Plain as Day: The Labor Market Recovery is Non-Existent

The single most accurate indicator of labor-market health is the employment-to-population ratio.

Unfortunately for the United States, it’s not looking any good … and it hasn’t for over two years.

People say a picture is worth a thousand words.  In this case, a chart is worth many more.

[Actually, it would be nice if this chart got all of the politicians to stop blubbering away with their thousands of words, and instead take some time to truly ponder what the data is telling us!]

Employment-to-Population Ratio
Can politicians cut the B.S. and focus instead on what this chart is telling them? Don’t hold your breath.

Over-Hyping the “Made in China” Situation?

Made in China ... as threatening as we think?“Made in China” aren’t the most welcome-sounding words to American workers these days. Many of us believe that the plethora of goods it manufactures means the People’s Republic of China is grabbing scads of U.S. jobs as well.

Recent reports about Apple’s scads of assembly facilities in China only add fuel to fiery debate … and at least one presidential candidate is making the loss of manufacturing jobs a key component of his campaign rhetoric.

So I was surprised to read the findings of an analysis performed by economists Galina Borisova Hale and Bart Hobijn which contends that goods and services from China accounted for only ~2.7% of personal consumption expenditures in the United States in 2010.

What’s more, less than half of that amount reflected the actual cost of Chinese imports. The remainder went to American businesses and employees transporting and selling the products carrying the “Made in China” mark.

The report, which draws on data published by the Bureau of Economic Analysis, U.S. Census Bureau, the Bureau of Labor Statistics and other sources, states that total U.S. imports in 2010 amounted to about 16% of total Gross Domestic Product.

More specifically, imports from China amounted to ~2.5% of GDP. Moreover, nearly 90% of consumer spending in the United States during 2010 was on American-generated products and services.

Of course, services – which comprise about two-thirds of total spending – are mainly produced locally. And when we consider items like automobiles and electronics, the picture is different: One-third of U.S. consumption on durables goes for goods that are made outside the country.

It’s not hard to guess which products are the ones most likely to be imported from China; they’re primarily electronics, furniture, clothing and shoes. Offshore sourcing is most pronounced in apparel and shoes, where more than 35% of U.S. purchases in these categories were of items labeled “Made in China.”

No wonder so many clothing mills in America have gone the way of the dodo bird.

Without dismissing the impact of overseas manufacturing on manufacturing jobs in the United States, the broader statistics suggest that any long-term drop in American manufacturing employment is due to more factors than merely Chinese labor competition. Undoubtedly, advanced manufacturing technology and productivity gains per worker have a lot to do with it as well.

It looks like the “Made in China” debate may be another example of how the issues and challenges we face in the world are rarely ones of “black and white” … but rather “shades of gray.”

The Fortunes of the Fortune 500

Global Business:  28% of the 500 largest multinational companies are U.S.-based.Time was when the United States accounted for the largest contingent of the Fortune 500 global companies. Not so anymore. According to stats reported recently by international business expert Ted Fishman in USA Today, only about one-fourth of the 500 largest global enterprises are based in the U.S.

And those that remain on the list aren’t behaving particularly “American,” either. This group of ~140 companies has eliminated nearly 3 American million jobs since 2000.

Is that a consequence of the recent global recession? Hardly … the same companies added ~2.4 million jobs overseas during the same period.

The particulars behind each company’s employment choices are varied, of course. But certain factors seem to come up often in the analysis, including:

 Gaining closer geographic proximity to the world’s fastest-growing economies such as India, China and other Far Eastern countries.

 The availability of workforces that are “cheaper” to hire and require fewer employee benefits.

 A relatively unattractive U.S. corporate tax rate compared to other countries – hard to believe, but America’s 35% top corporate rate is eclipsed only by Japan’s (39.5%).Going forward, it would be nice if America’s largest corporate entities could be more sensitive to the need for additional investment here at home. Then again, it would be equally gratifying if government adopted policies of lower tax rates and easing regulations to make business growth and job creation in America easier.

The truth is, both parties will continue to pursue their own self-motivated interests, which is only natural.

The problem is, it’s a lopsided game. With a big wide world out there, the multinationals have a host of options at their disposal … and thus hold the winning cards. Tax laws and new regulations can be put on the books time and again, but the multinational crowd continues to float above it all, seemingly unaffected by anything – at least not to any great extent.

Meanwhile, U.S. small business gets hammered.