Job growth MUST be our number one priority as a nation.

[bighart]

How do we create and sustain job growth in the US? This question has been on my mind over the last several months so I decided to write down my thoughts.
The analysts and financial “experts” are telling us we are in a “jobless recovery”, just what does that mean? How can we be in an economic recovery that will impact and benefit the masses if that recovery is not creating jobs? The best we can hope for is a temporary recovery as defined by “more economic activity” at the highest levels. I personally don’t see any way that can be sustained if there are not jobs, and lots of them, being created that will drive consumer demand in a healthy and sustainable way.
Let me relate my personal experience. I am employed in a high mid-level management position for a US manufacture, that is to say I can’t be promoted any higher than I am without becoming an “executive” in the company. We are owned by a private investment group so we don’t have to answer to shareholders but do have corporate overlords to answer to. We don’t make consumer goods, our business is focused on a specific industry and we provide product to them that supports their business. There are several big players in our customer base but one far outweighs all of the others. We support many of the big players including the largest one.

Twenty years ago my company had a base employee count that was around 15,000 and did all of our manufacturing in the US. At that time the company paid 80% of employee health insurance, gave regular and generous bonuses to all employees and it was a generally favorable place to work from the perspective of the average manufacturing floor employee.

Ten years ago that base employee number was around 10,000 and due to competition in the industry we were importing about twenty percent of what we were selling. Our gross sales actually grew during that period as did our gross profit dollars, as a percentage our gross profit dropped but was still above industry average. Health insurance costs began to go up at that point, first we had to cover 30% of our insurance cost then 40%, as the company had to find ways to control overheads to maintain profit growth. Bonuses began to get a little smaller and some of the “extras” the company provided such as paid days off that weren’t counted as sick or vacation days and periodic pizza feeds or cookouts began to get less frequent.

Today our base employee count is down under 8000 and around 40% of what we sell we import. Health insurance costs have gone up every year and we now paying 50% of our health insurance, most of the “extras” have been eliminated and bonuses are smaller. Other changes that have been made include wage caps for manufacturing positions and all salary positions, lowered starting wages for low skill positions etc. Our sales growth has slowed and our profit margins while still just above industry average have declined every year. We are still improving our sales and profit dollars and as such our taxes but the percentage of profit growth compared to sales growth has declined every year.


If you are thinking why don’t you only sell what you can produce in the US, that isn’t an option. We are forced to bid on or participate in reverse actions for “packages” of product and you have to bid it all or nothing. Most of these packages contain items that are imported and have been for some time so there is no way you can bid them domestically produced and expect to get the package as it will drive the package price up to the point you won’t even be considered.

I know my experiences are limited to this one industry but I have to believe if we are seeing these kinds of things and having to make these kinds of choices regarding our business, other industries must be seeing the same thing. We keep hearing it is getting less favorable to import from China but the pricing we see from our suppliers doesn’t really reflect that. I have seen cases where import pricing for an item, including freight to deliver it to our warehouses is less than our material costs for the same item.


Given the “globalization” of the economy and the reality that the US needs manufacturing jobs to sustain a healthy middle class, what is the answer?

[Statistical]

1. Paragraphs please while you can still edit it.

[bighart]

4. Sorry typed it on Word and just pasted it in here.

[Statistical]

5. Much better thanks. I get huge readers block looking at a wall of text like is was before. n/t

[upi402]

2. can you

breakthatupintoparagraphssoitseasiertoread please?
ty

[theophilus]

3. I agree, but the Corporations want a vast pool of unemployed to exploit. And the corps are in

control right now. So fuggedabout good jobs in renewables and infrastructure or anything else until the Corporations are put back in their place.

[NNN0LHI]

6. Here this should do it

How do we create and sustain job growth in the US? This question has been on my mind over the last several months so I decided to write down my thoughts.

The analysts and financial “experts” are telling us we are in a “jobless recovery”, just what does that mean? How can we be in an economic recovery that will impact and benefit the masses if that recovery is not creating jobs? The best we can hope for is a temporary recovery as defined by “more economic activity” at the highest levels. I personally don’t see any way that can be sustained if there are not jobs, and lots of them, being created that will drive consumer demand in a healthy and sustainable way.

Let me relate my personal experience. I am employed in a high mid-level management position for a US manufacture, that is to say I can’t be promoted any higher than I am without becoming an “executive” in the company. We are owned by a private investment group so we don’t have to answer to shareholders but do have corporate overlords to answer to. We don’t make consumer goods, our business is focused on a specific industry and we provide product to them that supports their business. There are several big players in our customer base but one far outweighs all of the others. We support many of the big players including the largest one.

Twenty years ago my company had a base employee count that was around 15,000 and did all of our manufacturing in the US. At that time the company paid 80% of employee health insurance, gave regular and generous bonuses to all employees and it was a generally favorable place to work from the perspective of the average manufacturing floor employee.

