little job growth for scientists and everyone else

Another Grim Jobs Report
How Safe is Your Job?
By PAUL CRAIG ROBERTS

Is your job safe? Not if it can be done abroad. The only safe jobs are
in domestic services that require a "hands-on" presence, such as
barbers, hospital orderlies, and waitresses.
For a number of years the Bureau of Labor Statistics' monthly payroll
jobs reports have been sending US policymakers dire warnings, only to
be ignored. The March report repeats the message. Ninety-five percent
of the new jobs created are in domestic services. The US economy no
longer creates jobs in export or export-competitive sectors.

Wholesale and retail trade, waitresses and bartenders account for 46%
of the new jobs. Education and health services, administrative and
waste services, and financial activities account for another 46%.
(Wholesale and retail trade jobs for March were 40,000. These jobs
would be sales clerks ringing up sales on registers, people stocking
the aisles at Wal-Mart, Home Depot, etc.

Leisure and hospitality (primarily waitresses and bartenders) accounted
for 42,000 March jobs.) In contrast, computer system services accounted
for 3,600 jobs.

The biggest item (half) in education and health services is "ambulatory
health care services."

This has been the profile of US employment growth for a number of
years, along with some construction jobs filled by legal and illegal
immigrants. It is the job profile of a third world economy.

>From January 2001 to January 2006 the US economy lost 2.9 million
manufacturing jobs. The promised replacement jobs--"new economy"
high-tech knowledge jobs--have failed to materialize.

High-tech knowledge jobs are also being outsourced abroad. According to
the Bureau of Labor Statistics, US employment of engineers and
architects declined by 189,940 between November 2000 and November 2004
(latest data available).

Economist Alan Blinder estimates that as many as 56 million American
jobs are susceptible to offshore outsourcing. That would be about half
of the US work force.

Offshoring has contributed to the explosion of the US trade/current
account deficit over the past decade to $800 billion annually and
rising. The US has a trade deficit in manufactured products, including
advanced technology products, of more than a half trillion dollars
annually, a sum far larger than the oil import bill.

To cover the trade deficit, the US has to turn over to foreigners
ownership of its accumulated wealth. This worsens the current account
deficit as the income streams on the US based assets now accrue to
foreigners.

Many economists pretend that the whopping US trade/current account
deficit is evidence that the rest of the world has great confidence in
America. They pretend that it is foreign investment in the US that
causes the trade deficit, whereas the simple fact is that it is the US
trade deficit that gives foreigners the dollars with which to purchase
our existing assets.

Traditionally, a trade deficit might indicate that a country's
industries were not competitive against imports from abroad, resulting
in a decline in the exchange value of the country's currency. This
would make foreign goods more expensive for that country and its goods
cheaper for foreigners, thus restoring a balance.

This does not work for the US for three reasons:

(1) The US dollar is the world's reserve currency. The dollar can be
used to settle all international accounts. Therefore, there is a world
demand for dollars. This demand absorbs what would be an excess supply
for any other country running such large deficits.

(2) China pegs its currency to the dollar, thus preventing an
adjustment in the price of the two countries goods and services. Other
countries, such as Japan, intervene in currency markets by purchasing
dollars in order to support the dollar and prevent its currency from
rising in dollar value.

(3) Offshoring turns US production into imports. Much of the US trade
deficit results from offshoring, not from traditional trade
competition. The collapse of world socialism and the advent of the high
speed Internet made cheap foreign labor available to US companies. US
firms use foreign labor to produce offshore the goods and services that
they market to Americans. For example, more than half of the large US
trade deficit with China is comprised of goods and services produced by
US companies in China for American markets.

How can the US reduce its trade deficit when it deprives itself of
exports and fills itself with imports by offshoring its production of
goods and services, and when the devaluation of the dollar is limited
by the dollar's reserve role and by other countries pegging their
currency to the dollar or by intervening to support the dollar?
Obviously, when balance returns to US trade, it will not come through
traditional means.

One way balance can return is by the US oversupplying the world with
dollars to the point at which the dollar is abandoned as the reserve
currency.

Another way is through the limit placed on Americans' ability to
consume that results from replacing manufacturing and engineering jobs
with waitress, bartender and hospital orderly jobs. A country that
loses high value-added jobs and gains low value-added jobs is in danger
of losing its prosperity. Offshoring raises corporate profits in the
short-run at the expense of destroying the domestic consumer market in
the long-run.

Most economists are confused about offshoring. They mistakenly think
offshoring is an example of free trade bringing mutual benefit through
the principle of comparative advantage. It is not. Offshoring is an
example of companies obtaining absolute advantage by combining
high-tech capital with low-cost labor. The gains from absolute
advantage are asymmetrical or one-sided. The cheap labor country gains,
and the expensive labor country loses.

As Morgan Stanley economist Stephen Roach pointed out on April 7,
"average hourly compensation of Chinese manufacturing workers is only
3-4 per cent of levels in the US, 10% of the pay rate of Asia's newly
industrialized economies, and 25 per cent of levels in Mexico and
Brazil." Roach also notes that with a rural population of 745 million
(about two and one-half times the total US population) and headcount
reductions of more than 60 million workers from state-owned
enterprises, China will not experience a labor shortage any time soon.

This means that it will be a long time before Chinese wages rise enough
to offset the benefits of offshoring. The same can be said about India.
Consequently, a large percentage of US jobs is vulnerable to being
moved abroad.

Paul Craig Roberts was Assistant Secretary of the Treasury in the
Reagan administration. He was Associate Editor of the Wall Street
Journal editorial page and Contributing Editor of National Review. He
is coauthor of The Tyranny of Good Intentions.He can be reached at: