April 20, 2011

The American Workplace and the Shift from Manufacturing to a Service Economy: Manufacturing Employs 9.1% of the U.S. Workforce While the Service Industry Employs 83.4% (in Other Words, Service Companies Employ Almost 85% of the Workforce)

It was in the 1990s that American multinationals, spurred by government policy, began outsourcing operations to China. At the same time, the Clinton administration steadily relaxed antitrust enforcement, leading to massive corporate consolidation and the creation of the virtual firm. By the early parts of the last decade, the ideal American multinational made its profits by using its market power to gut labor and supply prices and by using its political power to eliminate taxation. All of this turned giant American institutions against making things. US corporate leaders now see the idea of making things as a cost of doing business, one best left to others. What has happened as a result is that much of the production for critical products and services that make our economy run is constructed by a patchwork global network of suppliers all over the world in unstable regions, over which we have very little control. An accident or political problem in any number of countries may deny us not just iPhones but food, medicine or critical machinery. - Matt Stoller, How America Could Collapse, The Nation, August 11, 2011

It is becoming very, very difficult to live a middle class lifestyle if you do not work for the government. More than 40 percent of Americans who actually are employed are now working in service jobs in the private sector, which are often very low paying. So the tables have turned: the private sector now works to service the public sector, the last great source of middle class.

Manufacturing employment as a share of total employment in the United States has been declining over the past 60 years. In 1950, nearly 31% of nonfarm workers were employed in manufacturing. Since then, the share has been dropping three or four percentage points per decade, falling to 28.4% in 1960, 25.1% in 1970, 20.7% in 1980, 16.2% in 1990, 13.1% in 2000, and 9.1% in 2009. Even with this downward trend in manufacturing’s share of jobs, employment in manufacturing has on average been fairly stable over the past 60 years, averaging a decline of –0.1% per year. In contrast, the growth of nonfarm employment averaged 1.9% per year, and this led to the reduction in manufacturing’s share of jobs. - William Strauss, Is U.S. Manufacturing Disappearing?, Federal Reserve Bank of Chicago, August 19, 2010

Big U.S. Firms Shift Hiring Abroad

Work Forces Shrink at Home, Sharpening Debate on Economic Impact of Globalization

By David Wessel, Wall Street Journal Commentary
April 18, 2011

U.S. multinational corporations, the big brand-name companies that employ a fifth of all American workers, have been hiring abroad while cutting back at home, sharpening the debate over globalization's effect on the U.S. economy. [They are also using cheap prison labor rather than high paid union workers (see article below)].

The companies cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million, new data from the U.S. Commerce Department show. That's a big switch from the 1990s, when they added jobs everywhere [see graph below].

The data … underscore the vulnerability of the U.S. economy, particularly at a time when unemployment is high and wages aren't rising. Jobs at multinationals tend to pay above-average wages and, for decades, sustained the American middle class. …

While small, young companies are vital to U.S. economic growth, big multinationals remain a major force. A report by McKinsey Global Institute … estimates that multinationals account for 23% of the nation's private-sector output and 48% of its exports of goods.

These companies are more exposed to global competition than many smaller ones, but also more capable of taking advantage of globalization by shifting production, and thus can be a harbinger of things to come.

With Jobs Czar under Fire, New Data Confirm Offshoring Trend by Multinational Corporations

The Lookout
April 19, 2011

In January, the White House appointed Jeff Immelt (pictured), the CEO of GE, as its "jobs czar," charged with finding solutions to America's unemployment crisis. Three months later, despite some positive signs, employment rates have barely budged, Americans are more pessimistic about the economy than they've been in a while--and Immelt is under fire amid news that GE reportedly paid no taxes this year.

And some new jobs data may not help things. The Wall Street Journal reports (sub. req.) that during the last decade U.S. multinationals reduced their domestic workforce by 2.9 million, according to Commerce Department figures. During the same period, those same companies increased their overseas workforce by 2.4 million. (Here's a chart that nicely lays it out.) As recently as the 1990s, things were different: Multinationals were adding jobs both domestically and overseas.

Worse, Immelt's own company may be a case study for the shift. As we've reported, the number of workers employed by GE in the United States fell from around 162,000 in 2000 to 134,000 in 2009.

When President Obama named Immelt to chair the President's Council on Jobs and Competitiveness, he said the GE leader "understands what it takes for America to compete in the global economy."

But some observers have expressed frustration at what they see as the White House's complacency on jobs. Last month, Christina Romer, the former chair of the White House Council of Economic Advisors, publicly slammed the Obama administration for what she called "shameful" inaction.

A coalition of progressive groups led by Russ Feingold, the former Democratic senator from Wisconsin, recently seized on the news of no taxes from GE to launch a campaign aimed at ousting Immelt from the jobs czar post.

U.S. multinationals are a crucial player in the economy. They employ about 20 percent of all American workers, and, according to the McKinsey Global Institute, account for 23 percent of the country's private-sector output. Since they're more exposed to global trends, they often point the way toward where the economy is going.

35 Facts About the Gutting of America’s Industrial Might that Should Make You Very Angry

The Economic Collapse Blog
November 17, 2011

Did you know that an average of 23 manufacturing facilities were shut down every single day in the United States last year? As World War II ended, the United States emerged as the greatest industrial power that the world has ever seen. But now America's industrial might is being gutted like a fish and both political parties seem totally unconcerned.

Yes, we will always need trading relationships that are fair and balanced with other countries that have economic systems that are similar to our own. However, the truth is that most of our trading relationships are neither "fair" nor balanced.

For example, China manipulates currency rates so that Chinese products are much cheaper than they should be, they brazenly steal our technology and we let them get away with it, they deeply subsidize their most important industries and they exploit their citizens by allowing them to be paid slave labor wages.

How in the world does that resemble the "free market" at work? Predatory nations such as China do everything that they can to distort the free market. So why in the world would any rational economist ever recommend that we should keep trading with other countries that are cheating us blind?

After you read the facts in this article about the gutting of America's industrial might, hopefully you will get very angry. We need the American people to start getting very upset about these very important issues.

Both major political parties promised us that globalization would be wonderful for the U.S. economy. Well, in the first decade of this century less net jobs were created than in any other decade since the Great Depression.

The "free trade" polices of the globalists have been an abysmal failure. Tens of thousands of factories, millions of jobs, and hundreds of billions of dollars of our national wealth have gone to countries that engage in predatory trade practices and that exploit slave labor pools.

How in the world are American workers supposed to compete against workers that make less than a dollar an hour (with no benefits) on the other side of the globe?

If you support the version of "free trade" that most of our politicians are promoting, then you are supporting the one world economic system that the global elite are trying to establish. In this one world economic system, American workers will increasingly be forced to compete for jobs with the cheapest labor on the planet. This will continue to force the standard of living of American workers way, way down and it will continue to absolutely destroy the middle class.

The following are 35 facts about the gutting of America's industrial might that should make you very angry....

#1 According to U.S. Representative Betty Sutton, America has lost an average of 15 manufacturing facilities a day over the last 10 years.

#2 Sadly, it looks like this trend is picking up momentum. During 2010, an average of 23 manufacturing facilities a day were shut down in the United States.

#3 Since 2001, the U.S. has lost a total of more than 56,000 manufacturing facilities.

#4 According to the Economic Policy Institute, the U.S. economy loses approximately 9,000 jobs for every $1 billion of goods that are imported from overseas.

#5 The United States has had a negative trade balance every single year since 1976, and since that time the United States has run a total trade deficit of more than 7.5 trillion dollars with the rest of the world.

#6 Back in 1979, there were 19.5 million manufacturing jobs in the United States. Today, there are 11.6 million. That represents a decline of 40 percent during a time period when our overall population experienced tremendous growth.

#7 Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

#8 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of all jobs in the United States are manufacturing jobs.

#9 The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

#10 The Economic Policy Institute says that since 2001 America has lost approximately 2.8 million jobs due to our trade deficit with China alone.

#11 All over the United States, road and bridge projects are being outsourced to Chinese firms. Just check out the following excerpt from a recent ABC News article....
In New York there is a $400 million renovation project on the Alexander Hamilton Bridge.
In California, there is a $7.2 billion project to rebuild the Bay Bridge connecting San Francisco and Oakland.
In Alaska, there is a proposal for a $190 million bridge project.
These projects sound like steps in the right direction, but much of the work is going to Chinese government-owned firms.
"When we subsidize jobs in China, we're not creating any wealth in the United States," said Scott Paul, executive director for the Alliance for American Manufacturing.
#12 If you can believe it, the United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

#13 The U.S. trade deficit with China rose to an all-time record of 273.1 billion dollars in 2010. This is the largest trade deficit that one nation has had with another nation in the history of the world.

#14 The U.S. trade deficit with China in 2010 was 27 times larger than it was back in 1990.

#15 The new World Trade Center tower is going to be made with imported glass from China and imported steel from Germany.

#16 The new MLK memorial on the National Mall was made in China.

#17 Do you remember when the United States was the dominant manufacturer of automobiles and trucks on the globe? Well, in 2010 the U.S. ran a trade deficit in automobiles, trucks and parts of $110 billion.

#18 In 2010, South Korea exported 12 times as many automobiles, trucks and parts to us as we exported to them.

#19 Even in high technology products we are being destroyed. In 2002, the United States had a trade deficit in "advanced technology products" of $16 billion with the rest of the world. In 2010, that number skyrocketed to $82 billion.

#20 China has now become the world's largest exporter of high technology products.

#21 Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China's share had soared to 20 percent.

#22 Manufacturing employment in the U.S. computer industry was actually lower in 2010 than it was in 1975.

#23 In 2008, 1.2 billion cellphones were sold worldwide. So how many of them were manufactured inside the United States? Zero.

#24 The United States now has 10 percent fewer "middle class jobs" than it did just ten years ago.

#25 Today, American workers are bringing home a much smaller share of economic pie. Over the past decade, the ratio of wages to GDP has been declining very steadily.

#26 Now that millions of our jobs have been exported, there aren't nearly enough jobs left for all of us. Right now, the average amount of time that a worker stays unemployed in the United States is approximately 39 weeks.

#27 There are fewer payroll jobs in the United States today than there were back in 2000 even though we have added 30 million extra people to the population since then.

#28 If you gathered together all of the workers that are "officially" unemployed in the United States today, they would constitute the 68th largest country in the world.

#29 According to one study, between 1969 and 2009 the median wages earned by American men between the ages of 30 and 50 dropped by 27 percent after you account for inflation.

#30 As the number of good paying jobs declines, America's middle class is rapidly shrinking. In 1970, 65 percent of all Americans lived in "middle class neighborhoods". By 2007, only 44 percent of all Americans lived in "middle class neighborhoods".

#31 In the United States today, corporate profits are at a record high, and yet employment numbers have still not rebounded. Obviously something is structurally wrong.

#32 The Obama administration says that there are certain things that "we don't want to make in America" anymore. If you don't believe this, just check out what U.S. Trade Representative Ron Kirk recently told Tim Robertson of the Huffington Post about the Obama administration's attitude toward keeping manufacturing jobs in America....
Let's increase our competitiveness... the reality is about half of our imports, our trade deficit is because of how much oil [we import], so you take that out of the equation, you look at what percentage of it are things that frankly, we don't want to make in America, you know, cheaper products, low-skill jobs that frankly college kids that are graduating from, you know, UC Cal and Hastings [don't want], but what we do want is to capture those next generation jobs and build on our investments in our young people, our education infrastructure.
#33 Jeffrey Immelt, the head of Barack Obama's highly touted "Jobs Council", has shipped tens of thousands of good jobs out of the United States.

#34 According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent offshore over the next two decades.

#35 One recent poll found that 41 percent of all Americans believe that "the American Dream has been lost".
Yes, it is fun to go out and fill up our shopping carts with "cheap products" from the other side of the world, but when we do that it destroys our jobs, our businesses and our communities.

Our addiction to cheap foreign products is incredibly self-destructive. Essentially what we are doing is that we are ripping apart pieces of our own home and throwing them into the fire in an attempt to keep it going. Eventually we will cannibalize our entire home.

And we never really think about what it is like for the slave laborers that make all these cheap products for us. The following is from an article in the Telegraph about what conditions at one major Chinese manufacturing facility are like....
So far, at least 16 people have jumped from high buildings at the factory so far this year, with 12 deaths. A further 20 people were stopped by the company before they could attempt to kill themselves.
The hysteria at Longhua, where between 300,000 and 400,000 employees eat, work and sleep, has grown to such a pitch that workers have twisted Foxconn’s Chinese name so that it now sounds like: “Run to your Death”.
If we stay on this current path, even more of our formerly great manufacturing cities will turn into post-industrial hellholes.

Once upon a time, I also bought the "free trade" propaganda hook, line and sinker. But then I opened up my mind and I learned the truth.

This nation is losing jobs, factories and wealth at a pace that is almost unbelievable.

Something desperately needs to be done.

Is there anyone out there that is willing to defend the emerging one world economic system that is stealing our jobs and killing the middle class?

If so, I challenge you to take your best shot. Leave a comment below and explain to the rest of us why we are wrong.

We need to debate these issues because the myth of "free trade" is absolutely killing us.

Please wake up and get angry about these issues America.

