- The Washington Times - Thursday, September 9, 2004

August was the 34th month of disappointing job growth. A mere 120,000 private sector payroll jobs were created in August, the Bureau of Labor Statistics reports.

Continuing the Third World transformation of the U.S. labor force established by the Bush recovery, the new payroll jobs are concentrated in domestic nontradable services.

Health care and social assistance account for 42,000 of new jobs. Employment services and temporary help provided work for 18,000, as did financial services. Construction added 15,000 workers to payrolls. These four payroll classifications account for 78 percent of last month’s net new jobs. Manufacturing jobs increased by 22,000, leaving the economy with a net loss of 2.7 million manufacturing jobs since George W. Bush was sworn in as president.

Today’s economy has 4,000 fewer jobs in architectural and engineering services and 200,000 fewer jobs in computer systems design and related areas than in January 2001.

America’s continuing decline as a manufacturing power is further evidenced by a decline in total manufacturing hours worked during almost three years of economic recovery — a first, according to MBG Information Services’ Charles McMillion.

Mr. McMillion notes total hours worked for all nonsupervisory jobs have not risen over the economic recovery. In contrast, past recoveries saw hours worked grow 5 to 12 percent.

Let’s get real: Neither employment growth nor increased consumer income is driving the current recovery. July’s rise in personal spending was financed by a drop in the savings rate to 0.6 percent of disposable income.

Face it: The current recovery has been driven by the Federal Reserve’s low interest rates, which have pushed up housing prices, allowing people to refinance their homes and spend their home equity. Households and government are loaded with debt.

At least the Census Bureau is not in denial. According to a recent report, the number of Americans living in poverty increased by 1.3 million during 2003. Americans without health insurance rose by 1.4 million to 45 million.

It’s a fact: Americans are not prospering. When U.S. companies locate manufacturing abroad, where costs are lower, and outsource high value-added jobs to foreigners hired for less, foreigners, executives and shareholders gain income at the expense of the U.S. labor force.

Stagnant U.S. real income growth results from loss of career occupations to outsourcing, forcing many Americans into less remunerative employment, while executive pay explodes.

Standard & Poor’s reports 2003 median earnings growth for the Fortune 500 largest companies was 9.6 percent, but median pay for Fortune 500 chief executive officers rose 22 percent. Prosperity only for the few undermines Americans’ political tolerance for the rich, especially when upward mobility ladders are lost to outsourcing and offshore production.

According to William McDonough, chairman of the Accounting Oversight Board, in the bad old days of President Reagan’s “trickle-down economics,” “the average Fortune 500 CEO made 40 times more than the average person who worked for him. … By 2000, it was between 400 and 500 times, and last year I believe it was about 530 times.” Pity the policymaker who tries to make a case for across-the-board tax cuts in the face of such politically explosive economic inequality.

Nothing can better revive the political left than loss of good American jobs to foreigners while executive pay skyrockets — particularly if the two are closely related. One might expect conservative “free market” economists to be alarmed. Instead, they either turn a deaf ear or shoot the messenger.

Recently, Steve Roach, chief economist at Morgan Stanley, wrote: “Economists, market strategists and even analysts are all too often becoming identified with a political cause; that is a disturbing development — it has the potential to compromise credibility and leave investors without the security of independent advice.”

Mr. Roach could just as well have said politicization of economic analysis leaves presidents and legislatures with no awareness of the true consequences of their actions. “You are with us or against us” means no market for independent thought and no hearing for independent advice.

Paul Craig Roberts is a nationally syndicated columnist.

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