The Labor Shortage Hoax

June 27, 2014

I haven’t posted much lately because it’s been a tough few weeks, with the worst re-aggravation of an old back injury that I’ve experienced in 25 years.  But I’ve finally overcome it!

The following article appeared in the most recent edition of the FAIR Immigration Report.  “FAIR” is the Federation for American Immigration Reform, a lobbying group that works for tougher enforcement of the border, deportation of illegals and lower rates of legal immigration.

The article takes on the hoax perpetrated by business lobbying groups that we need more immigration because of labor shortages (both in skilled and unskilled labor).  I can’t say it better myself, so enjoy the article:  FAIR article.


Obama Directly Responsible for Immigration Mess

June 11, 2014

As reported in this CNN article (and virtually everywhere else this week), the southern U.S. border has been overrun by a tidal wave of unaccompanied, underage illegal immigrants.

Of the 1,200 or so crossing the Rio Grande in eastern Texas every day, up to 400 are unaccompanied children…

Prior to Obama’s refusal to enforce immigration laws, about 8,000 unaccompanied children entered the country illegally each year.  Now the rate is 400 per day – almost 150,000 per year – and that’s just one small section of the border in Texas.  Word has gotten out in Mexico and Central America that if you’re a minor and you can make it here, then you’re here to stay and the American Dream is yours.

The Obama administration has often complained that we don’t have the resources to deport all of these illegal immigrants.  Yet it has found the resources to bus this new wave all across the southwest and to set up housing for them.  Couldn’t it much more easily simply bus them back to the border?  At that point, they’re Mexico’s problem and if Mexico doesn’t like it, it’s time to get tough with Mexico and demand that they begin enforcing their own borders.

This situation is an outrage and the vast majority of the American people are absolutely fed up.  The media is also widely reporting the defeat of Republican Eric Cantor this morning, and his support for immigration “reform” and amnesty is being cited as the major reason why.  All congressmen and senators should sit up and take note.

This isn’t a rant against immigration, it’s a rant against a breakdown in common sense that fuels population growth at a time when that’s the very last thing that this country needs.  Of the approximately 18 million people added to our ranks in the last seven years (almost all of it through immigration), not a single one has found employment.  (The employment level is the same as it was seven years ago.)  But all are exacerbating our dependence on foreign oil, our challenge to reduce carbon emissions and our growing dependence on safety net programs to feed and house a growing population living in poverty.

Good riddance, Eric Cantor.  Too bad we have to wait three years before a similar change in president.


May Jobs Report Provides Further Evidence of an Economy Locked into “New Normal”

June 7, 2014

The May jobs report, released yesterday by the Bureau of Labor Statistics, was celebrated as evidence of an economy rebounding from an economically-scary first quarter in which GDP (gross domestic product) actually declined by a significant 1%.  Another quarter of decline and the economy would officially be declared in recession.  So another month of job gains that exceeded 200,000 (the total was 217,000) was a relief.  Little discussed is the fact that it’s down significantly from April (282,000).

Manufacturing managed to eke out a gain of 10,000 jobs, all in durable goods, driven mostly by auto manufacturing.  Aside from durable goods, manufacturing employment actually fell by 7,000 jobs.

Construction was worse, squeaking out only 6,000 new jobs.

Much was made of the fact that the “employment level” – a statistic from the household survey – has returned to pre-recession levels.  Well, that depends on when you consider that the recession actually began.  Officially, it began with the 4th quarter of 2008 when GDP began to decline.  But by that time, the employment level had already fallen by over a million jobs, and the employment-population ratio was already in free-fall.

The report is riddled with the word “unchanged.”  Aside from the headline number from the establishment survey, there wasn’t much to celebrate.  Per capita employment is essentially unchanged over the past four months and has actually fallen slightly in the past two months.  Here’s the chart:  Per Capita Employment.  Note that, although per capita employment rose above 45% in November of 2011 for the first time since the start of the recession, it has not managed to crack 46% yet.  When I first began tracking this data in November of 2007, per capita employment was at 48.4% and in the midst of a rapid plunge from earlier, even higher levels.