Manufacturing Left Because of the Big Bad U.S. Government

By Dick Destiny

“Surveys of college graduates are finding that more and more of our top minds want to work for the government,” the man writes. “Why? Because in recent years only government agencies have been hiring …”

Everyone’s going for the security. They don’t want to work for the private sector where they can be fired because it’s cheaper to use foreign labor — except for security work or weapons manufacturing.

In any case, we ran this economist’s graph on hiring by the government a number of weeks ago:

For the past eleven years the vast majority of federal government hiring has been in homeland security.

The WSJ piece, which I suppose you should read, does not make any mention that American big business — like GE — is fine with making weapons with US workers, because the government and, by extension the taxpayer, pays for it. There’s no talk of firing ‘underperformers’.

However, manufacturing of non-military goods by the same company? That’s another matter entirely.
“Sadly, we could end up with a generation of Americans who want to work at the Department of Motor Vehicles,” concludes Moore.
It’s their cowardliness, he implies. They don’t want to work for the private sector, which isn’t hiring anyone except those who are willing to work at jobs that don’t earn a middle class living, because they might get fired.

It’s an unusual argument. But it fits with the Ayn Rand-ian thing that you’re a weakling if you can’t make it as a millionaire or billionaire in corporate America. Ted Nugent spouts it all the time. The fired, the underemployed, government workers, unionized teachers — every manjack of them inferior.

More Students Seek Public Sector Work

If you’re looking for job security, benefits, and a decent salary, consider working for the federal government. President Obama’s stimulus plan will create 200,000 new jobs over the next three years. Monster has a good overview of stimulus jobs, including who's hiring, where the jobs will be, and the types of jobs available. - Alison Doyle, Stimulus Jobs: Alison's Job Searching Blog, About.com Guide to Job Searching, March 25, 2009

April 5, 2011

College graduates are increasingly looking for degree paths to prepare them for public sector work, but the end of federal stimulus funds is putting those positions in jeopardy.

The number of college graduates working for the federal government increased 16 percent from 2008 to 2009, according to an analysis of the American Community Survey from the U.S. Census Bureau. Employment in nonprofit organizations also increased by 11 percent during the same time period.

Brint Milward, director of the School of Government and Public Policy, said the number of students interested in majors that prepare them for positions in the public sector has risen since the school's split from the Eller College of Management in April 2009.

Milward said that the number of public administration undergraduates has increased by more than 200 in the last two years, from 305 to more than 500 today, and the number of political science majors has also increased from 900 to 1,200. The number of graduate students working toward a master's in public administration almost doubled over the same time period, from close to 50 two years ago to 96 today.
"There's no doubt that more people are asking for the major," Milward said. "Whether there are more opportunities, I don't know."
According to Bill Ruggirello, assistant director of UA Career Services, more private sector companies tend to try and reach out to students via career fairs.
"We have a couple of government types that come (to career fairs), but it in no way compares to the private groups," he said.
Ruggirello does not know yet if this trend continued this year. The annual career services survey to determine where students received employment will occur two weeks before graduation for students and about a month or two after graduation for employers.

He said that the job market has tightened in both the public and private sectors during the last couple of years, a factor Milward also addressed.
"The numbers sound right," he said in reference to the survey. "But it is important to note that, that is looking backward, not forward."
Out of the top five employers in Southern Arizona, four either are public sector companies or private companies that derive revenue from public funds. Raytheon is Southern Arizona's largest employer, followed by three public sector companies: the University of Arizona, the state of Arizona and Davis-Monthan Air Force Base.

The college class of 2011 is going into a job market with a starting salary higher than its recent predecessors, according to the National Association of Colleges and Employers, a Pennsylvania-based nonprofit that connects career service departments to employers,.
"The Southern Arizona economy is dominated by the public sector," Milward said. "Would I rather work for the parks departments or work at Dillard's? I don't know. I've worked in universities and government and I thoroughly enjoyed it, but I think it depends on that individual."
Milward said federal stimulus funds, which allowed local governments to retain workers in the last two years, will soon end and that will affect whether or not those same public sector opportunities will still be available.
"It's really striking to see how the public sector employs Arizonans," he said, "but demand in the market going forward, that's a little hard to predict."

Labor’s Decline Means Trouble for Workers

United Federation of Teachers
October 5, 2006

As labor unions have decreased in size and influence, American workers lost tremendous ground:
  • 90 percent of Americans have lost real income since 1973
  • 47 million — 16 percent of the population — have no health insurance
  • 50 percent have no retirement security
  • The top 1 percent of the population owns 75 percent of the wealth
  • No developed nation has a wider gap between rich and poor
Even big, highly profitable employers now offer minimal employee benefits. The percentage of Americans with job-based health insurance has steadily declined from 63.6 in 2000 to 59.5 percent in 2005, even as health-insurance premiums rose at double-digit annual rates. Even profitable companies whose pension plans are in good financial shape — DuPont, Verizon and IBM to name a few — are slashing pension benefits.

The UFT and other public-employee unions are going to find it harder and harder to win public sympathy in their contract battles if their wages and benefits are better than those of most workers in private employ.

The labor movement’s decline has had a serious impact on community standards and public policy as well. In states where few workers are unionized, more people live in poverty, households earn less money, and more people have no health insurance. In these weak union states, governments spend less on education, unemployment insurance and workers’ compensation.

Why the link? Because in places where unions are strong, working people have a political voice.

The ongoing decline in union membership is making it tougher for the labor movement to execute a successful political program. Even when most union households vote for the worker-friendly candidate, their votes can’t swing elections simply because not enough people belong to union households. Consider the results of the 2005 presidential election, when labor had its best get-out-the-vote effort in a generation. John Kerry beat George Bush among union members by 32 percent, but he lost overall by 3 percent.

The current rate of organizing in this country is not even remotely close enough to reverse the decline in union membership. To catch up to where we were in 1981 at the time of Ronald Reagan’s defeat of the air traffic controllers’ strike, we would need to organize 10.7 million workers...

Teachers’ unions are a particularly choice target of anti-union forces since more than 80 percent of the nation’s more than 4 million teachers belongs to unions, making teaching the most highly unionized sector of the work force. The Bush administration seized upon Hurricane Katrina to reopen most of New Orleans public schools as non-unionized charter schools. And the Detroit teachers union made $63 million in concessions in September in the settlement that ended their 16-day strike...

Socialism, Communism and the New World Order

Freedom and initiative are being replaced by ever higher taxation, regulation and centralization of power in Washington. Our economy is now stagnant and our standard of living is declining. Each year government takes a bigger share of our earnings, employs more and more of our people, enacts more rules that strangle our economy, and controls more and more of our lives. In the enjoyment of plenty, have Americans lost the memory of freedom? When citizens are willing to sacrifice their liberty for security, they will have neither liberty nor security and will soon find themselves living under tyranny. [Ellen Sauerbrey, The Spark That Has Triggered Rebellion, American Thinker, September 13, 2009]

We have become a nation of consumers rather than producers, and now the only true source of middle class is government employment. Yet the government does not create a traditional sellable product and thus produces no revenue outside of what it collects from taxpayers. So how can America survive without producers? And how can America produce anything when manufacturing jobs are being shipped overseas?

Perhaps it's time to nationalize everything so that Socialism doesn't just benefit the 25% employed directly by the public sector. This is what the financial oligarchy have in mind with the corporate state. However, once this happens, no one will have the good life except the elitists. Take Cuba, for example:

According to Barack Obama's Tax Plan:

When government mandates prices that are artificially low, it causes a transfer of wealth
out of the country. To see evidence of this, simply look at the communist nation of Cuba.
Though Cuba is communist, the difference between socialism and communism is that a socialist society is only about economic monopolies, whereas a communist society is about economic and political monopolies.
Since the communist revolution in Cuba in 1959, the country has seen a progressive economic downturn. Without the influx of money from the Soviet Union to bolster its economic, it has seen class equality achieved — everyone in Cuba (except for the ruling class) is poor.
Here is what Socialism has brought to Cuba:
  • Production is run by the government and the labor force is run by the state.

  • Capital investment is restricted and requires approval by the government. This ensures a lack of private sector jobs and economic competition.

  • The Cuban government sets most prices and rations goods to citizens.

  • Any firm wishing to hire a Cuban must pay the Cuban government, which in turn will pay the company’s employee in Cuban pesos.

  • Preferential treatment exists for the ruling class of the Communist party, which get luxuries average citizens do not, such as access to transportation, work, housing, university education and better health care.

  • Starting in the late 1980s the Soviet subsidies for Cuba’s state-run economy started to dry up. Before the collapse of the Soviet Union, Cuba depended on Moscow for sheltered markets for its exports and substantial aid. The Soviets had been paying above-market prices for Cuban sugar, while providing Cuba with petroleum at below-market prices. The removal of these subsidies sent the Cuban economy into a rapid depression known in Cuba as the Special Period.

  • Since 1959 Cuba has experienced slow growth in its Gross Domestic Product relative to other countries that were in a similar situation in the 1950s, stagnant trade, and amassed a significant debt amounting to some $16.62 billion in convertible currency and $15 to $20 billion dollars with Russia

  • Cuban citizens themselves have experienced a decrease in their caloric intake and a shortage of housing since 1959.

  • For some time now, Cuba has been experiencing a housing shortage because of the state’s failure to keep pace with increasing demand.

  • Food is rationed to Cuban citizens and state salaries are failing to meet personal needs of its citizens under the state rationing system chronically plagued with shortages.

  • As the variety and amount of rationed goods available declined, Cubans increasingly turned to the black market to obtain basic food, clothing, household, and health amenities.

  • There have been mass exoduses of Cuban citizens to the United States in an effort to achieve economic prosperity, causing a decline in productivity, innovation, and wealth creation in Cuba — not to mention a shrinking work-force, which contributes to the government’s failure to meet production demand.
And this is just the most recent example of how a government-run monopoly can wreck the economy. Keep in mind, this all started when Castro had his government seize the wealth and property of his country’s rich and wealthy, and took over the utilities and financial institutions.

Government Jobs: The New Path to the Middle Class

Don’t think that federal jobs are safe from the same forces that shipped America’s good factory jobs overseas. For the last decade there has been a push to “privatize” federal jobs; that is, to make federal workers compete for their jobs with contractors. On its face, that competition might strike you as fair when, in practice it is anything but fair and those private companies looking to take over Federal jobs quickly learned how to “play” the system. Only the owners of the companies who take over federal jobs get rich—and the owners of these companies come from the same 5% of the population that owns 80% of the wealth of our country! They blanket Capitol Hill with lobbyists and buy our political system right out from under the working people of this country.

TMG Books - Are Federal Jobs The Factory Jobs of the Future?

It used to be that unionized factory jobs were the best path to the middle-class in America. Factory jobs, union factory jobs in particular, afforded the workers a good wage, health insurance, and a defined-benefit retirement plan—all three being the foundation of a middle-class lifestyle.

Most of those jobs no longer exist and in the economy of 2010, as I write this, the workers displaced by when a factory closes and their jobs being shipped overseas are slowly losing their grip on the middle-class because they are unable to find a job offering those same benefits. This is a tragedy, really.

And factory jobs are not coming back. America is making the transition from an economy where we built things to a service economy. The downside of that is that service jobs are most often not as good as a union factory job in terms of pay and benefits. And they are not the path to the middle class.

A job with Uncle Sam does provide all the pay and benefits of a factory job. In fact, Federal jobs pay more than comparable jobs in the private sector.

But don’t think that Federal jobs are safe from the same forces that shipped America’s good factory jobs overseas. For the last decade there has been a push to “privatize” Federal jobs; that is, to make Federal workers compete for their jobs with contractors.

On its face, that competition might strike you as fair when, in practice it is anything but fair and those private companies looking to take over Federal jobs quickly learned how to “play” the system. Every Federal job contracted out is one more path to the middle-class lost!

Only the owners of the companies who take over Federal jobs get rich—and the owners of these companies come from the same 5% of the population that owns 80% of the wealth of our country! They blanket Capitol Hill with lobbyists and buy our political system right out from under the working people of this country.

Federal contractors are taking over government jobs from which they are rightly prohibited. The government is even using mercenaries to fight our wars! The military is still a path to the middle-class for many Americans, it was for me, but even that is being robbed from our future generations.

Military personnel used to cook foods for the front-line soldiers and military mechanics once kept vehicles running in the motor pools; those are just two examples of good Federal jobs that have been taken over by contractors. And the truth is that the companies who assumed took those jobs from our young men and women are not doing it for less: They are not saving the American taxpayer a dime!

And what they are costing us are good jobs!

But for the time being, the Federal government does employ over two-million Americans. These are great jobs and each one represents an opportunity for the employee to achieve and maintain a middle-class lifestyle.

Federal employment is the factory floor of the future. And just like unions once fought to maintain the dignity of the American worker, every Federal employee and citizen of the United States who sees the value of having a strong and growing middle-class in our country must fight to keep Federal jobs for Federal employees.

Either that or there will be no path to the middle-class left in America!

The American Workplace - The Shift to a Service Economy

At the conclusion of World War II, manufacturing accounted for 38% of nonfarm employment compared to the service industries, which accounted for 10%. In 1955, the proportion of manufacturing jobs was 30.6% of all nonfarm jobs; however, since the 1970s the American economy has moved away from producing goods to providing services. Although the number of workers in manufacturing remained roughly the same from 1970 through 2000, since then the sector has experienced a steady decline. As of 2005, the proportion of manufacturing jobs had fallen to 10.7% of all nonfarm jobs. In contrast, the service-providing industries accounted for 83.4% of nonfarm employment in 2005 (federal, state, and local government jobs accounted for 19.5% of the total service-providing jobs in 2005, but this doesn't account for the government's hidden workforce, which would bring it closer to 25% or more).


