Charlie Cook, quoted in Donkey Rising, has some important things to say about why we aren’t seeing the creation of new full time jobs in the US:
In December, the CEO of a California-based high tech firm told me that “there is no amount of overtime that we will not pay, there is no level of temporary services that we will not use, there is no level of outsourcing or offshoring that we will not do, in order to prevent us from having to hire one new, permanent worker in the U.S.” As I travel around the country, meeting with business leaders, I hear similar, though less succinct thoughts in almost every sector and every part of the country. U.S. wages, health care, and other benefit costs have gotten so high — and the press by investors for high stock prices is so great — that the premium is on wringing every last bit of work out of as few employees as possible, to do anything but incur the costs of adding permanent employees.
Ruy Teixeira’s comments on this are right on:
If this description is roughly accurate, then this dynamic is going to be hard to counter by getting a bit tougher on trade, cracking down on “Benedict Arnold” corporations or providing a tax credit for manufacturers. Instead, it appears to call for a more direct role for the government in fostering job creation through direct spending (likely to be more effective in the short term) and socializing costs like health care and pensions that put US firms at a competitive disadvantage (likely to be more effective in the long run). Kerry does have some ideas along these lines–for example, his state tax relief and education fund, his energy independence plan and his plan to socialize and control some health care costs–but, perhaps because they don’t lend themselves as easily to applause lines in speeches, we hear less about them.
(Also see Body and Soul’s recent posts on the topic.)