On January 24, 2012, President Obama delivered his latest State of the Union (SOTU) speech to Congress. It heavily emphasized economic themes, among which were jobs, manufacturing, trade, the auto industry, teachers, taxes, Medicare, financial regulation and growing income inequality in the United States. Claims were made and general proposals offered for how to create more jobs and how to get a sluggish US economic recovery finally going after three years of tepid, stop-and-go results.
But many of the president's claims in his SOTU speech, especially with regard to jobs, were contrary to the facts. And the proposals he reaffirmed for generating a sustained economic recovery were more of the same “old wine in new bottles,” which hasn't had much impact to date. Here are some facts concerning jobs to consider before feeling too optimistic over what was largely a campaign-oriented, election-year SOTU speech – a speech more reminiscent of Obama's 2008 “talk the talk” period than of his 2009-2011 “talk but no walk” record.
Obama boasted that the US manufacturing sector had turned around and created millions of jobs on his watch. He subsequently named the need to further boost manufacturing, and the exports of US-manufactured goods, as one of his two primary recommendations for doing something about the 23 million people still jobless in the United States. (His other primary recommendation was more business tax cuts, which I will address in Part 2 of this series.)
What are the facts concerning manufacturing sector jobs in the United States today?
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According to the US Labor Department, there were almost 17.3 million jobs in manufacturing in December 2000. By the start of the recession in December 2007, there were just under 13.9 million. When Obama took office in 2009, there were slightly over 13.4 million. As of December 2011, there were about 11.8 million.
Over the past year, from December 2010 through December 2011, there were over 1.9 million total private sector jobs created. But only 218,000 of those were manufacturing jobs. And virtually all of those manufacturing jobs were created as global trade and exports accelerated in the first half of 2011. That same global trade began contracting in the second half of 2011.
In response to that contraction, in the last three months of 2011, US manufacturing employment actually fell by 24,000 jobs. So, tell me how this picture, and a further promotion of the manufacturing sector, is going to significantly aid the 23 to 24 million people currently still jobless in the United States? Even at the early 2011 rate, it would take 100 years to create 20 million additional manufacturing jobs.
The above numbers represent total manufacturing jobs. How about jobs for nonsupervisors and nonmanagers in manufacturing? Since the so-called official “end” of the recession in June 2009 up through December 2011 – over a period of two and a half years – a mere 174,000 production manufacturing jobs were created. That's a meager 5,800 a month.
The president in his speech was exceptionally laudatory of the Big Three US auto companies, praising them for having fully recovered and creating jobs. But let's look at the record here, as well. From the start of the recession in December 2007 through the end of 2010, 315,000 auto jobs were lost. Over the past year, the industry has hired back at the rate of only 4,000 a month, or 48,000 of those 315,000 jobs lost. And let's not forget, the overwhelming number of those hired in the past year have been hired for temporary status auto industry jobs paid at around $14 an hour, about half the normal auto worker wage rate. Yes, the auto companies are hiring, but at half pay. Not surprisingly, their profits have recovered – but they have done so by shifting money from auto workers to auto companies' bottom line.
Okay, friends of the administration may argue, maybe the facts regarding manufacturing jobs were a bit overblown and exaggerated by the president. What about the 1.9 million total private jobs created this past year. Isn't that significant?”
Well, 600,000 of those jobs were created in the retail sector in the last two months of 2011, the holiday season. Most jobs in that sector are part-time and temporary jobs, many of which will disappear in early 2012. Another 82,000 jobs went to messengers and couriers, hired by UPS, FedEx and other shipping companies for the holiday mailing surge. Those jobs, too, will quickly disappear in early 2012. In addition, banking-and-finance sector companies have announced more than 150,000 layoffs scheduled for 2012 – and that's just to start. And the two biggest job creation sectors of the economy in the first half of 2011 – business and professional services, and leisure and hospitality – both reduced jobs in the final two months of 2011 by 264,000 jobs.
Finally, let's not forget the government sector of the economy. While the private side may have created 1.9 million jobs, 257,000 state, local government and postal workers lost their jobs in 2011 alone; 106,000 of them were teachers.
Speaking of teachers: Obama praised the profession for its key role in the economy and in the development of society, for which, he properly noted, teachers should be honored and respected. He then proclaimed that the best teachers should be rewarded with more pay. Education managers should be given more flexibility, he advocated, to give more pay to the best teachers and get rid of the worst. This is his education secretary, Arne Duncan's, old formula. In practice, it means the introduction of merit pay, which would undermine teachers' union contracts and give managers more freedom to fire teachers and/or lay them off based not on seniority, but on administrators' preferences and favoritism – the old “civil service” approach. Together with the push toward charter schools, Obama's policy for education amounts to a destruction of teachers' union contracts. Charter schools, plus merit pay, plus end of seniority, plus more freedom to fire means the end of teacher unionism as we know it.
In the second half of 2010, Obama reshuffled his staff, repopulating his team with corporate advisers. Bill Daley became chief of staff. General Electric CEO Jeff Immelt headed the president's “jobs council.” Scores of corporate underlings were hired behind them. What we subsequently got, in terms of jobs policy, was a manufacturing sector- and export trade-centric set of proposals. Jobs were supposed to come from stimulating manufacturing and exports, pushing free trade, and cutting business regulations, as well as from promoting patent protection for the technology sector and similar pro-business approaches. Daley-Immelt essentially took over the Obama jobs program.
More business and investor tax cuts followed, including $802 billion in further tax reductions in December 2010. Regulations were reduced, as Obama bragged in his SOTU speech that he cut more regulations than George W. Bush did in his first term. Contrary to the president's 2008 campaign promises to restructure “job-killing” free trade agreements, the Obama-Daley-Immelt team opened a new offensive to pass pending free trade agreements with Korea, Panama, Columbia and elsewhere. The former three were adopted in 2011. These were promoted as measures to create manufacturing jobs. However, according to various studies since 1994 by the Economic Policy Institute, more than 10 million jobs have been LOST due to free trade. Nevertheless, in his SOTU speech, Obama once again promoted the corporate line and the false claim that free trade creates jobs.
Manufacturing output has risen significantly since mid-2009, as has manufacturing corporations' revenues and profits, especially the big multinational players such as Immelt's GE and the auto and high-tech companies. But manufacturing jobs are still 1.6 million short of where they were in early 2009, and wages of new manufacturing jobs are far lower than existing wages. A few workers get low paying jobs while manufacturing companies reap the big benefits of Obama's manufacturing-export-centric jobs policies. The, “Let's boost manufacturing-export companies” approach to job creation has been a sham job-creation program, taken straight out of the economic playbook of the Daleys and Immelts who have been driving the Obama team jobs program since late 2010. And judging from the comments of President Obama in his recent SOTU address, corporations will continue to drive the Obama jobs program – while they simultaneously sit on their $2.5 trillion cash hoard and refuse to invest in America.