According to researcher Joseph R. Meisenheimer II ("The Services Industry in the 'Good' Versus 'Bad' Jobs Debate," Monthly Labor Review, February 1998), the American economy has undergone a fundamental shift since the conclusion of World War II, at which time service industries accounted for 10% of nonfarm employment, compared with 38% for manufacturing.

Since the 1970s the American economy has moved away from producing goods to providing services, and the service-producing sector has accounted for an increasing proportion of workers. In 1970, for example, there were 48.8 million service-providing workers, and 22.2 million people in the goods-producing sector, representing a service-to-goods ratio of 2.2 to one. (See Table 2.2.)

By 2000, the number of workers in the service-providing sector was 107.1 million, compared with 24.6 million in the goods-producing sector, representing a service-to-goods ratio of 4.4 to one. In 2005, according to preliminary statistics compiled by the Bureau of Labor Statistics and published in Establishment Data Historical Employment (2005), workers who provided services (111.5 million) outnumbered workers who produced goods (22.1 million) by a ratio of five to one.

Employment status of the civilian noninstitutional population, 1940–2005
[Numbers in thousands]
Year Civilian noninstitutional population Civilian labor force Not in labor force
Total Percent of population Employed Unemployed
Total Percent of population Agriculture Nonagricultural industries Number Percent of labor force
*Not strictly comparable with data for prior years.
SOURCE: "Table 1. Employment Status of the Civilian Noninstitutional Population, 1940 to Date," in Current Population Survey, U.S. Department of Labor, Bureau of Labor Statistics, January 2006, http://www.bls.gov/cps/cpsaat1.pdf (accessed March 21, 2006)
1990* 189,164 125,840 66.5 118,793 62.8 3,223 115,570 7,047 5.6 63,324
1991 190,925 126,346 66.2 117,718 61.7 3,269 114,449 8,628 6.8 64,578
1992 192,805 128,105 66.4 118,492 61.5 3,247 115,245 9,613 7.5 64,700
1993 194,838 129,200 66.3 120,259 61.7 3,115 117,144 8,940 6.9 65,638
1994* 196,814 131,056 66.6 123,060 62.5 3,409 119,651 7,996 6.1 65,758
1995 198,584 132,304 66.6 124,900 62.9 3,440 121,460 7,404 5.6 66,280
1996 200,591 133,943 66.8 126,708 63.2 3,443 123,264 7,236 5.4 66,647
1997* 203,133 136,297 67.1 129,558 63.8 3,399 126,159 6,739 4.9 66,836
1998* 205,220 137,673 67.1 131,463 64.1 3,378 128,085 6,210 4.5 67,547
1999* 207,753 139,368 67.1 133,488 64.3 3,281 130,207 5,880 4.2 68,385

2000* 212,577 142,583 67.1 136,891 64.4 2,464 134,427 5,692 4.0 69,994
2001 215,092 143,734 66.8 136,933 63.7 2,299 134,635 6,801 4.7 71,359
2002 217,570 144,863 66.6 136,485 62.7 2,311 134,174 8,378 5.8 72,707
2003* 221,168 146,510 66.2 137,736 62.3 2,275 135,461 8,774 6.0 74,658
2004* 223,357 147,401 66.0 139,252 62.3 2,232 137,020 8,149 5.5 75,956
2005* 226,082 149,320 66.0 141,730 62.7 2,197 139,532 7,591 5.1 76,762

From 1992 to 2005, construction was the only industry in the goods-producing area that consistently employed more workers each year (4.6 million in 1992, 7.2 million in 2005). The number of employees working in natural resources and mining has fallen significantly in the past two decades. From a fifty-year industry high of 1.2 million workers in 1981, the natural resources and mining sector decreased to 629,000 people in 2005.

The number of workers in manufacturing remained roughly the same from 1970 (17.8 million workers) through 2000 (17.3 million workers). Since then, however, this sector has experienced a steady decline. In 2005, according to Establishment Data Historical Employment, 14.3 million people worked in manufacturing. The proportion of manufacturing jobs has fallen from 30.6% of all nonfarm jobs in 1955 to 10.7% in 2005. In contrast, the service-providing industries accounted for 83.4% of nonfarm employment in 2005. (See Table 2.2.)

Service-producing industries include jobs in transportation, wholesale and retail trade, services, finance, public service (government), and more. Within the service-producing industry, service industry jobs are found in legal services, hotels, health services, educational services, and social services, among others. However, all jobs within the service industry are not necessarily service occupations. For example, while hotels are part of the services industry within the service-producing sector, they not only employ workers who are in service occupations, but also secretaries, managers, and accountants whose occupations are not considered service occupations.

The largest category of service-providing jobs is found in the group of trade, transportation, and utilities occupations (23.1% in 2005). Federal, state, and local government jobs (21.8 million) accounted for 19.5% of the total service-providing jobs in 2005. (See Table 2.2.)

Because average wages are higher in manufacturing than in services, some observers view the shift in employment from goods-producing to service-providing as a change from "good" to "bad" jobs. Meisenheimer, however, found that many service industries equal or exceed manufacturing and other industries on measures of job quality, while some service industries could be viewed as less desirable by these measures.

Employees on nonfarm payrolls by major industry sector, 1955–2005
[In thousands]
Year and month Total Total private Goods-producing
Total goods producing Natural resources and mining Construction Manufacturing
Annual averages
1955 50,744 43,722 19,234 828 2,881 15,524
1956 52,473 45,087 19,799 859 3,082 15,858
1957 52,959 45,235 19,669 864 3,007 15,798
1958 51,426 43,480 18,319 801 2,862 14,656
1959a 53,374 45,182 19,163 789 3,050 15,325
1960 54,296 45,832 19,182 771 2,973 15,438
1961 54,105 45,399 18,647 728 2,908 15,011
1962 55,659 46,655 19,203 709 2,997 15,498
1963 56,764 47,423 19,385 694 3,060 15,631
1964 58,391 48,680 19,733 697 3,148 15,888
1965 60,874 50,683 20,595 694 3,284 16,617
1966 64,020 53,110 21,740 690 3,371 17,680
1967 65,931 54,406 21,882 679 3,305 17,897
1968 68,023 56,050 22,292 671 3,410 18,211
1969 70,512 58,181 22,893 683 3,637 18,573
1970 71,006 58,318 22,179 677 3,654 17,848
1971 71,335 58,323 21,602 658 3,770 17,174
1972 73,798 60,333 22,299 672 3,957 17,669
1973 76,912 63,050 23,450 693 4,167 18,589
1974 78,389 64,086 23,364 755 4,095 18,514
1975 77,069 62,250 21,318 802 3,608 16,909
1976 79,502 64,501 22,025 832 3,662 17,531
1977 82,593 67,334 22,972 865 3,940 18,167
1978 86,826 71,014 24,156 902 4,322 18,932
1979 89,932 73,864 24,997 1,008 4,562 19,426
1980 90,528 74,154 24,263 1,077 4,454 18,733
1981 91,289 75,109 24,118 1,180 4,304 18,634
1982 89,677 73,695 22,550 1,163 4,024 17,363
1983 90,280 74,269 22,110 997 4,065 17,048
1984 94,530 78,371 23,435 1,014 4,501 17,920
1985 97,511 80,978 23,585 974 4,793 17,819
1986 99,474 82,636 23,318 829 4,937 17,552
1987 102,088 84,932 23,470 771 5,090 17,609
1988 105,345 87,806 23,909 770 5,233 17,906
1989 108,014 90,087 24,045 750 5,309 17,985
1990 109,487 91,072 23,723 765 5,263 17,695
1991 108,374 89,829 22,588 739 4,780 17,068
1992 108,726 89,940 22,095 689 4,608 16,799
1993 110,844 91,855 22,219 666 4,779 16,774
1994 114,291 95,016 22,774 659 5,095 17,021
1995 117,298 97,866 23,156 641 5,274 17,241
1996 119,708 100,169 23,410 637 5,536 17,237
1997 122,776 103,113 23,886 654 5,813 17,419
1998 125,930 106,021 24,354 645 6,149 17,560
1999 128,993 108,686 24,465 598 6,545 17,322
2000 131,785 110,996 24,649 599 6,787 17,263
2001 131,826 110,707 23,873 606 6,826 16,441
2002 130,341 108,828 22,557 583 6,716 15,259
2003 129,999 108,416 21,816 572 6,735 14,510
2004 131,480 109,862 21,884 591 6,964 14,329
2005b 133,631 111,836 22,141 629 7,233 14,279

Meisenheimer stressed the importance of examining more than just average pay when assessing the quality of jobs in each industry. Within each industry, there are jobs at a variety of different quality levels. The quality of service-industry jobs is especially diverse, encompassing many of the "best" jobs in the economy along with a substantial share of the "worst." Thus, employment shifts away from manufacturing and toward services that can, but do not necessarily, signal deterioration in overall domestic job quality.

Wisconsin Has Nation’s Highest Ratio of Manufacturing Jobs to Government Jobs

Wisconsin Budget Project
December 2010

Some people believe that the ratio of manufacturing jobs to government jobs in a state is a good measure of a state’s economic health. For people who use that yardstick, it should be welcome news that Wisconsin has the highest ratio of manufacturing jobs to government jobs in the nation, tied with Indiana.

Wisconsin’s high ranking is due to having a higher percentage of our workforce in manufacturing than other states, as well as having a relatively lean public sector.

Employment in the manufacturing industry in Wisconsin has waned in recent years as part of a national decline in manufacturing. Wisconsin’s ratio of manufacturing jobs to government jobs has been falling more slowly in Wisconsin than in the nation as a whole.

About the Data

Industry employment figures in this analysis come from the Bureau of Labor Statistics, are seasonally adjusted, and include the months January through October 2010. Numbers from recent months are preliminary and may change slightly.

Figures regarding the number of state and local government employees in 2009 are taken from U.S. Census Bureau data. Population numbers represent U.S. Census Bureau estimates for the number of people living in the state in July of that year.

A Leader in Manufacturing Jobs

Wisconsin has the highest percentage of its workforce in manufacturing among all states, tied with Indiana. Moreover, our state has the highest ratio of manufacturing to public sector jobs in the nation, again tied with Indiana.

Both Wisconsin and Indiana had a 1.0 ratio, as shown in Chart 1, and the other 48 states all had at least 20 percent fewer manufacturing jobs than government jobs. In other words, Wisconsin has about as many people working in locations like foundries and assembly lines as in locations like classrooms and police stations.

Wisconsin’s ratio was almost twice the national average of just 0.52 jobs in manufacturing for each government job.

Change Over Time

We examined the job sector trends in Wisconsin and nationally for each year from 1990. Not surprisingly, we found that there has been a significant drop in manufacturing jobs in Wisconsin and in the U.S. as a whole. However, at no time in the last 20 years has the national ratio of manufacturing to employment jobs been higher than it currently is in Wisconsin. Table 1 illustrates that the ratio dropped 46% nationally since 1990, compared to 34% in Wisconsin.

1990 2010 Change
United States 0.96 0.52 -46%
Wisconsin 1.53 1.00 -34%

Public Sector Employment

Someone might infer from the nature of the debate that the drop in the ratio of manufacturing to government jobs in Wisconsin — to a point where it dipped below 1.0 for seven of the last twelve months — reflects a large and growing number of public sector jobs in Wisconsin. That is not the case. We analyzed the most recent U.S. Census Bureau data on government employment, which is from 2009. As Chart 2 illustrates, Wisconsin actually has a relatively lean public sector. The chart shows that government employment across the U.S. has grown slightly since 2000 (as measured in FTEs per thousand residents), but has declined in Wisconsin.

In 2009, Wisconsin was 4.4 percent below the national average in the number of state and local employees for every 1,000 state residents. Only twelve other states had fewer public employees, measured relative to the state’s population.

Corporate taxes

The WMC report suggests that Wisconsin taxes create a negative business climate for manufacturers in the state. We’ll take a closer look at the tax issue at a future date, but for now will simply reference a March 2010 study by Ernst & Young in conjunction with the Council on State Taxes, a trade association made up of major corporations. Their study found the following:
  • Total business taxes of all sorts comprised 4.6% of gross state product in Wisconsin, compared to a national average of 4.7 percent.

  • Wisconsin ranked 30th among the states in terms of state and local taxes paid by businesses, measured as a percentage of gross state product.

Manufacturing has long been a very important part of the Wisconsin economy, and none of us wants to see it decline. However, if having more manufacturing jobs than public sector jobs is an important objective, then it appears the focus should be on U.S. economic and trade policy, since the ratio of manufacturing to government jobs has been much lower and falling faster at the national level compared to Wisconsin.

An objective analysis of the job sector data reveals the following:
  • Wisconsin and Indiana have a larger percentage of their total jobs in manufacturing than any other states.

  • The size of Wisconsin’s public sector workforce is 4.4 percent below average, relative to the state population.

  • In 2009 Wisconsin was one of only two states with as many manufacturing jobs as government jobs; all other states had fewer.