The long and short of it is welcome to the world of “new normal” – high unemployment, lots of part-time work and low wages.  It’s now accepted.  This is about as good as it gets now in an economic “recovery.”

If this is recovery, what will the next recession look like?


U.S. Balance of Trade in Manufacturing in Free-Fall

June 5, 2014

The April trade report, released by the Bureau of Economic Analysis yesterday, was about as bad as it gets.  It jumped by $3.0 billion to $47.2 billion, its worst level in two years.  But dig into the details and it gets even worse.  The trade deficit in manufactured goods soared to $48.9 billion – an all-time record.  Check out this chart of our balance of trade in manufactured goods:  Manf’d Goods Balance of Trade.

As you can see, our balance of trade in manufactured goods is in a state of free-fall.  There’s just no other way to describe it.  Manufactured exports fell by $0.7 billion in April while imports rose by $3.1 billion.  Contrary to President Obama’s goal of doubling exports by January of next year (as compared to five years earlier), exports have actually been stagnant for two years.  (Here’s the chart:  Manf’d exports vs. goal.)  Almost 4-1/2 years into his plan, manufactured exports have risen a meager 29%, and all of that has much more to do with the global rebound in trade following the recession than anything resembling an “American manufacturing renaissance” that we keep hearing about.  Imports have risen far more.  In other words, as the rest of the world economy recovers, America’s share of the market continues to decline.

The stage is being set for the next recession.  With both federal deficit spending and Federal Reserve stimulus shrinking to a level that is now lagging the trade deficit, we’re beginning to experience once again a net drain of money from the economy.  In the past, every time that’s happened, a recession soon followed.  We’ll soon see.

Walmart Suppliers Complain of Obstacles to American Manufacturing

June 4, 2014

In the above-linked Reuters article, Walmart’s suppliers are reported to be complaining of problems in re-establishing American manufacturing to help meet Walmart’s very publicly proclaimed goal of sourcing an additional $250 billion of American-made goods over the next decade.

Their complaints include a lack of domestic suppliers for components, an inexperienced work force and so on.  I have no doubt that their complaints are valid.  There’s hardly anyone left here making anything other than cars and trucks.  (As an aside, have you ever noticed that there are virtually no foreign-made trucks on the road?  Even Toyota and Nissan pickup trucks are made in the U.S.  Why?  Because the U.S. has continued to maintain a 25% tariff on all imported trucks.)  However, these complaints ring hollow when you consider the fact that when these American companies moved production to China, China was completely devoid of all such resources.  Yet, they found ways to overcome those obstacles so fast that, in a few short years, China manufacturing went from zero to the being the world’s dominant manufacturer.

Why?  Because those companies were motivated by a completely untapped, virgin market of 1.3 billion new consumers.  That’s one hell of a big motivation.  But what motivation do they have now to rebuild factories in  the U.S., other than Walmart asking them to do so?  (And I’m sure Walmart isn’t offering to pay them more to do it.)  And, what little motivation that provides is completely offset by the fact that their China plants will now be slowed by reduced exports to the U.S.

A big part of the problem is that Walmart sells end-use products, and not components, sub-assemblies or raw materials.  Those companies have even less motivation to come back – they don’t even have Walmart on their backs.  It’s kind of like the U.S. trying to apply a tariff to some end-use product.  It never works because, ultimately, it puts the companies involved at a disadvantage when trying to obtain materials and components.

Provide real motivation  and they’ll all find a way around these obstacles, just as they did when they moved to China.  Only tariffs, applied across the board to nations incapable of providing the U.S. with an equivalent market (overpopulated nations with emaciated per capita consumption), can provide the profit incentive companies need to make the transition.

I’m no fan of Walmart, but give them credit for trying.  But they need help in the form of trade policy that’s rooted in how the world of trade really works – help that our government lacks the wisdom and courage to provide.  Until that happens, the manufacturing renaissance will remain a myth.