In the last decade, U.S.-based multinational companies have been on a hiring spree, adding over 2 million new jobs. They're just not adding them in the United States.
In the last decade, U.S.-based multinational corporations cut nearly 864,000 jobs in the United States, according to a new report from the Commerce Department's Bureau of Economic Analysis. At the same time, they added 2.87 million jobs outside the country, including 1.61 million jobs in Asia and the Pacific region.
Multinational companies are focusing their hiring largely in emerging markets, where economic growth has been faster than in other regions. China, which grew at an average 10.3 percent per year between 1999 and 2009, was the country that enjoyed the most job growth from U.S.-based multinational companies, with 691,100 jobs added, according to the report.
In India, where the economy grew an average 7.2 percent per year during that time frame, U.S.-based multinational corporations added 425,800 jobs. The U.S. economy, in contrast, grew an average 1.7 percent per year.
U.S.-based multinational corporations also added 532,300 jobs in Latin America, the study found. Economies in the region have been growing nearly four percent per year on average, according to the Conference Board.
"They're going abroad mainly to sell their products," said BEA economist Raymond Mataloni, who co-authored the report. "Most of the sales in these emerging markets are to local customers."
Read the rest at The Huffington Post
by Bonnie Kavoussi
This headline is somewhat misleading. It suggests that the US lost workers bu offshoring production, whereas the numbers indicate that US multinationals not only produced but also sold more products abroad. This is going to be an increasing feature of the global economy as the emerging economies continue to grow rapidly. Viewing it as a bug is counter-productive, and this will only serve to disadvantage US multinationals in the arena of global competition. Scapegoating "big corporations" is not the way to go here, as intuitive as it may seem.
The problem is not as much offshoring US jobs as the US technocrati being unable to understand that the real issue is lagging demand, largely due to flat worker incomes and excessively high taxation, FICA in particular.
It is true that corporations have been allocating a larger share of revenue to profit at the expense of wages. However, worker compensation has remained pretty stable over this time. While wages have been stagnant to falling in real terms, benefits have been rising, driven by exploding health care costs and rising insurance premiums. This has meant a transference of revenue to FIRE, along with interest and mortgage payments. As a result, the proportion of GDP garnered by FIRE has increased dramatically.
Demand was supported for a time through credit-based consumption, which finally reached unsustainable levels when private debt ballooned, hit historically high levels.
The solution is not bringing "back the jobs." Rather, it lies in an understanding that the real issue is effective demand and that this can be addressed fiscally through the sectoral balance approach and functional finance, as recommended by MMT.
Some will counter with the rising level of imports and assert that the US needs to grow it export market to take back jobs. MMT economists point out, however, that imports are favorable in real terms of trade, whereas exporting involves domestic workers using national resource to supply foreigners rather than the country's own nationals.
As long as the issue is understood correctly and the sectors kept in balance at full employment, there is no problem with multinationals producing and selling abroad, or the country running a persistent current account deficit as long as other countries want to save in its courrency.