Ten years ago that base employee number was around 10,000 and due to competition in the industry we were importing about twenty percent of what we were selling. Our gross sales actually grew during that period as did our gross profit dollars, as a percentage our gross profit dropped but was still above industry average. Health insurance costs began to go up at that point, first we had to cover 30% of our insurance cost then 40%, as the company had to find ways to control overheads to maintain profit growth. Bonuses began to get a little smaller and some of the “extras” the company provided such as paid days off that weren’t counted as sick or vacation days and periodic pizza feeds or cookouts began to get less frequent.

Today our base employee count is down under 8000 and around 40% of what we sell we import. Health insurance costs have gone up every year and we now paying 50% of our health insurance, most of the “extras” have been eliminated and bonuses are smaller. Other changes that have been made include wage caps for manufacturing positions and all salary positions, lowered starting wages for low skill positions etc. Our sales growth has slowed and our profit margins while still just above industry average have declined every year. We are still improving our sales and profit dollars and as such our taxes but the percentage of profit growth compared to sales growth has declined every year.

If you are thinking why don’t you only sell what you can produce in the US, that isn’t an option. We are forced to bid on or participate in reverse actions for “packages” of product and you have to bid it all or nothing. Most of these packages contain items that are imported and have been for some time so there is no way you can bid them domestically produced and expect to get the package as it will drive the package price up to the point you won’t even be considered.

I know my experiences are limited to this one industry but I have to believe if we are seeing these kinds of things and having to make these kinds of choices regarding our business, other industries must be seeing the same thing. We keep hearing it is getting less favorable to import from China but the pricing we see from our suppliers doesn’t really reflect that. I have seen cases where import pricing for an item, including freight to deliver it to our warehouses is less than our material costs for the same item.

Given the “globalization” of the economy and the reality that the US needs manufacturing jobs to sustain a healthy middle class, what is the answer?

[Statistical]

7. It is a difficult problem.

In the past we have seen similar issues. In the 1600s it took 50 people to grow enough food for 100 people. Lots of need for labor. Today it only requires 2 people to grow the food for the same 100 people. Textile Mills were common in early US history and they left a long time ago.

In the PAST each time we saw one of these "events" (more long growths in productivity) a new industry came along to scoop up the untapped labor.

That doesn't seem to be happening today. The sad reality is eventually (30 to 50 years) nanotechnology may mean that 2 people can build everything used by the other 98, much like 2 farmers grow everything eaten by the other 98. So what does the country and world do in a situation like that?

[bighart]

8. In talking to some of our Chineese vendors they use double and triple

the labor force we do to produce the same items and still sell it at a price that is impossible to compete with. I don't want to get into a discussion about government subsidies in China or the manipulation of currency values, but those are factors.

[Statistical]

10. Oh they certainly are.

The one material thing the US could do TODAY is force China to float their currency. Period. There is no excuse for them to be able to fixed their currency where they want it. They are part of WTO, they are playing at the big kids table they should float just like everyone else. US should put import duties at 200% of the difference between real exchange rate and China manipulated one. On everythng. Every single product they export until they float their currency. No other country in the world is given that privilege.

The consumer is also partially to blame also. Many (most?) consumers simply look at the pricetag. They know it is a piece of crap, they know it will break in 6 months but they buy it anyways. Companies are selling what consumers want.

I got a set of tools from my grandfather that still work great today. Not many companies make stuff that lasts three generations. While he may have paid more they lasted, they are an asset.

[bighart]

11. The problem with duties is that we owe them so much money we have

no real position of strength to negotiate from.

I find it hard to blame the consumer at this point. 25 years ago I think people started buying import products because they were cheap, now I think it is to the point that they can't afford to buy anything other than the cheapest, or close to it, option for whatever they are looking for.
Add in the fact that in some situations there is no option but an imported product and the problem compounds.

Wage stagnation, benefit loss and loss of manufacturing jobs are killing the middle class.
And BS government calculations for unemployment and inflation just mask and hide the reality.

[Statistical]

12. That isn't true. US treasuries aren't negotiable.

China bought bonds. They get an interest payment. They get repayment on maturity. Done. China can't change the terms of the bond anymore than you can.

Also China isn't going to do anything stupid like dump Treasuries on the open market. It would tank the dollar and their currency is tied to the dollar. It would destroy Chinese economy to lose their largest trading partner.

China & US are in the same boat. The only way threats make sense is if you think China will shoot a whole in the boat to sink it. No the reason we do nothing is huge money is to be made by the status quo. Combine that with a timid and wholy owned government and they sit and wait.

Eventually to avoid crippling inflation China will raise the value of the Yuan. Pathetic American governmental officials are simply China does it on their own rather than grow a pair and force a confrontation.

[bighart]

14. My thoughts are not that China would want to change the rules on the

current debt but would threaten to not take on any new debt in US treasuries. Maybe I'm wrong on this issue, certainly not an expert in this area.

