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The U.S. Department of Labor reported some sobering statistics on Tuesday. Reporting on December the agency found:
- The jobless rate grew in 371 of 372 metro areas
- Unemployment was higher than 10% in 138 metro areas
- El Centro, California reported the highest unemployment rate at 27.7%
- Employers shed 85,000 jobs
- There were 929,000 discouraged workers in December, up from 642,000 a year earlier
- The national unemployment rate of 10% was unchanged
One small item on the plus side: temporary help services added 47,000 jobs in December. An uptick in temporary hiring often foreshadows increased permanent hires. The preliminary January report is due out on Friday. The ADP private sector employment report, which often presages the Labor Department results, reported yesterday that 22,000 jobs were lost in January. This number is slightly better than analysts had been guessing.
Some major news outlets, including National Public Radio, reported that 306 of 372 metropolitan areas experienced increases in job losses, but the actual report, referenced above, says otherwise.
But a more alarming number came out of Davos, Switzerland last week, from the lips of my least favorite administration economic advisor, Larry Summers. He said that 20% of men—one in five—between the ages of 24 and 54 were jobless. This number suggests a reality beyond the official characterizations like “discouraged workers” that serve to skew the stats downward, and that reality is debilitating beyond measure. The clever media label “mancession,” with its overtones of “manboobs,” has done little to create any understanding of the phenomenon. For context, consider that 95% of men in that age range were employed in the 1960s. Summers himself, as quoted in the New York Times, refers to “a statistical recovery and a human recession.”
This state of affairs reinforces the unpredictable political unrest that pops up like Desperation Whack-a-Mole in different forms around the country. Are men simply becoming redundant? The truth, I suspect, is that in a service economy many are. This prospect complicates any proposed job plans yet to be spun by Democrats or Republicans. Both sides are selling snake oil when it comes to our prospects coming out of this thing employment-wise. And I don’t mean for men only. They are just, with apologies, our canaries in the coalmine in this instance.
We Don’t Make Anything Here Anymore
Part of the problem is that we don’t make anything anymore. Grizzled manufacturing types have been saying this, mostly to themselves for lack of interest, for 15 years to no avail. Why bring it up at all? Well, President Obama has been touting a green revolution in ways that suggest he sees a job renaissance of major proportions here. But let’s get real—cash for caulkers is a piddly exercise with no future. Let’s contrast that with what’s going on in China.
A Look Behind the Industrial Curtain
The same edition of the Times that contained Mr. Summers’ remark featured another article entitled, “China Leading Race to Make Clean Energy.” This, I imagine, would be the same race Mr. Obama refers to with his green initiative. So why, in the face of a worldwide meltdown, has China vaulted ahead on the manufacturing side to take what some see as an insurmountable lead in the field? I get the sense that Americans were planning on merely talking about making green energy products for a couple more years before we even got down trying anything out. So now we find that last year China became the world’s largest manufacturer of wind turbines and will push ahead even farther this year. I understand there are a million reasons—or 70 million reasons, the number of people in the private Chinese industrial workforce—why China is the leading manufacturing nation. But advanced manufacturing, high-tech manufacturing, is area where the U.S. could excel if it chose to simply reinvest in American workers.
Multinational companies have no incentive to invest in any jobs in the developed world. A Danish firm, Vestas, just finished constructing the world’s largest wind turbine plant in China, and, according to the Times, is transferring the technology, including technology related to the electronic control systems, to the Chinese. So, in exchange for labor priced at ten cents on the dollar, the West simply gives away its knowledge economy—the proprietary resource that could propel a revitalization of the manufacturing sector, and energy solutions sector, at home. Renewable energy jobs in China now number some 1.1 million, with another 100,000 a year coming online. And how many do we support—actively support—in the U.S? Probably a tenth of that.
It is a strange irony that a capitalist, centrally-planned economy is now showing us up in terms of imagination and initiative. What about those small, nimble little companies that could? Long fixtures of our nation imagination, these start-ups are locked in a Bambi versus Goliath scenario in attempting to compete with a Chinese monolith. On the financing side, state-owned banks provide the capital to Chinese firms looking to expand. The interest rate on that capital is in the range of 2%. Should we even waste a breath on comparing what is going on here? Just call us the United Stasis of America.
This and other anomalies confront the American right most substantially, for it is the right that holds to nearly all the premises that result in domestic job-producing gridlock. To wit, no American first tier manufacturing firm—think Boeing—would consider investing in domestic precision manufacturing for renewable energy on the scale the Chinese have already mastered without federal government contracts to do so. And there is only one type of government contracts the right favors, and those are defense contracts. Do we have to ask the Chinese to explain that they did not create their incredible momentum with tax cuts?
Here, we face the choice of paying extra to convert from coal while in China they are essentially developing new power capacity. Standing at that crossroads, the landscape looks very different from the choices we face. And what they see, I kid you not, is that alternative power (full disclosure: this includes nuclear) is priced competitively with legacy power generation technologies like coal. This offers them a domestic market with staggering advantages in terms of economies of scale. These advantages are leading the Chinese to aggressively export the technology. And all the West can do is complain that the Chinese have some sort of unfair advantage. It seems to me that a big component of that advantage is Chinese smarts.
I’m not here to defend or debate Chinese labor practices. But if I were, I would point, not to their annual wage rates—about $4,100 a year for a semi-skilled assembly line worker—but to the exponential increase in Chinese wages over the past decade. Contrast that with our falling and stagnant wages and you understand why they were the stars at Davos this year. Their economy has actually picked up steam in the worldwide recession—consider that, Cato cretins.
Even with the advantages of their current momentum, the Chinese charge a renewable energy fee to all electricity users. Anyone care to propose such a measure here? Industrial power users there pay a surcharge of .8%. And here, what do we have? Cap and trade gridlock. Merely another manifestation of our Gridlock Nation.
When Chinese firm Shenyang Power Group, Cielo Wind Power, and private equity firm U.S. Renewable Energy Group announced a $1.5 billion Texas wind farm to be funded by Chinese banks last fall, Congress railed against the deal but did nothing substantive. My question is: where was Congress while China was implementing a national initiative of staggering proportions? This deal should have been seen as a Chinese Sputnik.
Never mind that GE makes wind turbines in the U.S., or that the Chinese had in effect a rule that the wind turbines it procures from abroad must have a 70% domestic Chinese component ratio. Green jobs are little more than rhetoric in the U.S., while they are a national business strategy in China. I am not calling for a return to old-school protectionism. But strategic economic interests—and those interests include good jobs for Americans—should trump an international race to the bottom when it comes to the price of technology. There needs to be a jobs quotient—a JQ—factored in when we make billion-dollar investments in our future. And despite the ascendance of global free trade, Europe (the Airbus consortium) and the Far East have factored in the JQ far better than we have. Why? Because their governments offer closer scrutiny to the machinations behind corporate bottom lines.
The problem we face is that of a failure of imagination. This is not the imagination intrinsic to conceiving of energy solutions, but of implementing them in a manner that addresses our need to confront massive national challenges while preserving good jobs for Americans. Remaking our energy grid is Moonshot 2.0 and our national leadership, past and present, didn't and doesn’t get it. That is, they don’t get how to actually do anything about it. While politicians do nothing more than stymie each other and CEOs maximize quarterly profits by outsourcing everything, Americans are being cheated out of the next phase of a knowledge economy, one in which solutions involve engineering, precision manufacturing, and on-site implementation.
We are playing at the shallow end of the pool—offering $5,000 subsidies for pizzeria jobs—while the Chinese have developed a coherent strategy to spearhead the growth of green energy technology, and are doing so right under our noses, in Texas.