  • At no time in the last 20 years has the national ratio of manufacturing to government jobs exceeded the current ratio in Wisconsin.

  • That ratio is almost twice as high in Wisconsin in 2010 as it is nationally.
Whether the ratio of manufacturing to government jobs is a good measure of a state’s economic health and competitiveness is beyond the scope of this short paper. But if it is a useful gauge of a state’s economic vitality, then we should all celebrate the fact that Wisconsin is #1 and is far above most other states.

Service Industry Vs. Manufacturing Industry

By Jason Reeher, eHow.com

The manufacturing and service industries continue to evolve. An examination of manufacturing and service jobs reveals distinct differences in the two sectors: employment patterns emerge to uncover details about the U.S. economy. While public policy can somewhat influence the balance of manufacturing and service industry jobs, global socioeconomic forces have caused a major shift in the number of jobs in both sectors. Knowing the differences between manufacturing and service jobs will help you better understand how the U.S. economy is changing.


The manufacturing industry came to prominence in the United States during the 19th century. Spurred by technological advances that were occurring in Britain in Western Europe, manufacturing industries arose in conjunction with the advent of the steam engine, the extensive mining and use of coal and the building of railroads. Before the Industrial Revolution, America had been an agricultural society; as technology promoted travel and created new, easier ways to make things, manufacturing industries attracted capital (investment) and labor, especially in America's bigger Northern cities. Manufacturing was the dominant industry sector for much of the 20th century.

Although service industry jobs have existed for centuries, the prominence of the service industry sector is more recent. Beginning in the mid-1980s, service jobs such as medical, educational, food services and hospitality, pulled even with manufacturing in the total number of jobs by category in the United States. By 1999, however, the service industry employed about twice as many workers as the manufacturing industry.


Manufacturing jobs, as the name suggests, involve making things. Manufacturing jobs include machinist and craftsman work, laboratory production in chemicals and pharmaceuticals, food processing and electronics and engineering jobs, to name a few. Manufacturing may occur in factories; mass production, one of the drivers of the boom in industrial manufacturing, often incorporates assembly lines with specialized tasks to produce items at the highest possible rate of speed.

Service industry jobs, by contrast, have a much broader function. The service industry is defined by the U.S. Department of Labor as including workers as varied as health care employees, educators, restaurant employees, hairstylists and even performers like musicians and actors. Basically, service industry jobs can involve working with things (like fixing appliances, for example) or working with people.


Historically, the manufacturing sector has contained a much higher rate of unionization than the service industry. While during the 1970s more than 29 percent of the U.S. labor force belonged to a union, in the early 2000s that figure had dropped to 13 percent. As the U.S. economy has become more service oriented, less unionization has occurred.

Another contrasting feature is the service sector's relative resistance to economic downturns. While the manufacturing industry contracts during a recession, the U.S. Bureau of Labor Statistics has found that some service industries, such as health care and education, are "countercyclical," or may actually increase in number of jobs during a recession, due to increased demand for these services.


Other trends help further separate the manufacturing and service sectors. Globalization, or the increase of trade between nations, has weakened the U.S. manufacturing sector in terms of percentage of jobs. Emerging economies, like China and Brazil, that are rapidly becoming more open to trade and investment, have seen increases in their manufacturing sectors as production moves overseas from the United States.

Although U.S. service industries are not immune to the same kind of job losses, a more pressing trend concerns wages. Public policy makers fret that the movement away from highly paid, mostly unionized manufacturing jobs will correspond with an increase in low-wage service jobs, especially in food service, personal services and hospitality businesses.


As globalization continues, manufacturing jobs will continue to relocate from the United States to other nations. To avoid becoming a country of low-paid workers, America will need to develop more service jobs that are higher paid and higher skilled, such as in health care, where demand from the aging baby boomer generation will naturally increase the need for services. In addition, jobs programs, whether from the government or via private-public partnerships, will continue to aid displaced manufacturing sector workers transitioning to service industry jobs.

The Trade Deficit is the Jobs Deficit and the Jobs Deficit is the Budget Deficit

A very elite club of corporate leaders -- and the politicians that they bought and paid for -- has moved jobs offshore and shifted America's manufacturing economy to a service economy.

The offshoring of American manufacturing separated Americans’ incomes from the production of the goods and services that they consumed. The advent of the high speed Internet made it possible to offshore professional service jobs, such as software engineering, which drove down the returns to a college education and the employment prospects of graduates. In an offshored economy, the profits of corporations are not a measure of the economic welfare of the population. As American incomes stagnated—except for the rich, there has been no real increase in 20 years—the economy was kept going by the growth of consumer debt to take the place of the missing growth in take-home pay. Federal Reserve Chairman Alan Greenspan’s low-interest-rate policy fueled a real estate boom and drove home prices to new highs, permitting Americans to refinance their mortgages and to spend the equity. Anyone could obtain credit cards, and many Americans maxed out several. By the 21st century, the U.S. economy was a Potemkin economy just as the Soviet economy had been. [Paul Craig Roberts, Potemkin America, Infowars.com, February 5, 2011]

Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can't make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street. [America Without a Middle Class, devoish's CAPS Blog, July 24, 2010]

The federal government has been using a sledgehammer to endlessly pound away on the capacity of small businesses and individuals to create wealth and jobs and opportunities. The business atmosphere in the United States is now so toxic that it is amazing that any small businesses have survived. Most Americans find themselves with no other way to make a living other than to work for someone else. But the big global corporations have discovered that they can make much larger profits by getting rid of American workers and by shipping our jobs overseas, and our politicians are allowing them to get away with it. [Michael Moore Demands Even More Taxes and Government Handouts, The Economic Collapse, March 9, 2011]

In between a storm of “pretend” rhetoric about creating jobs, rebuilding America’s infrastructure, cutting domestic spending, balancing the budget, ending the wars and other blatant lies, President Obama made a joke about TSA pat-downs at the expense of airport travelers everywhere during his State of the Union address. He suggested that high-speed trains wouldn’t include them. In the first sense of this joke, it is not clear if they will really build these trains, but there are already plans laid by Homeland Security to deploy TSA screening, VIPR detection squads and mobile x-ray scanners at bus and train stations, highway checkpoints, sports stadiums and shopping malls—all in spite of public outcry over invasive “pat-downs” and excessive security checks. The other part of the joke revolves around the background humor of the context of his comments. Like the fact that more jobs than you think will be created through TSA hiring and other security contracting, since manufacturing and other labor has been offshored under globalization while de-industrialization-by-design at home further destroys our economic foundation. Increasingly corporatized public education will sell our children out, not lift them up. [Aaron Dykes, Obama Mocks Airport Pat-Downs as Police State Economy Cripples Nation, Infowars, January 26, 2011]

There are more government employees now than all those employed in manufacturing and construction. How is it that state employees now make 40% more than the average income in non-governmental jobs? What a perversion of government. It is no wonder that the US poverty rate is higher than in Mexico and Turkey." [Bob Chapman, Fairy Tales of Recovery, Reality of More Failures, The International Forecaster, September 3, 2009]

A half century ago, industrial jobs at car and steel plants provided high salaries and rich benefits. But as manufacturing moved overseas, many formerly well-paid workers had to take lower-paying jobs. By the end of the Great Recession, the economic order was undeniably changed. It's the government sector worker who's the new elite, the highest-paid worker on the block. For instance, most non-uniformed public employees who have worked in New Jersey for 30 years with an ending salary of $85,000 can look forward to retiring at 55 with an annual pension of about $46,000. Working until age 60 and a salary of $90,000 can bring a public pension of $57,000. And many of the New Jersey's public-sector retirees have no or low premiums for their health insurance. [Pension Envy: Anger Brews Over Government Workers' Benefits, Associated Press, March 8, 2011]

Beginning in the mid-1990s until about 2005, China exported price deflation into the United States as the country’s 1.3 billion people were gradually integrated into the world workforce. In 2000, the United States imported $100 billion of goods from China, increasing to $365 billion in 2010. During this time, multinational companies in search of the lower costs transferred hundreds of thousands of manufacturing jobs from the United States into China. Many accused Wal-mart of instigating the exportation of 200,000 US jobs. This phenomenon began reversing in late 2007 as all the juice had been squeezed out of lower prices. [A Crack in the Great Wall-mart: Watch Out for Rising Prices from China, Gold Shark, April 7, 2011]

Due to China’s furious growth, the country is expected to surpass the United States as the world’s largest economy by 2030. China outpaced the United States in manufacturing this year. In 2009, the U.S. created 19.9 per cent of world manufacturing output, compared with 18.6 per cent for China, with the US staying ahead despite a steep fall in factory production due to the global recession. The G20 is dedicated to transforming the IMF into a globalist version of the Federal Reserve. The authoritarian slave labor nation of China plays an instrumental role in this proposed transformation. During recent G20 meetings, China worked closely with the United Nations to replace the dollar as the world’s reserve currency. China’s central bank insists the dollar’s global role allowed the U.S. to borrow cheaply abroad, fueling the credit boom that led to the financial crisis. “A new world order is emerging,” declared former British Prime Minister Gordon Brown at the conclusion of the London G20 summit. Brown later characterized the globalist takeover scheme as the emergence of “one global progressive family.” [G20 Pushes Globalist SDR and China’s Role, Infowars.com, February 15, 2011]

American is bleeding jobs at a rate of millions, and its crumbling manufacturing base is being replaced by the endless import of cheap slave goods from the Communist state -- the stunted U.S. economy is being rapidly outpaced by the Red Dragon. Everyone is painfully aware of the fact that China now owns the United States economically, with the Chinese central bank being the largest debt holder at approaching $1 trillion dollars. The average American family with two children collectively owes around $12,000 dollars to China. The Communist state’s ownership of long term U.S. Treasury Securities means the United States pays upwards of $100 million dollars a day to China in terms of interest alone. China’s huge accumulation of U.S. dollars gives it the sway to lead the United States by the nose like a sheep to slaughter, holding in its hands the power to decide the economic destiny of the now collapsing American empire. The culmination of this process moved a step closer when Hu Jintao made it clear that China was preparing to sharpen the knife for the bloodletting to begin, by deriding the dollar as a “product of the past” and signaling its replacement with a new global monetary system based around the Chinese yuan. [Meet the New Boss: China Owns the United States, Infowars.com , January 19, 2011]

The Deficit America Has Forgotten -- and is Eviscerating the Middle Class

Campaign for America's Future
April 14, 2011

We can service each other till the cows come home but if we don't start making more things here and selling them there more and more jobs will be lost, more and more communities devastated and our standard of living will continue to drop. Everyone is focused on the budget deficit. But here's the thing: the trade deficit is the jobs deficit and the jobs deficit is the budget deficit.

The Trade Deficit

Before "The Reagan Revolution" America made things and sold them to the rest of the world. Since Reagan America borrows money to buy things made somewhere else. The trade deficit last month was above forecasts, and a big jump from last year:
The U.S. trade deficit with China widened to $18.8 billion in compared with $16.5 billion in the same month last year. The government also revised the deficit in January to $47 billion from $46.3 billion.
The February monthly trade deficit fell, but only because the decline in exports was less than the decline in imports.

The Big Change

In the early 80's conservative trade policies designed to pit American workers against low-paid, exploited workers in non-democratic countries transformed the United States from the largest creditor nation to the largest debtor nation in just a few years, and it has only gotten worse since then:

Democracy vs Thugocracy

America is supposed to be a democracy of We, the People. Democracies set up protections for their people that protect wages, rights, safety, dignity and the environment. Conservative "free trade" agreement allow companies to get around the borders of our democracy, pitting their employees against the exploited people living under thugocracies with few or no protections at all. This has created a "race to the bottom" for our wages and benefits. Of course our workers cannot compete against workers who are not able to fight for better pay and benefits. This is the reason we fought to build and preserve our democracy.


Instead of fixing our trade problems, we have gone back to the same old same old. Especially vis-a-vis China.

Alliance for American Manufacturing Statement on Latest Monthly Trade Figures
The monthly U.S. international trade deficit in goods and services was $45.8 billion in February. The goods trade deficit with China was $18.8 billion.
--Year over year, the 2011 trade deficit is running far higher than 2010. January-February 2010 clocked in at $74.3 billion, while the first two months of 2011 have already reached $92.7 billion.
--Year over year, the goods trade deficit with China is also running ahead of 2010. January-February 2010 totaled $34.8 billion, while the first two months of 2011 have already reached $42.1 billion.
--Of particular note is that China ($18.8 billion) now accounts for 70% of our overall monthly non-oil goods deficit ($27.0 billion).
Said Scott Paul, Executive Director of the Alliance for American Manufacturing (AAM):
“Washington has focused a lot on budget deficits this year, but scant attention has been paid to the trade deficit. That must change. The trade deficit serves as a drag on GDP growth and requires financing, just like any other debt. While only 9.5% of our national debt is financed by China, that nation is responsible for fully 70% of our trade deficit in non-oil goods.”
China, China, China

Over and over our trade relationship with China demonstrates so many things we are doing wrong in the world competition. Among so many other problems:

- We let them manipulate their currency rate which means their goods have a cost advantage of as much as 40% going out the gate, before other factors come into account.

- Their government subsidizes and promotes key industries. We don't have an industrial policy.

- Their workers are not free to organize and push for better wages, benefits and working conditions. (Ours aren't either, but are more able than theirs.)

