Robert Reich on the Jobs Stall in the U.S.

The Obama administration is no doubt telling itself that there are five months still to go before the presidential election. In 2011 there was also a mid year slump but then later a recovery.

However Reich points out that the most recent statistics are not at all encouraging and show how fragile and weak the recovery is. For the first time in nearly a year unemployment has risen, from 8.1 to 8.2 per cent. While not large it is still in the wrong direction.

Even worse only 69,000 jobs were created when many more were expected. From December to February of this year an average of 252,000 jobs were added each month. Just to keep up with labor force growth 125,000 jobs are needed each month.

The problem claims Reich is that Europe is facing a debt crisis and the big Asian economies are experiencing slower growth.BRIC nations are also feeling the effect of the global slowdown. As a result U.S. exports are not growing quickly..

However Reich also blames U.S. corporations for sitting on trillions in cash as they refuse to invest because of economic uncertainty..They are not sure either that American consumers would purchase goods if they increased production. Further investment is just not worth the risk..

Cutbacks and attacks on labor means that many consumers do not have the means to increase consumption. Median wages continue to decline.While in May wages were up 2 cents from last year adjusted for inflation this is actually a decline.

While overall corporate profits are healthy in many cases it is because of keeping costs down often by cutting the number of employees. This however decreases customer base for other companies.

Complicating the problems further Federal stimulus spending has run out.Even worse state and local governments shed workers to reduce their deficits.

Reich does not prescribe a solution to the situation but notes that Romney and Republicans will crow that the numbers show that what is needed is Republican measures such as more austerity policies and tax cuts.. This is a recipe for making the situation much worse as Reich sees it...For more see this article.

Robert Reich: Manufacturing Illusions

Although there has been some improvement in the U.S. manufacturing sector lately Reich points out that for the most part workers are not sharing in those gains.

Republican presidential candidates have been pushing their recipes for advancing U.S. manufacturing. Obama too pushes a manufacturing agenda.

Obama has moved to remove tax incentives for companies to move overseas and create incentives to keep jobs in the U.S. Obama said:"Our goal,, is to create opportunities for hard-working Americans to start making stuff again".

U.S. consumers pent-up demand for goods has created a mini boom in manufacturing. Since January 2010, 404,000 manufacturing jobs have been added. Even with this addition there are 5.5 million less factory jobs now than in July of 2000 and a whopping 12 million less than in 1990. Even if production creeps up there are fewer and fewer factory jobs.

The new assembly line has robots where before there were well paid workers. Jobs for Americans who lack college degrees are less and less available and when they are they are usually non-union and poorly paid.

Even the strongest unions are negotiating contracts for new workers at about half of what workers received just a decade ago. The UAW has agreed to starting pay of 14 dollars per hour for new hires.

The Employee Free Choice Act would make it easier for workers to organize. Obama supported it in his first election campaign but did not move to make it law. This time he has not even promised to promote the bill if elected. Of course the unions have nowhere to go but Obama.

Obama has not spoken out vigorously against the anti-union and right to work campaigns in Wisconsin and Indiana. Corporations are doing well in manufacturing and services. Third quarter profits were 2 trillion a full 19 per cent higher than five years ago in the pre-recession peaks.

Wages however are declining in inflation adjusted terms. Wages as a share of income are at the smallest share since records have been kept in 1949, just 44 cents on every dollar of income.

As Reich sees it the problem in the U.S. is not just the recovery of manufacturing but the declining power of workers to share in economic growth. For capital this is not a problem but an ideal situation in which capital receives a larger slice of the economic pie. For more see this article.