- The US continues its descent into the Third World, but
you would never know it from news reports of the Bureau of Labor Statistics'
July payroll jobs release.
- The media gives a bare bones jobs report that is misleading.
The public heard that 207,000 jobs were created in July. If not a reassuring
figure, at least it is not a disturbing one. On the surface things look
to be pretty much OK. It is when you look into the composition of these
jobs that the concern arises.
- Of the new jobs, 26,000 (about 13%) are tax-supported
government jobs. That leaves 181,000 private sector jobs. Of these private
sector jobs, 177,000, or 98%, are in the domestic service sector.
- Here is the breakdown of the major categories:
- * 30,000 food servers and bar tenders;
- * 28,000 health care and social assistance:
- * 12,000 real estate;
- * 6,000 credit intermediation;
- * 8,000 transit and ground passenger transportation;
- * 50,000 retail trade; and
- * 8,000 wholesale trade.
- (There were 7,000 construction jobs, most of which were
filled by Mexicans immigrants.)
- Not a single one of these jobs produces a tradable good
or service that can be exported or serve as an import substitute to help
reduce the massive and growing US trade deficit. The US economy is employing
people to sell things, to move people around, and to serve them fast food
and alcoholic beverages. The items may have an American brand name, but
they are mainly made off shore. For example, 70% of Wal-Mart's goods are
made in China.
- Where are the jobs for the 65,000 engineers the US graduates
each year? Where are the jobs for the physics, chemistry, and math majors?
Who needs a university degree to wait tables and serve drinks, to build
houses, to work as hospital orderlies, bus drivers, and sales clerks?
- In the 21st century job growth in the US economy has
consistently reflected that of a Third World country--low productivity
domestic services jobs. This goes on month after month and no one catches
on--least of all the economists and the policymakers.
- Economists assume that every high productivity, high
paying job that is shipped out of the country is a net gain for America.
We are getting things cheaper, they say. Perhaps, for a while, until the
dollar goes. What the cheaper goods argument overlooks are the reductions
in the productivity and pay of employed Americans and in the manufacturing,
technical, and scientific capability of the US economy.
- What is the point of higher education when the job opportunities
in the economy do not require it?
- These questions are too difficult for economists, politicians,
and newscasters. Instead, we hear that "last month the US economy
created 207,000 jobs."
- Television has an inexhaustible supply of optimistic
- Last weekend CNN had John Rutledge (erroneously billed
as the person who drafted President Reagan's economic program) explaining
that the strength of the US economy was "mom and pop businesses."
The college student with whom I was watching the program broke out laughing.
- What mom and pop businesses? Everything that used to
be mom and pop businesses has been replaced with chains and discount retailers.
Auto parts stores are chains, pharmacies are chains, restaurants are chains.
Wal-Mart, Home Depot, and Lowes, have destroyed hardware stores, clothing
stores, appliance stores, building supply stores, gardening shops, whatever--you
- Just try starting a small business today. Most gasoline
station/convenience stores seem to be the property of immigrant ethnic
groups who acquired them with the aid of a taxpayer-financed US government
- Today a mom and pop business is a cleaning service that
employs Mexicans, a pool service, a lawn service, or a limo service.
- In recent years the US economy has been kept afloat by
low interest rates. The low interest rates have fueled a real estate boom.
As housing prices rise, people refinance their mortgages, take equity out
of their homes and spend the money, thus keeping the consumer economy going.
- The massive American trade and budget deficits are covered
by the willingness of Asian countries, principally Japan and China, to
hold US government bonds and to continue to acquire ownership of America's
real assets in exchange for their penetration of US markets.
- This game will not go on forever. When it stops, what
is left to drive the US economy?
- Paul Craig Roberts has held a number of academic appointments
and has contributed to numerous scholarly publications. He served as Assistant
Secretary of the Treasury in the Reagan administration. His graduate economics
education was at the University of Virginia, the University of California
at Berkeley, and Oxford University. He is coauthor of The Tyranny of Good
Intentions.He can be reached at: firstname.lastname@example.org