- They restrict and otherwise discourage imports

- They follow "Buy China" policies, we do not have "Buy America" policies

- Etc., etc., etc.

The Trade Deficit Is The Jobs Deficit

Our trade deficit is our jobs deficit. When you close the factory we can't make a living. When you move the hobs over there the jobs aren't here.

American Prospect, The Plight of American Manufacturing,
Since 2001, the country has lost 42,400 factories, including 36 percent of factories that employ more than 1,000 workers (which declined from 1,479 to 947), and 38 percent of factories that employ between 500 and 999 employees (from 3,198 to 1,972). An additional 90,000 manufacturing companies are now at risk of going out of business.
Giant Sucking Sound

So we closed our factories (trade deficit) and shipped the jobs to other countries (jobs deficit) where they pay less and don't protect the environment. Again, from The Plight of American Manufacturing,
Long before the banking collapse of 2008, such important U.S. industries as machine tools, consumer electronics, auto parts, appliances, furniture, telecommunications equipment, and many others that had once dominated the global marketplace suffered their own economic collapse. Manufacturing employment dropped to 11.7 million in October 2009, a loss of 5.5 million or 32 percent of all manufacturing jobs since October 2000. The last time fewer than 12 million people worked in the manufacturing sector was in 1941. In October 2009, more people were officially unemployed (15.7 million) than were working in manufacturing.
Millions and millions of good-paying jobs. Gone.

The Jobs Deficit IS The Budget Deficit

People with jobs pay taxes. People with jobs don't collect unemployment benefits. A huge component of our budget deficit is the result of unemployment, much of it caused by the trade deficit.

Of course there is the core component of the budget deficit that was caused by tax cuts for the wealthy, the huge increase in the military budget and the interest on the borrow for these. But the big increase since the financial crisis is due to the recession and restoring our manufacturing base addresses much of this. People with good manufacturing jobs pay mortgages and buy houses and cars and shop at stores and make the economy work. And when thrry buy things made in America the money stays in America.

What We Can Do

This is from a year ago -- yes, a year, with nothing done: It Is Time To Put Our Foot Down: Ten Steps We Can Take To Stop Closing Factories And Eliminating Jobs,

Here are just some steps that We, the People can take to start turning this around:

- A border tariff on imports to remove the price advantage of goods produced by exploited, underpaid workers.

- A border tariff to remove the price advantage of goods produced in ways that harm the environment.

- A border tariff on goods from countries that are not democracies, to remove any pricing advantage gained from not allowing people to vote and set rules that benefit themselves.

- A border tariff on goods from countries that restrict workers from organizing to improve their wages and working conditions, to remove any pricing advantage gained from not allowing workers to bargain. (America currently doesn't meet this standard.)

- Remove tax benefits and instead impose tax penalties and fines on companies that close factories here. Don't let it be profitable to do this!

- Increase taxes on the big monopolistic companies to remove the advantages that help them destroy America's smaller, regional and local businesses -- the very job creators we need.

- Increase income taxes on high incomes to reduce the incentive to pursue short-term windfalls instead of long-term interests. Make it take a long time to accumulate a fortune. Making a fortune is great but it should be a reward for helping our economy and society, not destroying them.

- Break up the "too big to fail" Wall Street firms that wrecked the economy. And get the money back -- all of it.

- Explore the use of Eminent Domain to keep factories in communities and workers in the factories.

- Formulate and follow a national economic/industrial strategy to build a new green manufacturing economy.

Inequality Is On the Rise in America; the Ruling Class Has Redistributed Private Sector Middle Class Wealth to the Public Sector Until They Finally Redistribute It All to Themselves

There is a real “war” taking place today: an economic war, which has been instigated by the ultra-wealthy, prosecuted by the U.S. government, and directed at the American people. Having already robbed Americans of their political power through the establishment of the Wall Street-owned, two-party dictatorship, the Oligarchs now want to rob the people of their last vestiges of “economic power” -- in order to turn Americans into “serfs,” which they consider to be the only rightful place for the “little people.” - Jeff Nielson, The Plundering of America, March 7, 2010

Even if the U.S. government expropriated every dollar of private wealth in the nation, it would still have a deficit of $66,600,000,000,000 ($66.6 trillion), equal to $214,286 for every man, woman and child in America and roughly 500% of GDP. If the government does not directly seize the nation’s private wealth, then it will require $389,610 from each and every citizen to balance the country’s books. - Stewart Dougherty, America’s Impending Master Class Dictatorship, Kitco, January 22, 2010

History has proven to tyrants that oppression works. In fact, it is easy to control a populace, once you control the money, markets, military (including police), media and minions (the recipients of welfare, social security, free health care, government jobs and the like, who are dependent upon the state and likely to be compliant). This is exactly where the United States is today. - Stewart Dougherty, America’s Impending Master Class Dictatorship, Kitco, January 22, 2010

“When the people find that they can vote themselves money, that will herald the end of the republic.” - Benjamin Franklin

Future Jobs Won’t Support Decent Living Standard: Report

The Lookout
April 1, 2011

It's most welcome news that job growth seems to be picking up again--even if we'll need a whole lot more of it to get back to where we were before the Great Recession.

Still, as we've reported, there's growing evidence that the new jobs, many of which are in sectors like retail, food services, and health care, simply aren't as good--in terms of wages, hours, and seniority--as the ones they're replacing. And a report released today only adds to the concern.

The study, commissioned by the nonprofit group Wider Opportunities for Women, looks at how much income it takes to support a basic standard of living for an American family--and finds that many of the jobs of the future won't pay enough to provide that.

To calculate this "economic security" income, the study's authors certainly didn't assume a lavish lifestyle. They considered basic needs--housing, food, utilities, health care, child-care, and transportation--plus the cost of modest saving for retirement and a small surplus for emergencies. (At at a time when economic "shocks" are increasingly common, that's an essential part of financial security.) They don't factor in some things many of us take for granted, like entertainment or eating out.

The result? To achieve economic security, a single parent with two children needs an income of just over $30,000 a year--nearly twice the federal minimum wage--while a two-income household needs almost $68,000.

The study then finds that, according to Labor Department projections, fewer than 13 percent of jobs to be created by 2018 will meet the economic security threshold for a single parent with two kids. Forty-three percent of those jobs will meet the threshold for a two-income household.

In other words, most of the jobs of the future aren't likely to pay enough to offer the kind of stable, middle-class existence that for much of the 20th century was seen as the American birthright.
"The American Dream of working hard to support your family is being re-written by the growth of low-paying industries and rising expenses," said Joan Kuriansky, WOW's executive director.
Indeed, this seems to be the new reality of the American economic landscape. Gary Burtless, an economist with the Brookings Institution, noted in a statement on the government's jobs numbers that real earnings fell 1.1 percent between October and February--a development he attributed to the still-high unemployment rate, which is eroding workers' bargaining power.

Overall CEO Pay Rose 27% in 2010, While Pay of Average Workers Rose 2%

The Lookout
April 1, 2011

Just a week after the report that bonuses for CEOs jumped 30 percent last year comes another startling statistic that illustrates the ever-increasing gap between rich and poor in America: overall CEO compensation increased by 27 percent in 2010, while the pay of the average worker grew only 2 percent, according to a USA Today analysis of data from GovernanceMetrics International.

Perhaps it's fitting that, as the Columbia Journalism Review points out, the Business section of today's New York Times reads like a "snapshot of the gilded age economy." Stories in the April 1 section include one on the $17 million paid to the CEOs of Fannie Mae and Freddie Mac in 2009 and 2010--fresh off the taxpayers bailing out the two lenders to the tune of $150 billion--and another on the multi-billion dollar lending program the Fed used to save the likes of Fannie and Freddie.

In other U.S. news, outside of the Business section, the Times devotes another piece to the state of Florida's efforts to cut unemployment benefits considerably, featuring a jobless man so desperate that he recently sold his handgun for money, and, he says, to avoid blowing his brains out.
"I am just so depressed," he told the paper.

Off-the-charts Income Gains for Super-rich

The Lookout
April l 8, 2011

In recent years, we've been hit with a barrage of statistics, charts, and even full-length books, documenting how inequality is on the rise in America.

But very few of them capture what's happened over the last 30 years or so as well as this image:

Put together by the Center on Budget and Policy Priorities, a liberal Washington think tank, the chart is pretty self-explanatory. It shows that the 30 years following the Second World War were a time of broadly shared prosperity: Income for the bottom 90 percent of American households roughly kept pace with economic growth.

But over the last 35 years, there's been an abrupt shift: Total growth has slowed marginally, but the real change has been in how the results of that growth are distributed. Now, the bottom 90 percent have seen their income rise only by a tiny fraction of total growth, while income for the richest 1 percent has exploded by upwards of 275 percent.

One can argue about why this is happening. Some say it's the result of a decline in workers' bargaining power as labor unions have weakened, while others blame the rise of offshoring and outsourcing. But despite the best efforts of some commentators, there's really no serious debate about the overall realignment of income in our age: The already super-rich have vastly increased their share of the pie--at the expense of everyone else.

This article explains why prices keep going up for all of us and why jobs are difficult to find with businesses hiring people for starvation wages overseas -- so the very rich can keep getting richer at the expense of the rest of us. I can't understand why some of you can't seem to grasp this reality! - Byline

The truth is, I am making the same wages my dad made 25 years ago, when he was about my age and had similar education and experience. And the story's true for everyone else I know. While a $35K salary was a handsome wage in 1986, it's not so hot in 2011. Employers have refused to push up wages unless they are mandated to do so. - MahenjoDaroen

The problem is that for all their flag-waving and claims of patriotism, Republican businessmen have no reservations at all about shipping American jobs overseas, if they can make a slightly higher profit. They also structure tax laws so that they can "write off" most of the day-to-day living expenses the middle class has to pay full price for (company car, jet, living accommodations), lowering their tax burden even further. Then they bribe ("Campaign contribution") their Congressmen into lowering their tax rates still more. As a finishing touch, they blame teachers, firemen, and policemen for being so greedy as to expect medical care and retirement benefits. - Art Ghecko

Last time I checked corporations use roads, police, fire departments, eat subsidized foods, use subsidized energy, municiple water, and all of the other services that are provided by our government. There is no excuse for them to not pay for those services. Especially when they spent last year paying less taxes than they have in the last 40 years, producing less jobs than they have in the US, and outsourcing more jobs. - Phil

The percentage of total national tax revenue on corporations was 33% in the 50's... now they pay only 6.6%! The top marginal tax rate (rate paid by the super rich) was 91% in the mid 50's - now they're only paying 33% and freaking out at any talk of taking it up to 36%. The problem in america is the greed of corporations and the super-rich. - Robin

Every time money is borrowed, it adds up to billions and trillions. The interest on that is unthinkable. Somebody is earning it. For every money you and the government borrows, someone is receiving it. So of course the divide is huge. That debt obligation to the people, in one form or another, ultimately results in higher taxes to pay off the principle and interest. Right now the American people are nearly half a trillion in interest every year on the national debt. Someone is earning that interest. It is not the people; the people are drowning in debt and higher taxes. Keep thinking the system works, and keep thinking you will beat the system, win the race; but in the end, it does not work. It depletes people and resources. It consolidates power into fewer hands. - Anonymous

Simplest solution for Social Security's budget? Remove the 30 year old earnings cap on Social Security taxes, reduce the tax percentage a few points, and have all earned income taxed for Social Security without a cap. Income caps that cut off Social Security taxes after $106,000 in earned income allows those who make the most to proportionally pay the least. - Maureen

This is one problem I see: People give a certain amount of their income to savings accounts and investments taht a bank decides to use to provide capital to a company or corporation. That worked once. The company was local and the investment you made went into the community providing jobs and if successful paid a dividend. It is not like that now. Instead your account is invested in companies that you know little or nothing about. The seed corn you provide them is planted somewhere else and it is not reinvesting in your community. You personally may make a profit but at the expense of your community that is not gaining collectively from these initiatives. How is that generating jobs in America? What happens when we become a nation of consumers and do not reinvest and fertilize the common ground with our common wealth? We do this in the form of shared taxes to keep infrastructure going and in the form of real labor and productivity, producing tangable things. Not just remore speculation and investments by proxy that pay off in the short run. Long term these things are hurting us. - Bob M

That chart should be shown constantly to everyone who will look. Clearly, the uber-rich have figured out how to steer all the money their way. My guess is they had a lot of political help in making that possible. They've been shown a lot of favoritism by congressmen and governors. - Bill

Today the Darned Rich GOP and Tea Party Liars are going to shut down parts of our Government in order to fulfill their agenda for drummer students and even poorer poor and middle class. They are holding America Hostage because of a Budget problem they themselves created during the past Republican administrations, robbing S.S. to give to these hard-put 1% Rich and the no tax, to near no tax to the Rich and Corporations, as well as company incentives to move our U.S. jobs out of the country. They are back now for the Kill, to finish the job on working Americans. No American company that is doing work outside of the U.S. should have Government contracts or paid incentives. - WrongIdea

The Tea Partiers seem to think they are some sort of populist movement, but in fact they are just dupes for bankers, Wall Street, the corporations and the Koch Brothers and other super-rich who run this country. Their stupidity is helping to kill the middle-class and create a huge gap between the very few super-rich and everyone else who is struggling to survive. - RootieKazootie

The problem isn't democrat or republican -- it's the system. Lobbyist representing corporate America -- aka multinational corporations -- run the show. Both political parties are responsible for deregulation and the housing mess. Both parties are responsible for allowing the outsourcing of jobs and importing foreign labor. Politicians care about getting reelected, not about you. We the sheeple have allowed our standard of living to be decimated. We continue to believe in a political system that obviously has no regard for its citizens. - Kathleen

We have 22 million people out of work, paying no taxes and scraping by on the dole. Meanwhile, both Parties are still giving TAX BREAKS to companies for outsourcing jobs. Both Parties refuse to force employers to use E-Verify to stop the employment of illegals. Both Parties still encourage American employers to use H1/Green Card workers. Both Parties have endorsed more NAFTA style trade agreements. Both Parties recently agreed to allow Mexican trucks and drivers to work in the U.S., knowing it will cause U.S. truckers to lose their jobs. While both Parties work to sell this country, they keep up us riled up with gay marriage, gun control, abortion. By the time they are finished outsourcing jobs and "in sourcing" cheap labor, both legal and illegal we will all be willing to work for beans and a place to sleep. - Greg789

Read up on the "Roaring 20's" and the Depression. The rich were never sorry then and they're not sorry now. Now that everyone who experienced the Depression is dead or dying, we're going to have to relearn those hard lessons. Maybe this time there will be no FDR to save capitalism. Rich idiots just don't see when they're in trouble. - Erik

It is largely due to a shift from a manufacturing economy to a service economy and movement of jobs offshore coupled with greed from corporate leaders to politicians - the establishment of a very elite club. - DRussman

This just shows the greediness that is called capitalism. Prices keep going up even though many businesses are outsourcing oversees and paying starvation wages while avoiding US taxes and hiding their money. The CEO's and upper management are making huge profits and the big investors on Wall Street are growing fat and rich by controlling the markets and moving them at will. The salaries of the top 1% in this country have risen 275% the last 35 years, yet they have had their taxes lowered and use huge loopholes to avoid paying their share. Democracy, morals, religion and concern for our brothers and sisters that built our country into a great nation are losing out to this greediness! The Bible says, "It is easier for a camel to go through the eye of a needle than for a rich man to go to Heaven." - Byline

Capitalism is a good thing when it's ambitions are restrained and it doesn't consume the society that empowers it. It begins rightly enough by filling a need but when unbridled it then starts creating needs and works to sustain ever more contrived needs to maintain an excessive expansion which includes greater political influence as well as the ever mounting profits. It should be reinvesting in the society and market it sells to so that the relationship is balanced and that market "an employed and well paid population" can sustain it as much as it can sustain that market. - Bob M

What I do not understand is why do we not have people protesting? We are about to become peasents! These 1% are the ones that line the pockets of our government officials to pass the necessary laws to allow this to happen! - Anonymous

The term global economy is just a bunch of garbage -- meaning corporations can send jobs overseas and find creative ways to avoid taxes. - graphicsguy

30 years of "trickle down" economic policies, and we see the result. The money stays at the top (with the richest of the rich), and the bills (payments) trickle down to the middle and lower classes. - Dorks

All these rich people should set up a pool and donate a portion back to the taxpayers and disabled; we are the people who made it for them. - Avery

.....perfectly illustrates why you need a progressive tax rate in a capitalist system......if we had a truly free market and everyone could compete on a level playing field, flat tax rate would be fine.....that's not what capitalism is.......extending the bush tax cuts was a disaster....... - JENSEN

Guess the trickle down economic plan isn't working. At GE they pay no taxes yet expect the young to die in wars to protect their multinational interests. Lovely arrangement. Jack Welsh - take a bow. It's easier for a camel to pass through an eye of a needle, then for a rich man to enter the kingdom of heaven. Enjoy your riches on earth - it's going to be bumpy ride south afterwards - a realist

The rich get richer, as it's been said over and over. Try playing the stock market these days. It becomes readily apparent that the wealthy manipulate it, at will, for their own gains. Once you are in it you will play a short game, get wiped out and then leave, licking your wounds. Guess who now has the few pennies you brought in??? It's like Vegas, except the deck is stacked against you to an even greater extent. Unless you can trade mega-blocks of stocks and make the market move the way you want, there is little chance that you are coming out a winner. - News Guy

The corporations downsize so they can stay in business and we can have jobs, or so they say when they lay off people and now one person is doing the job of three. It's all about greed, whether it's politicians or big business, even little business because they want to become big business. This so reminds me of an old scifi movie, can't remember the name of it, but the rich lived in a dome-covered lush, beautiful land, and the poor lived outside in whatever was available -- not much food, etc, radiation effects I believe. The poor suffered greatly while the rich stood by and laughed, behind their dome of course. That's about the way it is now. They own the businesses and we bow down, or else. The big business owns the government and politicians, so we bow down or else. No job, no unemployment, no SS, whatever, if we don't bow down. Sad. It will end eventually!!! - Lewe

Don't you all know that the people you "voted" for do not represent you? The elected are bought and paid for by "them." Even the "new" ones succumb to it after a term or two. We do not matter, and they are making sure of that. Just ask GE or Warren Buffet. - Pánico Extenso

If I read the comments, I don't think most of the commenters understand the graph. I would suggest you ask someone to explain it to you. Ever heard of Pareto analysis? I would guess if we compared any decade that an analysis would show approximately the same result. 20% of the people will have 80% of the wealth. That's not news, that's reality, except dictatorships like Libya -- 1 family controls 90%+ of the wealth. - AM

The central issue is not unions or outsourcing, it's tax policy. Starting in the '30s, under FDR, the tax rate on every dollar earned in income above roughly $5 million (inflation adjusted) per year was 91%. In the early '60s, Kennedy (a Democrat) voted to decrease this to 72%. In the 70s, Republicans Nixon and Ford both supported keeping the top marginal rate at 72%. In the 80s, Reagan dropped the top marginal rate to about 40%; Clinton kept it there, but Bush reduced it to 36%. - Aaron

If you haven't figured out that the wealthy, corporations, and their political employees -- paid for by political campaigns -- are ensuring that American wages don't increase, then you aren't paying attention. In fact, with the destruction of unions, government furlough days, and removal of medical plan as compensation, the middle class is becoming poorer everyday. The extreme poor have been written off as non-existent. Wake up America, you are becoming slave labor. - OldPatriot

Of the things that the government has to do for the people, regulating financial institutions is one of them. When the Great-Depression-era law regulating banks, insurance companies and financial institutions' ability to game the system was overturned by Republican Congress and signed by Bill Clinton, the middle class was shot down. I neither want the European socialism that Obama and the liberals want nor the unfettered capitalism that many Republicans want. I want capitalism with restraints and social conscience. - AnnO

The truth is Taxes --ALL TAXES --- are paid by the people. Corporations NEVER HAVE AND NEVER WILL PAY TAX. They simply pass these cost on to you and I by increasing the cost of goods and services. Corporations are loved by Government. They can talk about corporations paying their fair share -- while what they are really doing is raising taxes and reducing the standard of living for the common man . Our politicians are absolutely sure we the people will never figure out that corporations, the way they are currently structured, are just cash collecting machines for Government.. As such, Adolph Hitler loved Corporations; in fact, fascism was originally known as Corporatism. - Boyd H

Those of you that believe that some socialist or communist is going to redistribute to you...are suckers. - flipacoin

The Top 1% pays 39% of state and federal income taxes. The Bottom 47% (Obama's base) pay no income taxes at all. - Muhammed Nidal

Liberalism is a mental disorder. Any thought process which rewards non performance and penalizes performance is insanity by any other word! Here's the one-question litmus test to determine if you afflicted by the mental disorder: Do you value entitlement more than personal responsibility? - El Gato

Um, well, the after-tax income of the rich went up by 281%.....but, the pre-tax income only went up 19%. Since the bottom 50% pay NO tax, their after and pre tax is about the same, and their income went up 16% to 25% percent, more than the top 1%. Nice try, socialists. - Brooke

Future Hiring Will Mainly Benefit Those with Specialized Skills

Future hiring will generate mainly high-skilled or low-paying jobs in service industries

The Associated Press
September 5, 2010

Whenever companies start hiring freely again, job-seekers with specialized skills and education will have plenty of good opportunities. Others will face a choice: Take a job with low pay — or none at all.

Job creation will likely remain weak for months or even years. But once employers do step up hiring, some economists expect job openings to fall mainly into two categories of roughly equal numbers:
  • Professional fields with higher pay. Think lawyers, research scientists and software engineers.

  • Lower-skill and lower-paying jobs, like home health care aides and store clerks.
And those in between? Their outlook is bleaker. Economists foresee fewer moderately paid factory supervisors, postal workers and office administrators.

That's the sobering message American workers face as they celebrate Labor Day at a time of high unemployment, scant hiring and a widespread loss of job security. Not until 2014 or later is the nation expected to have regained all, or nearly all, the 8.4 million jobs lost to the recession. Millions of lost jobs in real estate, for example, aren't likely to be restored this decade, if ever.

On Friday, the government said the August unemployment rate ticked up to 9.6 percent. Not enough jobs were created to absorb the growing number of people seeking work. The unemployment rate has exceeded 9 percent for 16 months, the longest such stretch in nearly 30 years.

The crisis poses a threat to President Barack Obama and Democrats in Congress, whose hold on the House and Senate appears to be at increasing risk because of voter discontent.

Even when the job market picks up, many people will be left behind. The threat stems, in part, from the economy's continuing shift from one driven by manufacturing to one fueled by service industries.

Pay for future service-sector jobs will tend to vary from very high to very low. At the same time, the number of middle-income service-sector jobs will shrink, according to government projections. Any job that can be automated or outsourced overseas is likely to continue to decline.

The service sector's growth could also magnify the nation's income inequality, with more people either affluent or financially squeezed. The nation isn't educating enough people for the higher-skilled service-sector jobs of the future, economists warn.
"There will be jobs," says Lawrence Katz, a Harvard economist. "The big question is what they are going to pay, and what kind of lives they will allow people to lead? This will be a big issue for how broad a middle class we are going to have."
On one point there's broad agreement: Of 8 million-plus jobs lost to the recession — in fields like manufacturing, real estate and financial services — many, perhaps most, aren't coming back.

In their place will be jobs in health care, information technology and statistical analysis. Some of the new positions will require complex skills or higher education. Others won't — but they won't pay very much, either.
"Our occupational structure is really becoming bifurcated," says Richard Florida, a professor at University of Toronto. "We're becoming more of a divided nation by the work we do."
By 2018, the government forecasts a net total of 15.3 million new jobs. If that proves true, unemployment would drop far closer to a historical norm of 5 percent.

Nearly all the new jobs will be in the service sector, the Labor Department says. The nation's 78 million baby boomers will need more health care services as they age, for example. Demand for medical jobs will rise. And innovations in high technology and alternative energy are likely to spur growth in occupations that don't yet exist.

Hiring can't come fast enough for the 14.9 million unemployed Americans. Counting part-time employees who would prefer full-time jobs, plus out-of-work people who have stopped looking for jobs, the number of "underemployed" is 26.2 million.

Manufacturing has shed 2 million jobs since the recession began. Construction has lost 1.9 million, financial services 651,000.

But the biggest factor has been the bust in real estate. The vanished jobs range from construction workers and furniture makers to loan officers, appraisers and material suppliers. Moody's Analytics estimates the total number of housing-related jobs lost at 2.4 million. When you include commercial real estate, the number is far higher.

One of them is Martha Escobar, who last month lost her $13.50-an-hour job cleaning an office tower owned by JPMorgan Chase & Co. in Century City, Calif. She was one of 16 janitors, mostly single mothers, who lost jobs as part of the real estate crunch that's squeezed landlords.

Some of them traveled to New York on Thursday to try to pressure JPMorgan to get its cleaning contractor to take them back, given that the bank earned $8.1 billion during the first half of this year.
"I don't know what I am going to do if I can't get my job back," Escobar, 41, said.
JPMorgan Chase spokesman Gary Kishner said the bank has no say over the layoffs, which he said are handled by the building's cleaning contractor.

On top of real estate-related job losses, manufacturing is likely to keep shedding jobs, sending lower-skilled work overseas. Millions who worked in those fields will need to find jobs in higher-skilled or lower-paying occupations.
"The big fear is the country is simply not preparing workers for the kind of skills that the country is going to need," says Gautam Godhwani, CEO of SimplyHired.com, which tracks job listings.
Sectors likely to grow fastest, according to economists and government projections, are:


The sector is expected to be the leading job generator, adding 4 million by 2018, according to Labor Department data. An aging population requires more doctors and nurses, physical therapists, home health aides and pharmacists.

Many of these jobs will pay well. Physical therapists averaged about $76,000 last year, according to the department's data. Others pay far less. Home health care aides earned an average of just $21,600.

Home health care and personal care aides are expected to add about 900,000 jobs by 2018 — 50 percent more than in 2008.

Jennifer Gamboa of Body Dynamics Inc., an Arlington, Va.-based physical therapy firm, says the drive to reduce health care costs should benefit her profession, which can treat pain less expensively than surgery. Gamboa plans to add two employees in the next year.

Technology could be an economic elixir as computers and online networks expand ways to automate services, distribute media and communicate.

