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Archive for Wednesday, December 29, 2010

Where are the jobs? American companies hiring, just not in U.S.

December 29, 2010

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Corporate profits are up. Stock prices are up. So why isn’t anyone hiring?

Actually, many American companies are — just maybe not in your town. They’re hiring overseas, where sales are surging and the pipeline of orders is fat.

More than half of the 15,000 people that Caterpillar Inc. has hired this year were outside the U.S. UPS is also hiring at a faster clip overseas. For both companies, sales in international markets are growing at least twice as fast as domestically.

The trend helps explain why unemployment remains high in the United States, edging up to 9.8 percent last month, even though companies are performing well: All but 4 percent of the top 500 U.S. corporations reported profits this year, and the stock market is close to its highest point since the 2008 financial meltdown.

But the jobs are going elsewhere. The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute’s senior international economist.

“There’s a huge difference between what is good for American companies versus what is good for the American economy,” says Scott.

American jobs have been moving overseas for more than two decades. In recent years, though, those jobs have become more sophisticated — think semiconductors and software, not toys and clothes.

And now many of the products being made overseas aren’t coming back to the United States. Demand has grown dramatically this year in emerging markets like India, China and Brazil.

Meanwhile, consumer demand in the U.S. has been subdued. Despite a strong holiday shopping season, Americans are still spending 18 percent less than before the recession on furniture, and 10 percent less on electronics, according to MasterCard’s SpendingPulse.

“Companies will go where there are fast-growing markets and big profits,” says Jeffrey Sachs, globalization expert and economist at Columbia University. “What’s changed is that companies today are getting top talent in emerging economies, and the U.S. has to really watch out.”

With the future looking brighter overseas, companies are building there, too. Caterpillar, maker of the signature yellow bulldozers and tractors, has invested in three new plants in China in just the last two months to design and manufacture equipment. The decision is based on demand: Asia-Pacific sales soared 38 percent in the first nine months of the year, compared with 16 percent in the U.S. Caterpillar stock is up 64 percent this year.

“There is a shift in economic power that’s going on and will continue. China just became the world’s second-largest economy,” says David Wyss, chief economist at Standard & Poor’s, who notes that half of the revenue for companies in the S&P 500 in the last couple of years has come from outside the U.S.

A key factor behind this runaway international growth is the rise of the middle class in these emerging countries. By 2015, for the first time, the number of consumers in Asia’s middle class will equal those in Europe and North America combined.

“All of the growth over the next 10 years is happening in Asia,” says Homi Kharas, a senior fellow at the Brookings Institution and formerly the World Bank’s chief economist for East Asia and the Pacific.

Comments

just_another_bozo_on_this_bus 3 years, 8 months ago

The Bush tax cuts, hard at work, putting Americans out of work.

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tomatogrower 3 years, 8 months ago

Give me a break. This has been going on for years now. Especially after the Bush tax cuts. It gave the corporations enough money to move even more manufacturing out of the US. These corporations have no loyalty to the US, tax breaks or not. That's why tax cuts are not going to create any jobs. It's all a farce. Money is their only concern, and the US economy could tank for all they care.

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Kontum1972 3 years, 8 months ago

you know when we dropped the big bomb on japan ...that changed everything economically...because we had to rebuild that nation after we turned it to Vapor... funny how that works... its not going to get any better...

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tomatogrower 3 years, 8 months ago

What a weird comment. We learned our lesson after WWI, when we didn't help rebuild Germany, and Hitler easily swayed the citizens to his warped views. Besides, what does rebuilding Japan have anything to do with China? You do realize they are separate entities, right?
Unless the government comes to their senses and start tying tax cuts to US jobs created, then things will only get worse. In other words, if you want a tax cut, prove you have created jobs. Jobs first, then a tax cut. Of course too many of our lawmakers are getting rich from this "new" capitalism, and could care less about the American people.

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Fossick 3 years, 8 months ago

"UPS is also hiring at a faster clip overseas. "

Valid complaint. I mean, it makes so much more sense to hire Americans to deliver packages in Paris and Shanghai.

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