Who Broke America’s Jobs Machine?: Why creeping consolidation is crushing American livelihoods

[marmar]

from Washington Monthly:



Who Broke America’s Jobs Machine?
Why creeping consolidation is crushing American livelihoods.

By Barry C. Lynn and Phillip Longman


--------------------------------------------------------------------------------


Washington Monthly/New America Foundation Discussion:
"Who Broke America's Jobs Machine?"

From the March 4, 2010 Webcast


If any single number captures the state of the American economy over the last decade, it is zero. That was the net gain in jobs between 1999 and 2009—nada, nil, zip. By painful contrast, from the 1940s through the 1990s, recessions came and went, but no decade ended without at least a 20 percent increase in the number of jobs.

Many people blame the great real estate bubble of recent years. The idea here is that once a bubble pops it can destroy more real-world business activity—and jobs—than it creates as it expands. There is some truth to this. But it doesn’t explain why, even when the real estate bubble was at its most inflated, so few jobs were created compared to the tech-stock bubble of the late ’90s. Between 2000 and 2007 American businesses created only seven million jobs, before the great recession destroyed more than that. In the ’90s prior to the dot-com bust, they created more than twenty-two million jobs.

Others point to the diffusion of new technologies that reduce the number of workers needed to produce and sell manufactured products like cars and services like airline reservations. But throughout economic history, even as new technologies like the assembly line and the personal computer destroyed large numbers of jobs, they also empowered people to create new and different ones, often in greater numbers. Yet others blame foreign competition and offshoring, and point to all the jobs lost to China, India, or Mexico. Here, too, there is some truth. But U.S. governments have been liberalizing our trade laws for decades; although this has radically changed the type of jobs available to American workers—shifting vast chunks of the U.S. manufacturing sector overseas, for instance—there is little evidence that this has resulted in any lasting decline in the number of jobs in America.

Moreover, recent Labor Department statistics show that the loss of jobs here at home, be it the result of sudden economic crashes or technological progress or trade liberalization, does not appear to be our main problem at all. Though few people realize it, the rate of job destruction in the private sector is now 20 percent lower than it was in the late ’90s, when managers at America’s corporations embraced outsourcing and downsizing with an often manic intensity. Rather, the lack of net job growth over the last decade is due mainly to the creation of fewer new jobs. As recent Labor Department statistics show, even during the peak years of the housing boom, job creation by existing businesses was 14 percent lower than it was in the late ’90s. ..........(more)

The complete piece is at: http://www.washingtonmonthly.com/features/2010/1003.lynn-longman.html

[endless october]

1. outsourcers. from both parties.

hire Americans, and they buy stuff.

fire Americans, and they don't buy shit.

it's as simple as that.

[Jennicut]

2. Monopolies are killing innovation and competition and the result is barely any job growth

in the 2000's so far. "Innovation by acquisition"...that is all the big companies do any more. Time for some trust busting to happen. Teddy R. would be rolling in his grave if he saw what has happened. That article really woke me up. Tons of products made by about 3 companies in each market.

[izquierdista]

7. Shop at the dollar store

Defeat all their niche marketing strategies by buying at cut price closeout stores. The best way to opt out of the rat race is to pick over the rat's carcass after he has sold at a loss.

[Jennicut]

8. Good idea. Cut their profits.

[NC_Nurse]

3. Excellent article. K&R

[leftstreet]

4. The Gilded Age Part II

Which will obviously be easier to remember than

The Mergers and Acquistions Meets Death of Anti-Trust Laws Age



Interesting article, thanks for posting!

[OHdem10]

5. Globalization and Trade Policies poorly managed by USA.

[FarCenter]

6. Mergers eliminate lots of "general, sales, and administrative" expenses

In a typical manufacturing company, the cost of supplies, parts, machinery, and labor to manufacture the goods might be 45% of the selling price. Another 45% of the selling price might be the category "general, sales, and administrative" expenses, which covers everything from top managment to the person aswering phones at the customer support center.

To take one category in GSA -- the HR function, this has grown over the years from a simple hiring, firing, and payroll function to an elaborate organization overseeing all sorts of benefits and retirement plans, all sorts of government reporting functions, and incidently hiring and firing, although payroll is probably outsourced. A lot of this is due to HR execs expanding their turf, but it is also due to a great expansion of federal, state, and local laws and regulations.

When you put two companies manufacturing similar products together, you do not need both GSA budgets. You can probably cut at least half of one GSA budget if they are equal size companies.

Therefore, you can be more competitive and profitable as a single company than as two separate companies.

Essentially the same arguements hold for two service companies in the same service sector.