Companies will need people to build and secure those networks. That should boost the number of programmers, network administrators and security specialists by 45 percent to 2.1 million by 2018, the government forecasts. Most of these jobs will provide above-average pay.

Technology pay averaged $84,400 in 2008 — nearly double the average private-sector pay of $45,400, according to an analysis of the most recent full-year data by the TechAmerica Foundation, a research group.


Deepak Advani, an IBM executive, has a title he says didn't exist five years ago: "Vice president of predictive analytics."

Companies and government agencies have amassed data on behavior ranging from shopping habits to criminal activity. Predictive analytics is the art of determining what to do with that data. How should workers' time be deployed? How best to target customers? Such jobs could grow 20 percent by 2018, the government predicts.

Still, economists say more will be needed to boost job growth. The answer may be some technological breakthrough akin to the personal computer or the Internet.
"Most big booms come from a particular sector that moves the rest of the economy," said Richard Freeman, a Harvard labor economist.
Technology spurred job growth after the 1982 and 1991 recessions. The PC became revolutionary in the early 1980s. Internet use exploded after the Mosaic Web browser was introduced in 1994. Housing eventually lifted employment after the 2001 dot-com bust.
"There's a lack of clarity on what the next big thing is going to be this time," said David Card, an economics professor at the University of California.
Until there is, many people will have to lower expectations and living standards as they enter fields with less pay and less job stability, said Dan Finnigan, CEO of online employment service Jobvite.
"People who are unemployed have to embrace this future that they are going to have many jobs," he said. "We will always be working on the next gig."

Are the American People Obsolete?

The richest few don't need the rest of us as markets, soldiers or police anymore. Maybe we should all emigrate

New America Foundation
July 27, 2001

Have the American people outlived their usefulness to the rich minority in the United States? A number of trends suggest that the answer may be yes.

In every industrial democracy since the end of World War II, there has been a social contract between the few and the many. In return for receiving a disproportionate amount of the gains from economic growth in a capitalist economy, the rich paid a disproportionate percentage of the taxes needed for public goods and a safety net for the majority.

In North America and Europe, the economic elite agreed to this bargain because they needed ordinary people as consumers and soldiers. Without mass consumption, the factories in which the rich invested would grind to a halt. Without universal conscription in the world wars, and selective conscription during the Cold War, the U.S. and its allies might have failed to defeat totalitarian empires that would have created a world order hostile to a market economy.

Globalization has eliminated the first reason for the rich to continue supporting this bargain at the nation-state level, while the privatization of the military threatens the other rationale.

The offshoring of industrial production means that many American investors and corporate managers no longer need an American workforce in order to prosper. They can enjoy their stream of profits from factories in China while shutting down factories in the U.S. And if Chinese workers have the impertinence to demand higher wages, American corporations can find low-wage labor in other countries.

This marks a historic change in the relationship between capital and labor in the U.S. The robber barons of the late 19th century generally lived near the American working class and could be threatened by strikes and frightened by the prospect of revolution. But rioting Chinese workers are not going to burn down New York City or march on the Hamptons.

What about markets? Many U.S. multinationals that have transferred production to other countries continue to depend on an American mass market. But that, too, may be changing. American consumers are tapped out, and as long as they are paying down their debts from the bubble years, private household demand for goods and services will grow slowly at best in the United States. In the long run, the fastest-growing consumer markets, like the fastest-growing labor markets, may be found in China, India and other developing countries.

This, too, marks a dramatic change. As bad as they were, the robber barons depended on the continental U.S. market for their incomes. The financier J.P. Morgan was not so much an international banker as a kind of industrial capitalist, organizing American industrial corporations that depended on predominantly domestic markets. He didn't make most of his money from investing in other countries.

In contrast, many of the highest-paid individuals on Wall Street have grown rich through activities that have little or no connection with the American economy. They can flourish even if the U.S. declines, as long as they can tap into growth in other regions of the world.

Thanks to deindustrialization, which is caused both by productivity growth and by corporate offshoring, the overwhelming majority of Americans now work in the non-traded domestic service sector. The jobs that have the greatest growth in numbers are concentrated in sectors like medical care and childcare.

Even here, the rich have options other than hiring American citizens. Wealthy liberals and wealthy conservatives agree on one thing: the need for more unskilled immigration to the U.S. This is hardly surprising, as the rich are far more dependent on immigrant servants than middle-class and working-class Americans are.

The late Patricia Buckley, the socialite wife of the late William F. Buckley Jr., once told me, "One simply can't live in Manhattan without at least three servants -- a cook and at least two maids." She had a British cook and Spanish-speaking maids. New York Mayor Michael Bloomberg recently revealed the plutocratic perspective on immigration when he defended illegal immigration by asking, "Who takes care of the greens and the fairways in your golf course?"

The point is that, just as much of America's elite is willing to shut down every factory in the country if it is possible to open cheaper factories in countries like China, so much of the American ruling class would prefer not to hire their fellow Americans, even for jobs done on American soil, if less expensive and more deferential foreign nationals with fewer legal rights can be imported. Small wonder that proposals for "guest worker" programs are so popular in the U.S. establishment. Foreign "guest workers" laboring on American soil like H1Bs and H2Bs -- those with non-immigrant visas allowing technical or non-agriculture seasonal workers to be employed in the U.S. -- are latter-day coolies who do not have the right to vote.

If much of America's investor class no longer needs Americans either as workers or consumers, elite Americans might still depend on ordinary Americans to protect them, by serving in the military or police forces. Increasingly, however, America's professional army is being supplemented by contractors -- that is, mercenaries. And the elite press periodically publishes proposals to sell citizenship to foreigners who serve as soldiers in an American Foreign Legion. It is probably only a matter of time before some earnest pundit proposes to replace American police officers with foreign guest-worker mercenaries as well.

Offshoring and immigration, then, are severing the link between the fate of most Americans and the fate of the American rich. A member of the elite can make money from factories in China that sell to consumers in India, while relying entirely or almost entirely on immigrant servants at one of several homes around the country. With a foreign workforce for the corporations policed by brutal autocracies and non-voting immigrant servants in the U.S., the only thing missing is a non-voting immigrant mercenary army, whose legions can be deployed in foreign wars without creating grieving parents, widows and children who vote in American elections.

If the American rich increasingly do not depend for their wealth on American workers and American consumers or for their safety on American soldiers or police officers, then it is hardly surprising that so many of them should be so hostile to paying taxes to support the infrastructure and the social programs that help the majority of the American people. The rich don't need the rest anymore.

To be sure, wealthy humanitarians might take pity on their economically obsolescent fellow citizens, but they no longer have any personal economic incentive to do so. Besides, philanthropists may be inclined to devote most of their charity to the desperate and destitute of other countries rather than to their fellow Americans.

If most Americans are no longer needed by the American rich, then perhaps the United States should consider a policy adopted by the aristocracies and oligarchies of many countries with surplus populations in the past: the promotion of emigration. The rich might consent to a one-time tax to bribe middle-class and working-class Americans into departing the U.S. for other lands, and bribing foreign countries to accept them, in order to be alleviated from a high tax burden in the long run.

Where would a few hundred million ex-Americans go? The answer is obvious: to the emerging markets where the work and investment are found. That will show all those American union members who complain that their jobs have been outsourced to China. Let them move to China themselves and compete, instead of complaining!

Needless to say, the Chinese and Indians might resist the idea of an influx of vast numbers of downwardly mobile North American workers. But like American capitalists, Chinese and Indian capitalists might learn that ethnic diversity impedes unionization, while the mass immigration of North Americans to East and South Asia would keep wages in those regions competitively low for another few decades at least.

Once emptied of superfluous citizens, the U.S. could become a kind of giant Aspen for the small population of the super-rich and their non-voting immigrant retainers. Many environmentalists might approve of the depopulation of North America, because sprawling suburbs would soon be reclaimed by the wilderness. And deficit hawks would be pleased as well. The middle-class masses dependent on Social Security and Medicare would have departed the country, leaving only the self-sufficient rich and foreign guest workers without any benefits, other than the charity of their employers.

Of course there are alternative options, which would not require the departure of most Americans from America for new lives on distant shores. One would be a new social contract, in which the American people, through representatives whom they actually control, would ordain that American corporations are chartered to create jobs in the U.S. for American workers, and if that does not interest their shareholders and managers then they can do without legal privileges granted by the sovereign people, like limited liability.

The American people also could put a stop to any thought of an American Foreign Legion and declare, through their representatives, that a nation of citizen-workers will be protected by citizen-soldiers, whether professionals or, in emergencies, conscripts. The American people, in other words, could insist that the United States will be a democratic republican nation-state, not a post-national rentier oligarchy.

But restoring democratic nationalism in the U.S. would inconvenience America's affluent minority. So instead of making trouble, maybe most Americans should just find a new continent to call home.

The Middle Class in America Is Radically Shrinking. Here Are the Stats to Prove it

Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can't make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street. - America Without a Middle Class, devoish's CAPS Blog, July 24, 2010

Business Insider
July 15, 2010

The 22 statistics detailed here prove beyond a shadow of a doubt that the middle class is being systematically wiped out of existence in America.

The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.

So why are we witnessing such fundamental changes? Well, the globalism and "free trade" that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects. It turns out that they didn't tell us that the "global economy" would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations. The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough.

Here are the statistics to prove it:
  • 83 percent of all U.S. stocks are in the hands of 1 percent of the people.

  • 61 percent of Americans "always or usually" live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.

  • 66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.

  • 36 percent of Americans say that they don't contribute anything to retirement savings.

  • A staggering 43 percent of Americans have less than $10,000 saved up for retirement.

  • 24 percent of American workers say that they have postponed their planned retirement age in the past year.

  • Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.

  • Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.

  • For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.

  • In 1950, the ratio of the average executive's paycheck to the average worker's paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.

  • As of 2007, the bottom 80 percent of American households held about 7% of the liquid financial assets.

  • The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.

  • Average Wall Street bonuses for 2009 were up 17 percent when compared with 2008.

  • In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.

  • The top 1 percent of U.S. households own nearly twice as much of America's corporate wealth as they did just 15 years ago.

  • In America today, the average time needed to find a job has risen to a record 35.2 weeks.

  • More than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying.

  • For the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.

  • This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.

  • Approximately 21 percent of all children in the United States are living below the poverty line in 2010 - the highest rate in 20 years.

  • Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.

  • The top 10 percent of Americans now earn around 50 percent of our national income.
Giant Sucking Sound

The reality is that no matter how smart, how strong, how educated or how hard working American workers are, they just cannot compete with people who are desperate to put in 10 to 12 hour days at less than a dollar an hour on the other side of the world. After all, what corporation in their right mind is going to pay an American worker 10 times more (plus benefits) to do the same job?

The world is fundamentally changing. Wealth and power are rapidly becoming concentrated at the top and the big global corporations are making massive amounts of money. Meanwhile, the American middle class is being systematically wiped out of existence as U.S. workers are slowly being merged into the new "global" labor pool.

What do most Americans have to offer in the marketplace other than their labor? Not much. The truth is that most Americans are absolutely dependent on someone else giving them a job. But today, U.S. workers are "less attractive" than ever. Compared to the rest of the world, American workers are extremely expensive, and the government keeps passing more rules and regulations seemingly on a monthly basis that makes it even more difficult to conduct business in the United States.

So corporations are moving operations out of the U.S. at breathtaking speed. Since the U.S. government does not penalize them for doing so, there really is no incentive for them to stay.

What has developed is a situation where the people at the top are doing quite well, while most Americans are finding it increasingly difficult to make it. There are now about six unemployed Americans for every new job opening in the United States, and the number of "chronically unemployed" is absolutely soaring. There simply are not nearly enough jobs for everyone.

Many of those who are able to get jobs are finding that they are making less money than they used to. In fact, an increasingly large percentage of Americans are working at low wage retail and service jobs.

But you can't raise a family on what you make flipping burgers at McDonald's or on what you bring in from greeting customers down at the local Wal-Mart.

The truth is that the middle class in America is dying — and once it is gone it will be incredibly difficult to rebuild.

Financial Dismantling of the American Middle Class in 8 Charts

Peak debt, credit card addiction withdrawal, banks hoarding cash, financial sector dominance in pay, Federal debt will never be paid off, and struggles of the middle class.

March 7, 2011

The American economy runs on high octane debt. Debt has been welcomed by many with open arms, and things seemed to be going well until people realized they actually had to pay the debt back.

Average Americans trying to keep up with the picket white fence image of Leave it to Beaver were largely relying on debt to keep up with this lifestyle that was unsustainable with current incomes. Paradigm shifts in economies the size of the United States happen gradually over time. They occur slowly and systematically with the patience of a person watching grass grow.

The Federal Reserve has made a conscious effort to bailout the banks and use the crisis as an excuse to lower the standard of living of most Americans to pay for the bailouts. Federal debt is so large that only someone with blind optimism would have any hope that it would ever be paid off.

When an average person cannot pay their mortgage, they lose their home in foreclosure. If someone can’t pay their car, they get it repossessed. When banks need bailouts, they simply print away and devalue the currency of the domestic country shifting the burden to society.

Have we in the United States reached a peak debt scenario? Is the Fed willing to sacrifice the middle class to keep the banking system intact?

