Republicans are celebrating the latest Bureau of Labor Statistics report showing 337,000 new jobs created in October.
However, a look behind the BLS numbers shows a discouraging trend that has been consistent over the past four years. Manufacturing jobs are shrinking. It appears that the U.S. economy is only creating jobs in government and in areas of domestic services that cannot be outsourced or replaced with imports.
The October report shows that government employment accounts for 41,000 of the new jobs. In the private economy, 296,000 jobs were created. Of these, 71,000 were in construction; 36,000 were in wholesale and retail trade, transportation and warehousing; 17,000 were in credit services; 55,000 were in employment services (primarily temporary help); 62,000 were in school administration, teaching, health care and social assistance; and 20,000 jobs were in bars and restaurants.
Manufacturing lost 2.7 million jobs since Bush took office, with losses being registered in every category, in both durable and non-durable goods. These losses continue in the latest report, despite gains in other categories. “New economy” jobs in information, computer equipment, and Internet-related firms were either flat or down, and in most cases still behind where they were a year ago.
The report also shows that foreign trade continued to erode U.S. production of both goods and services during the third quarter. According to Charles W. McMillion, president of MBG Information Services, and the Washington Post, the U.S. trade deficit in goods and services is now soaring past $1.2 million each minute.
Record-breaking levels of global sourcing has resulted in a 5.5 percent drag on the U.S. gross domestic product, paid for by accumulating an equivalent level of additional foreign debt and asset sales. As a share of GDP, the economic drag from unbalanced trade is at least two times worse than it was during the “competitiveness crisis” of the mid-1980s, when rumors of Japanese economic supremacy were rife.
The loss of production to net imports goes a long way to explaining the sluggish job and income growth since May. There has been job growth for 15 consecutive months and the addition of 2.1 million jobs. But, beyond any precedent, 35 months after the start of the current cyclical recovery, private sector workers are still being paid for virtually the same total hours worked as when the recession ended.
Three consecutive years of Bush tax cuts gave a temporary bounce to growth in disposable income and (after-tax) profits. But real income has been stagnant since April, with spending growth weak and uneven. Savings rates have fallen to post-Depression lows, plunging to just 0.17 percent of disposable income in September. Household debt has now spiked to 117 percent of annual disposable income, and debt service obligations in the past three years remain far higher than ever before — even with record low interest rates.
As a curious sidelight to the many election statistics available, it’s worth noting that in the month prior to the election, voters in Ohio and West Virginia — two hotly contested states — told pollsters that their number one issue was the “economy and jobs.” The jobs issue led by an 8-10 point margin over the next biggest issues, “terrorism” and “moral values,” which were tied, followed closely by “Iraq.”
In the last weeks before the election, the Kerry and Bush campaigns focused heavily on Iraq and questions of national security, and the religious right on “moral values” — all in contrast to the emphasis placed by Bill Clinton and others on the importance of keeping the focus on economic issues.
For those who still felt the “economy and jobs” was the most important question, Kerry was the choice in both states by a whopping 85-15 percent margin. Not surprisingly, these were also voters in the “under $50,000 annual income” category. Kerry also enjoyed a big margin among voters who thought Iraq was a big issue.
But those voters who were distracted by the campaign rhetoric about terrorism and moral values, or about Bush’s phony claims about job growth, were seriously misled.
The October jobs report is a blip that really disguises a continuing flop. Perhaps voters’ failing to focus on jobs may have helped re-elected Bush, the Blip-Flop President.
The author can be reached at jcase@steuber.com.
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