Arnold, Jobs and the Economy

Well, let’s see.  What’s the American public fretting about these days: jobs, the economy, federal government spending, education, the rat hole that we’re dumping billions a month into in Afghanistan? Nah. It’s Arnold.

I don’t pay all that much attention these days to national polls. I figure that the only people participating in them are old folks with land line telephones who are glued to the TV watching the network news shows. So I try to keep my finger on the pulse of the American public by looking at the most popular stories on USA Today.

This morning, four of the time five involve Arnold — and his secret love child. I didn’t find the USA Today stories particularly compelling; here’s one from the Los Angeles Times, “Arnold Schwarzenegger admits to adultery, Twitter erupts with jokes.”

Hasta la vista, baby.

Meanwhile, back in the real world, the NYT has an interesting article this morning about the lack of jobs — and career opportunities — facing college graduates this spring: “Many With New College Degree Find The Job Market Humbling.”

The individual stories are familiar. The chemistry major tending bar. The classics major answering phones. The Italian studies major sweeping aisles at Wal-Mart.

Now evidence is emerging that the damage wrought by the sour economy is more widespread than just a few careers led astray or postponed. Even for college graduates — the people who were most protected from the slings and arrows of recession — the outlook is rather bleak.

Employment rates for new college graduates have fallen sharply in the last two years, as have starting salaries for those who can find work. What’s more, only half of the jobs landed by these new graduates even require a college degree, reviving debates about whether higher education is “worth it” after all.

“I have friends with the same degree as me, from a worse school, but because of who they knew or when they happened to graduate, they’re in much better jobs,” said Kyle Bishop, 23, a 2009 graduate of the University of Pittsburgh who has spent the last two years waiting tables, delivering beer, working at a bookstore and entering data. “It’s more about luck than anything else.”

The median starting salary for students graduating from four-year colleges in 2009 and 2010 was $27,000, down from $30,000 for those who entered the work force in 2006 to 2008, according to a study released on Wednesday by the John J. Heldrich Center for Workforce Development at Rutgers University. That is a decline of 10 percent, even before taking inflation into account.

Of course, these are the lucky ones — the graduates who found a job. Among the members of the class of 2010, just 56 percent had held at least one job by this spring, when the survey was conducted. That compares with 90 percent of graduates from the classes of 2006 and 2007. (Some have gone for further education or opted out of the labor force, while many are still pounding the pavement.)

Even these figures understate the damage done to these workers’ careers. Many have taken jobs that do not make use of their skills; about only half of recent college graduates said that their first job required a college degree.

And, of course, this isn’t a crisis just facing new college graduates. It’s a crisis facing millions of Americans, young and old, those with high school diplomas, postsecondary degrees and credentials and those with not. We are not creating enough new jobs, especially the kind of jobs that support a middle class or better lifestyle.

Here’s one reason: American-based multinational companies are sending jobs and investments abroad. Ted C. Fishman opines in USA Today, “Why the jobs are going over there“:

Americans have long stood beside our big global firms, which have been key contributors to our prosperity. Today, however, an aging workforce at home, a challenged economy and the lure of foreign markets are pushing our biggest, richest companies to recreate their American miracle abroad and to weaken their commitment at home.

The American economy is home to 139 of the world’s 500 largest multinational firms, nearly twice the number of runner-up Japan. The big American multinational firms employ about 22 million of the nearly 153 million people in the U.S. workforce; that is one out every seven workers in the U.S. A 2009 study by economist Matthew Slaughter showed that the average yearly salary for employees at multinationals was $62,784 in 2006, more than $12,000 above the average wage in the private sector overall. The higher pay, Slaughter reasons, results from the better job big multinationals do at making their employees contribute more to the bottom line.

Cheap labor did it

Executives quoted about the trend are quick to say that the movement of jobs is not about undercutting U.S. wages. Jeffrey Immelt, CEO of GE and head of the White House Council on Jobs and Competitiveness, said that “the era of globalization around cheap labor is over. … Today we go to Brazil, we go to China, … India, because that’s where the customers are.” Of course, many of those customers Immelt refers to are multinationals that did move factories abroad for cheap labor and which need GE there to supply them.

The era of globalization around cheap labor is still upon us. That is why we could see the trade deficit with China near $300 billion this year. Cheap labor and the gutting of American jobs are inseparable from the economic miracles multinationals now chase. It’s tempting to lay blame on the companies, but the dynamic is too large for that. Even workers in America have a version of this game. Last year, pension plans, retirement accounts and personal savings helped pour $908 billion into the emerging markets recreating the formerly American jobs. Investors without an emerging market strategy rightly fear they will fall behind in the long run.

I know it’s more entertaining to read about Arnold — but I hope somebody Inside the Beltway or elsewhere is keeping an eye on what’s happening to jobs and our economy.

Hasta la vista, baby.

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