Doesn’t Pay to Export Jobs—And More Quick News

by Tula Connell, Oct 6, 2006

A few end of the week items worth noting.

* It doesn’t pay to export jobs. A new report by the Conference Board finds the cost advantages of low-wage countries over the United States in manufacturing industries are less than suggested by the wide gap in compensation levels because emerging economies also have much lower productivity rates.

The Conference Board says the report, Competitive Advantage of ‘Low-Wage’ Countries Often Exaggerated, is the first attempt by a non-governmental organization to estimate the level of unit labor costs in China and India in comparable U.S. dollar purchasing power parity.

And speaking of U.S. labor productivity….Why is it again that America’s workers have not seen a real wage increase since the 1970s while productivity has boomed?

Rising Productivity Used to Mean Rising Wages…Yet, Workers Have Not Seen a Wage Increase Since the 1970s

Source: Economic Policy Institute

* Long-term U.S. economic growth unhealthy. Today’s jobs report by the U.S. Labor Department will get attention for the dip in September unemployment rate, from 4.7 percent to 4.6 percent. But the report found a significant lack of job creation in September—a paltry 51,000 jobs compared with the more than 120,000 expected by analysts, yet another sign that long-term economic trends are unhealthy.
 
* More evidence of an unhealthy economy. The Center for American Progress released a report a few days ago showing the nation’s middle class is in worse shape than ever.
Some of the report’s findings:

From 2001 to 2004, the proportion of middle-class families that has saved three months’ worth of income dropped to 18.3 percent from 28.8 percent.

Higher prices for health care, energy, transportation, food and education have put Americans in this position as corporate profits have risen.

To maintain day-to-day consumption, families have taken on a record amount of debt, equal to 126.4 percent of disposable income in the first quarter of 2006, according to the study.

Gas prices rigged before the elections? Some 42 percent of the public agrees that the Bush administration is fixing prices before the November elections, according to a recent Gallup Poll. Sean-Paul Kelley at the Agonist offers some analysis of how this could be happening. It’s complex, but it involves Goldman Sachs tweaking the weighting of gasoline on its commodity index. Lower weighting, lower prices.

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