I do agree with the rest of your points and wonder why the US doesn't make a bigger issue of Chinese currency manipulation, it puts US manufactures at a huge disadvantage.

[Statistical]

15. US corporations are hugely profitable off of cheap labor in China.

Everything from Whirlpool and John Deer to GM and Ford to Apple and HP.

Who has the most influence in the government?
Who stands the most to lose by rapidly rising labor costs in China?

You are right China could stop buying new debt but it is unlikely they will do so. Billions of dollars flow into China each day from trade. What are they going to do with that money? Some of it they do spend on US goods but they still have a surplus. Are they going to keep it as cash and watch inflation whittle it away to nothing? Unlikely.

Still even if China DID stop buying US debt they buy roughly 5% of all US debt. If we cut our deficits by 5% we wouldn't need to borrow a single dollar from China.

[bighart]

16. I need to learn more about Chinese/US debt relations.

[bighart]

9. Thanks for the rec.

[rhett o rick]

13. First priority is to clean up Congress otherwise nothing else is possible. nm

[bighart]

17. I agree that we need to do that as well.

But if the economy goes belly up it won't really matter who is in congress.

[felix_numinous]

18. We need a WPO program

-which would provide a trifecta of benefits, jobs, health benefits, plus projects to rebuild infrastructure and green projects---I would so vote for a candidate in 2012 with this sort of platform.

[bighart]

19. Yes I would as I think that is a great idea to spur temporary

employment, I can see a program like that lasting 5 or maybe even 10 years. To deal with long term employment needs, however, this kind of program is not sufficient.

[felix_numinous]

20. Exactly-

just get us out of the survival mode into a self sustaining condition. People are going to have to demand this from the government, they sure show no signs of the benevolency required to start such a program on their own.

[bighart]

21. I would guess the fact that there is not enough profit

to be made by large corporations is part of the reason. It could be argued that such a program would generate orders for durable goods and thereby generate corporate profits. I would have some concerns that not nearly enough of the total expenditures would find their way into the hands of those who need it and too much would end up just bolstering the bottom lines of a few select corporations and their CEO's.

[Thav]

22. I think there's a 2 part problem

The first part of the problem is demand. The economy is "recovering" now, basically because the banks have gone back to what they always do, and people are trading stocks normally again. This doesn't mean the real economy is recovering - those who were laid off may now be working at a fraction of their pre-recession pay. Those of us who have weathered the storm haven't had a change in pay because "it's the economy, stupid!" Local companies are loathe to hire because there is no growth in demand for the goods/services they produce.

Supply side economics doesn't work. Demand drives sales. Companies aren't going to produce more than is needed to meet the demand. Example: my company has a demand of 100 (arbritary measurement) of my product. In order to remain profitable, I produce as close to 100 as possible. There's no need to make 120 only to have 20 sit unsold. Supply side says that I should get tax breaks to hire more people. However, there's still only demand of 100 for my product. Those tax breaks go right to helping my bottom line, making me more money. I may pay my current employees more, but I'll probably just pocket the difference.

The only way to really increase employment is to demand more out of producers. If there's demand for 125 of my product, and my current workforce can only produce 120, then I'll need to add more workforce. Demand comes from consumers - aka. the middle/lower class.

I did a little research and a calculation on 2007 taxes. If you raised the tax rate on the highest bracket by 5%, and made the first $30k of income tax-free, you'd basically inject $300 billion into the economy without changing tax revenue. (that's the total tax on all income up to $30k). The median income is $49k, so that's a considerable break for almost half the nation, and it's revenue neutral for the government.

The second problem is the manufacturing and other good paying jobs. Free Trade and globalization have really moved these jobs overseas due to a number of factors. However, the OP mentioned health care costs played a considerable factor. What if we had a single payer system that was taxed akin to Medicare. A company would know exactly how much it would cost them to hire a new employee, and the health insurance wouldn't be an ever increasing cost.

Do something do drive up demand for local goods/services first, then focus on how to create and maintain jobs in the US. Only when demand rises, will there be need for more jobs.

[bighart]

24. Kind of a circular system.

Demand drives production which creates more jobs, which creates more demand and so on. That is part of the reason the whole "jobless recovery" thing is nonsensical to me. Without more jobs at a decent wage you can't create the additional demand, but without the additional demand there is no real need to create additional jobs. With the current system stacked against American producers any additional demand translates to additional jobs outside of the US.

[moondust]

23. For starters...

If the government insists on creating policy that favors investors then it needs to draw a line in the sand--or build a wall--between foreign investment and domestic investment. Frown on the former and reward the latter. Long gone are the days when rewarding all investment was assumed to be good for the U.S. economy. Nowadays that which may be good for Wall Street may be equally destructive for Main Street.

[bighart]

25. I like that idea.

We need to spur investment in growing our own job base. I would like to see the government spearhead serious r and d in alternative energy and transportation as a starting place.