[this appeared as a Viewpoint piece in the Jacksonville Business Journal]
“Job-killing” is a favorite
phrase among politicians these days, particularly Republicans, as well as members
of the business community. In fact, a House bill was actually titled “Repealing
the Job-Killing Health Care Law Act”. The accusation is leveled primarily against
policies that are designed to regulate business, protect the environment, increase
revenue through taxation, raise the minimum wage, or increase the role of
government. These are the usual
suspects.
But rather than using the term to
target policies we happen to disagree with, we should acknowledge that “job-killing”
is a perfectly apt description of recent periods of US capitalism over the past
few decades. The U.S has been hemorrhaging jobs in many economic sectors for years.
The decade of the 2000’s yielded no net gain in the number of jobs.
These job losses cannot be linked
to a particular policy. They have occurred
under relatively favorable historical business conditions of low taxes,
deregulation, weak or non-existent labor unions, free-trade agreements, and
welfare reform. Over this period “jobless” has been frequently used to describe
economic cycles – we have experienced jobless growth, jobless recoveries, and
jobless expansions.
Yes, the private sector is and
should be the engine of job growth but let’s recognize that job-killing has also
become a standard business practice, particularly among the largest US
corporations.
One of the most significant job-killing
acts is the decision of U.S. corporations to move jobs offshore. The impact has
been greatest in manufacturing, where millions of domestic jobs have been
relocated to less developed nations where labor costs are lower, environmental
regulations weaker, and governments accommodating. Offshoring destroys not just
blue-collar jobs but increasingly higher skilled white-collar positions.
Another job-killing practice
involves downsizing the work force, or “permanent layoffs”, and the outsourcing
of business functions to subcontractors. These practices are intended to make
the firm meaner and leaner. When they are carried out executives are typically rewarded
with additional compensation, Wall Street responds favorably as stock prices
rise, and the actions are justified in the name of “enhancing shareholder value”.
Jobs also disappear when businesses
replace workers with technology or develop more efficient procedures that
reduce human labor requirements. Such practices are regarded positively as innovative
and productivity-enhancing.
People don’t usually describe
these acts by the private sector as job-killing because they are based on the
profit motive or the pursuit of competitive advantage. They are rational
business decisions based on the calculation of costs and benefits, and a desire
to maximize profit and share price. Whatever
the ultimate intention may be, the net effect is the elimination of jobs.
Job killing as well as job creation
has always been an expected consequence of capitalist development. When people
describe competitive capitalism as a form of “creative destruction” it means
that the dynamic process of creating new organizations, technologies, and products
involves the simultaneous destruction of existing jobs and firms. For the recent
history of the United States, unfortunately, more good jobs have been destroyed
than created. Those that have been created have tended to be lower paying and
less secure.
Further, two of the three examples of
job killing above – offshoring and downsizing – are more accurately forms of “uncreative
destruction”; nothing new is created, but many jobs, communities, and
livelihoods are destroyed.
The current presidential campaign
has rekindled the job-killing language with Obama now accusing Romney and Bain Capital
of job-killing. But again, like other economic actors, this is what rational private
equity firms are supposed to do -- increase the market value of the firms they
restructure, and frequently downsize, with the objective of turning a profit. If
Obama has a problem with this he should recognize that it is not a problem
unique to private equity but is a systemic characteristic of the US economy. As
long as job killing increases the bottom line, or is rewarded by Wall Street, it
is likely to continue.
The chances are slim that Obama, let
alone Romney, will make any significant changes to the existing job-killing
system; this would require acting against the financial and corporate elite who
lavish them both with campaign contributions.
And, as absurd as it sounds,
policies to prevent corporations from killing jobs would inevitably be attacked
as “job killing” government regulations.
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