Sunday, October 4, 2015

I can't get excited about employment

The first chart is Civilian Employment minus Total Population

The scale on the left.  It is simply the number of fewer jobs there are per population each month

This second chart is the inverse of the first.  It is Total Population minus Civilian Employment

The left scale is the number of more people than there are jobs each month.

It seems each recession kills off jobs that never return.

But that isn't the case earlier as seen below.  After the baby boom at the end of WWII, the seventies and eighties leveled out and we see a return to previous levels after recessions.

What happened in the nineties was the economic concept of comparative advantage that was pushed by economists AND the Bill Clinton administration was used to justify off shoring jobs.  It wasn't so much population grew so fast but jobs decline so fast.

Imagine that.  Policy never considered this could be a problem.  This is why.  I had a CEO boss in the apparel industry who contributed millions to Bill Clinton in order to gain access so he could present his plan for enterprise zones to save the industry for the US.  Finally in the late nineties he was at a fund raiser for Clinton and Al Gore came up to him and said, "We know about you plans for enterprise zones, but we are going to let yours and related industries go.  The future of the US is with the internet and creative industries"

Then my boss embarked on off shoring everything he could.  The company went from 500 people down to just the design, sales and marketing, and logistics people.

To be fair.  Production wages were extremely high.  Why couldn't the domestic market solve for high wages?  Why couldn't lower textile and apparel sales have reduced wages as people bought less clothing?

Answer: unions and regulations.  Not surprisingly, Bill Clinton supported unions and pushed for regulations that essentially forced off shoring.  There were activists, activist organizations withing government that make life really hard for apparel manufacturers.

And people love Bill Clinton.

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