Let us look at 8 charts showing shifts in our economy that put the middle class at risk.
Chart 1 – Credit card debt
revolving credit

Americans love credit cards right along with apple pie. Since the 1970s the amount of credit card debt in the United States moved unrelentingly higher and higher. By 2007 close to $1 trillion in credit card debt was outstanding. During the crazy debt era of securitization, we were hearing stories of cats being issued credit cards with $5,000 limits. It was a massive debt bubble.

Many average American families have relied on credit cards to give them the impression that they were keeping up with a middle class lifestyle, but instead were simply borrowing time on expensive shiny plastic. With stagnant incomes over a decade the piper is now calling.

The above chart clearly shows the contraction in outstanding credit card debt in the U.S. Much of this debt is being discharged in bankruptcy, if you are wondering how the chart is moving lower so quickly.

Chart 2 – Growing financial sector versus manufacturing
finance versus manufacturing

The above chart shows the financialization of the American economy. Since 1970s the U.S. manufacturing sector has contracted. Over 19 million workers were employed in manufacturing during the 1970s. Today we have slightly above 11 million workers with many more living in the country. Over 40 years later and our manufacturing workforce has been cut nearly in half.

But look at the financial sector. This part of the economy has been adding jobs almost nonstop. It seems that the U.S. economy was largely built on debt production and collection: credit cards, mortgages, student loans, and auto debt. Someone needs to collect the interest right?

Yet how useful is it to have giant parts of your economy developed to make nothing and suck away actual real wealth from the productive side of the market? That is what Wall Street investment banks have done for many decades, and it coalesced with our current Great Recession.

Chart 3 – Excess Reserves
excess reserves

Where is all that easy money going from the Federal Reserve? Clearly it isn’t going to average Americans in credit cards. Much of the taxpayer bailouts are being held as excess reserves and banks currently have over $1 trillion that they can easily deploy into the economy helping the middle class. Why don’t they? They don’t trust the economy because they only need to look at their internal shady practices.  They are holding onto this money for the coming problems that will hit with more defaults across all levels of loans.

The bailouts were simply a way to save the banks. Make no mistake, banks do not trust the middle class that is largely responsible for bailing them out.

Chart 4 – Too big to fail banks

The too-big-to-fail have gotten even bigger in the latest crisis. Over $10 trillion of all banking assets sit with a handful of the over 7,500 FDIC insured banks in the United States. Instead of using the crisis to make the too-big-to-fail smaller, the government, in conjunction with Wall Street, has made the big banks even bigger with more taxpayer protection. This has done little in making the financial lives of Americans any better.

Most of these banks are now making a large portion of their profits via overseas investments and stock market speculation (all on your dime by the way). Little has been done to shore up the finances of the middle class here, and many of these banks charge high interest and other hidden costs to scam Americans.

Chart 5 – Federal debt projections
cbo budget projections of federal debt
Source: CBO

The above chart shows that we have no intention of paying back our Federal debt. The optimistic scenario would require massive spending cuts that would likely contract the economy. The more dire line is basically us going on the same path. We are on this path. Nothing dramatic has changed in the last few years.
If we were adding jobs to the productive sector of the economy then we would have a better chance but, instead, the banking sector has sucked away all the taxpayer resources. There are giant expenses like Medicare that will eat a hole in our budget for years to come. It is likely that we will face cuts and tax hikes in the next decade, which doesn’t add any support for the middle class.

Chart 6 – Top 1 percent
top 1 percent
Wealth inequality in the U.S. is at levels not seen since the 1920s. We all know what happened after that. In fact, since the 1970s the top 1 percent have managed to control and take over 42 percent of all financial wealth in the United States.

We have seen in various reports that many top companies through various tax loopholes pay zero, or close to it, in taxes while most Americans have to pay Social Security and other taxes on a daily basis.

Real wealth gains have come for the top 10 percent while 90 percent of American household have gone into debt merely to stay on a middle class path. We are witnessing the effects of an economy that favors the entrenched plutocracy.

Chart 7 – Government spending
cbo budget

Just look at the above from the latest CBO report. We keep spending more than we earn as a nation. In the 2010 fiscal year we brought in $693 billion yet spent $1.1 trillion. This year it is expected to bring in $757 billion while spending $1.1 trillion again. How is this sustainable? It isn’t.

The only reason we can do this is because the Federal Reserve can print away and devalue the U.S. dollar globally. On a more basic level this means the quality of life of Americans will go lower and lower.

Notice how food prices are soaring? Notice how gas is $4 a gallon? Notice how college costs are soaring? The dollar isn’t going as far as it once did, and this isn’t by accident. Yet bank profits are soaring, and those that run these institutions keep getting more and more wealth in the top 1 percent bracket.

Chart 8 – Where do Americans work
Source: Wikipedia

What should stand out above is how few physical people work in finance but the share of their profits relative to all total sales and revenues is enormous. No other field has this kind of lopsided data.

Wall Street banks continues to rob the public blind by devaluing the U.S. dollar through their shell organization in the Federal Reserve. These are institutions that are largely responsible for the Great Recession with their creation of the toxic junk financial instruments and other archaic system designed to surgically suck true wealth out of the economy and aggregate it into the hands of the few.

What many are realizing is that we are in for a challenging decade ahead. Even with jobs being added, these are happening in lower paying sectors. This is the last thing we need with half of Americans working at jobs making $25,000 a year or less. Unless things radically change, the middle class will be gone within one decade.

Middle Class Being Squeezed Out of Existence

Economy in Crisis
July 27, 2010

America’s once thriving middle class is slowly but surely being squeezed out of existence as the gap between the haves and the have-nots continues to grow due to the nation’s failed trade policies that have benefited the very few, according to Michael Snyder.
“Wealth and power are rapidly becoming concentrated at the top and the big global corporations are making massive amounts of money,” Snyder writes at Yahoo! Finance. “Meanwhile, the American middle class is being systematically wiped out of existence as U.S. workers are slowly being merged into the new 'global' labor pool.”
The top 10 percent of Americans now earn roughly half of the nation’s wealth, according to The Business Insider. Just 1 percent owns 83 percent of all the nation’s stock. That same 1 percent of Americans were also the beneficiaries of 66 percent of all income growth between 2001 and 2007.
“The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough,” Snyder writes.
So tough in fact, that 61 percent of Americans now “usually or always” live paycheck to paycheck, The Business Insider says. Ninety-five percent of Americans have not earned enough additional income to meet the rise in housing costs since 1975. And the bottom 50 percent of Americans now hold less than one percent of the nation’s wealth.

The American middle class was built on the backs of the nation’s manufacturing base. So it stands to reason that the middle class would also fall with the decline of the industrial sector.

Today, top executives make, on average, 100 times more than their employees. In the 1960s, that gap was just 30 times as much. It is no coincidence then that since the 1960s, America has added roughly 46 million jobs, while shedding over two million manufacturing jobs.
“The reality is that no matter how smart, how strong, how educated or how hard working American workers are, they just cannot compete with people who are desperate to put in 10 to 12 hour days at less than a dollar an hour on the other side of the world,” Snyder writes.
The nation is now more reliant on the low-paying service sector than ever. Currently, 40 percent of those that are employed work in a service industry job. The shift from the manufacturing sector to the industrial sector has forced countless Americans out of the middle class and into lower class status, making the nation’s gap between the rich and poor even more pronounced.

In 2006, the 400 highest earning taxpayers in America made $105 billion in total adjusted gross income, for an average of $263 million each. Those making minimum wage in 2006 made approximately $13,100 for a difference of 20,000 to one.

In addition, a 2009 study by the Organization for Economic Cooperation and Development found that the U.S.' wage gap between the rich and the poor is greater than that of 30 other developed nations — including the United Kingdom, known for its class system with little upward mobility. Furthermore, the study found that America's wage gap is more fitting for an economically downtrodden nation like Russia or Turkey. The top 10 percent of earners in America made roughly $93,000 per year, while the10 percent on the low end of the scale made only $5,800 per year.
“The globalism and ‘free trade’ that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects,” according to Snyder. “It turns out that they didn't tell us that the ‘global economy’ would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations.”

Defense Contractors Using Cheap Prison Labor Rather Than High Paid Union Workers to Build High-Tech Weapons Systems

Prison labor seems like a win-win to many, but a closer look reveals a race to the bottom for skilled workers.

April 28, 2011

It is a little known fact of the attack on Libya that some of the components of the cruise missiles being launched into the country may have been made by prisoners in the United States. According to its website, UNICOR, which is the organization that represents Federal Prison Industries, “supplies numerous electronic components and service for guided missiles, including the Patriot Advanced Capability Missile (PAC-3)”.

In addition to constructing electronic components for missiles, prison labor in the United States is used to make electronic cables for defense items like “the McDonnell Douglas/Boeing (BA) F-15, the General Dynamics/Lockheed Martin F-16, Bell/Textron’s (TXT) Cobra helicopter, as well as electro-optical equipment for the BAE Systems”.

Traditionally these types of defense jobs would have gone to highly paid, unionized workers. However the prison workers building parts for these missiles earn a starting wage of 23 cents an hour and can only make a maximum of $1.15 an hour. Nearly 1 in 100 adults are in jail in the United States and are exempt from our minimum wage laws, creating a sizable captive workforce that could undercut outside wage standards.
"It's no different than when our government allowed a United Steelworkers-represented factory of several hundred good jobs in Indiana called Magnequench to shut down," United Steelworkers Public Affairs Director Gary Hubbard told AlterNet. "This was the last high-tech magnetics production plant in the U.S. that made guidance components for missiles and smart bombs. The factory was sold to a Chinese state enterprise that moved all the machinery to China. And now we depend on prison labor to build our defense products?"
As the governments look to cut costs and trim deficits, they are giving more and more contracts for skilled work to prisons, whose workers often make 1/15th of the wages they would earn in the private sector. Whereas in the past prisoners made license plates and desks for state offices, they are now being trained for skilled work doing everything from assembling cable components for guided missiles to underwater repair welding. Even the much heralded green jobs aren’t immune to being outsourced to prison -- the solar panels being used to provide electricity for the State Department’s office in Washington, D.C. are constructed with prison labor.

States are increasingly expanding the type of products they use prison labor for to help cover the cost of keeping a person in prison -- nearly $29,000 per year. States spend a whopping $60 billion dollars per year to maintain prisons, one of every 15 state dollars is spent on prisons, and corrections spending is the second fastest-growing expenditure in state budgets. Prisons are popular in small town America because they often mean bringing several hundred jobs to economically depressed communities. Thus many are in favor using incarcerated labor to pay for prisons because they work as a means of economic development.

According to the New York Times:
“Using inmate labor has created unusual alliances: liberal humanitarian groups that advocate more education and exercise in prisons find themselves supporting proposals from conservative budget hawks to get inmates jobs, often outdoors, where they can learn new skills. Having a job in prison has been linked in studies to decreased violence, improved morale and lowered recidivism." Michael P. Jacobson, director of the Vera Institute of Justice, told the Times, “At the grossest financial level, it’s just savings. You can cut the government worker, save the salary and still maintain the service, and you’re providing a skill for when they leave.”
For many people, prison labor looks like an easy win-win. Workers get skills, the state is able to pay for more prisons as the prison population grows, and local towns are eager to get prisons for the jobs they bring. But is it really a win-win for all?
“At first, giving people in prison a job looks like a good idea. The prisoner gets the job skill and a few extra dollars, the state takes some payment to let it happen, and the industry gets the work done. But this is not a win-win situation” says prison expert and SEIU senior research analyst Eric Lotke. “It’s actually a lose-lose. The person in prison is paid far less than a real wage negotiated by free people in a free market economy. So free-market wages are undercut, driving wages down in the real economy. Meanwhile, business gets an incentive to lock people up for convict labor and the state loses its financial incentive to improve its criminal justice policies.“
In some cases, forced prison labor has resulted in inmates being brutalized rather than rehabilitated. Last year, Georgia inmates went on strike at six prisons for over a week. They complained that they were beaten if they refused to work prison jobs for little or sometimes no pay.
Prison experts like Lotke say that while such jobs can be valuable in a productive environment, there are different ways to do things.
“You could pay workers union wages and incur it into an account for when they are released. This would give them an incentive to behave well while they are in prison and give them a financial base for when they get out of prison,” he said.
Lotke’s union, SEIU, which represents many government service workers whose jobs are threatened by slave wage prison labor, is looking at ways to invest in programs that will help create jobs. SEIU is working with state governments to dedicate resources away from prisons and into government services that keep people out of prison like education, after school programs and other services that create good jobs in underdeveloped communities.
“The prison industry is extraordinarily destabilizing because small towns want the jobs that prisons create. However, Its all backwards—a small town could get a highway or a university or a grant for a factory—any of these things could create jobs,“ says Lotke. “We could be investing in good jobs, creating the conditions where poor youth don’t turn to crime out of economic frustration. Instead we replicate the problem by throwing all this money at the prison system. When people realize what a waste of money, economic opportunity, and how ineffective it is to have so many people locked up, that is when we finally solve the criminal justice and jobs problem in this country.”
The effort by SEIU to mhttp://www.blogger.com/img/blank.gifove resources away from prisons is a bold one, as prison guard unions have traditionally lobbied heavily to expand the number of correctional facilities in places like California. But as public sector union workers lose their jobs and other services are cut to keep prisons open, more unions are realizing they have to do.

See Private Prisons Operate for Profit in America

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