Thursday, August 18, 2011

The American Dream: Employee, Corporate Executive or Entrepreneur?

I just read an August 8 article titled "The End of Jobs in America" in I recommend reading it.

Among other things, the article quotes a U.S. Commerce Department stat according to which "U.S. multinational corporations, which employ a fifth of all American workers, cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million. In contrast, in the 1990s, they added 4.4 million jobs in the U.S. and 2.7 million abroad".

Now, before I proceed to my comments, here is a prediction re jobs in America: See Table 1. in BOL's ((US) Bureau of Labor Statistics) "Occupations with the fastest growth in the Occupational Outlook Handbook, 2010-11: Overview of the 2008-18 Projections"
Note that occupations ranked No3 and 4 (in the Top 20) in predicted growth rate are:

At No. 3: Home health aides with an expected +50% growth 2008-2018 translating into 460,900 new (extra jobs) in 2018 compared to 2008 with a median 2008 annual salary of just USD 20,460 and short-term on-the-job training as an education/training requirement.

At No. 4: Personal and home care aides, with +46% translating into +375,800 jobs at mdian 2008 USD 19,180 (also "short-term on-the-job" education/training requirement).

These two occupations, which are valuable to Society (in my personal experience and view), no mistake about that, but alas fall into a wider low skill - low pay category that according to other predictions I have read in recent years constitute the bulk of new jobs expected in the US!

Noe that in 2008, about 1.74 million people occupied jobs of the above 2 types and another 847000 expected ti by 2018.

The list of largest % growth does include college degree or graduate degree requiring and medium and high pay occupations, but the volumes of these occupations are relatively low. Indicative: None of the 18 other in this list is expected to create more than 200,000 jobs by 2018. Only 3 had a 2008 median annual salary of more than USD 80k and none over 100k.

See also:

Thus, here are my comments:

The so called American Dream was not a dream of being a career employee or even a high flying corporate executive. It was of working hard upon arrival in the US (washing dishes, etc), often an employee but eventually starting your own company, ie being an entrepreneur.

There is a lot of fuzz as to what a multinational (or global or international or ....) company is. Does it really have a "nationality"? I mean, it has to have its global HQs in some country, but a real multinational is it a "national" of that country?

IMO, a genuine "multinational", not! It has to have a citizenship (aka HQs) in one country (there is no "global company statute" (yet at least) and I am not sure what happened to an old proposal for a "European company statute" that was caught in the EU's legislative pipeline for ages in the 80s and 90s). But its shareholders are from all over the world, the shares can be traded in many stock markets around the world, its board can include nationals from all over the world, so why would one expect that the mere HQ location of a multinational in the US (one of its states) or the UK etc makes it a "US or UK multinational" ie a contradiction in terms?

These days, having a multinational have its HQs in your country may give you the advantage of being able to tax a portion of its global income (via transfer pricing via HQ fees charged to its subsidiaries around the world, licensing and royalties etc) but a multinational to be a multinational has to spread its production and its employment around the world. It is an integral part of what makes it a "multinational". Otherwise, it is merely an American or British etc company with international sales! In other words, a bid difference from a multinational.

Thus the key statistic is how many Americans are employed in corporations that export (thus provide the US with revenue in addition to jobs).

So the US Dept of Commerce stats above simply reflect a transition of US corporations with international sales to multinational ones!

The bulk of US jobs should be expected and encouraged to come from companies that are dynamic, provide meaningful employment thus salary and, why not, are competitive by spreading their sales around the markets of the world. Multinationals will provide some jobs, but where and of what type, that is a matter of their multinational/global shareholders, board, stakeholders to decide or be concerned. No country owns a multinational corporation, many can benefit from its existence in different ways, but no "national allegiance" should be, rationally expected.

That is what makes the BOL predictions re occupations more relevant and puzzling.

PS 1. As I have argued in other posts (and tweets) the best way for the US and the EU to regain manufacturing in large numbers is via leaving the WTO. The EU and the US were losing manufacturing to the East before China joined the WTO (December 2001) but since it did, they kissed manufacturing capacity and jobs goodbye! Can green tech and emission trading schemes help them regain it? IMO, no.

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