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(DV) Velasquez: BS from the BLS







BS from the BLS
by Sheila Velazquez
July 25, 2005

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Overseas production guarantees that manufacturers and stockholders and everyone in the pipeline see greater profits. But do the Americans who have lost those jobs benefit from the lower costs of imported goods that we buy every day? In shopping for fabric, I discovered that American-made and Chinese- and Indian-made fabrics were the exact same price per yard. And that price was a third higher than a year ago. Can the North Carolina worker who lost her textile job afford to buy the fabric now produced in other lands? When I need plastic containers, I always buy Sterilite because the company produces its high-quality line in Massachusetts. And the prices are as good or better than some imports. So the question is, does the American consumer gain anything at all from the emigration of U.S. jobs?

The government tells us we do and also how well we're doing. It continues to issue false figures, and corporations continue to benefit from government largess, while the working man and woman switch to generic brands as they watch the inflation that is denied by the government skyrocket. The Consumer Price Index (CPI) is fudged and tweaked each month at the Bureau of Labor Statistics (BLS), which lowers the cost of products included in the index as the items are upgraded. Start with a $200 television. The next model at about the same price comes out cable-ready. Deduct $40. Then the quality of the screen is improved. Deduct another $20. You still have to pay the $200, but the government says you are getting more for your money and lowers the cost in the CPI based on the original television. Here are the facts:

The CPI does not contain figures for some of the items that have seen the highest levels of inflation, e.g. the cost of residential real estate, health insurance, and taxes. They do use a figure that represents rentals, but since rental costs are lagging far behind the cost of homes, they have no real relevance, particularly since most Americans now own their own home and are picking up the costs of maintaining and repairing them. But the government tells us month after month that inflation is under control.

As for jobs, in another part of their Web site,, the BLS admits that since its Birth/Death Model was initiated in 2004, they have modified the number of new jobs in all months but two, based on presumed, but unsubstantiated, business startups. They provide an explanation, but I do my own count -- of all the friends and family who are underpaid, underemployed, and without benefits. When the government says that 146,000 new jobs were created in June, and their Web site says that 184,000 were added by the Birth/Death model, well I think they got some ‘splaining to do.

Things may change, but I can't promise that they will be better. Oh, it looks like it's getting better. The stock market is up and productivity is rising. Except that neither of these things are positives for the American worker. Under the "Jobs Creation Act" (such a farcical title, since jobs are only being lost as a result of its provisions), companies are being allowed to repatriate money they invested offshore at a tax rate of 5.25 percent. Let's stop a minute to remember that those billions went untaxed in the first place, and guess who had to pick up the tab. These companies are saving nearly 30 percent in taxes on this money, estimated to be more than $300 billion dollars by the end of the year. The only requirement is that this repatriated money directly or indirectly (that's the key word) benefit the job market. In fact, one of the first things companies did was use existing funds to buy back their own stock, thus pumping up the stock market. With the new money, they can buy advertising, reduce debt, pay legal liabilities, and increase funds for research and development and capital investment. They can also make acquisitions. This certainly explains the daily headlines about companies gobbling each other up. And each merger and acquisition results in lost jobs that add to the number of workers being laid off by some of the biggest corporations in the United States. Recent cuts include HP with 12,000, while Kodak upped its number to 25,000. And there were hundreds of cuts by smaller companies. In June alone, 111,000 were announced, and this month looks to be higher. And as fewer people work harder so they can hang on to the jobs they do have, productivity goes up. What a country.

I've been ranting for the last several months that the goal of the corporatists is to pay all the workers of the world the same hourly wage -- $8.50 an hour. I think it's going to happen. The Chinese have revalued their currency, slowly for now, but expectations are that it will rise with time. As that happens, we can expect Chinese goods to become more expensive in the United States. Well, we could make things here again, and create jobs. But that would actually depend on whether or not we could build manufacturing plants and retool before we ran out of stuff, and how quickly all those M.B.A.s could be taught to weld. We would also have to consider that many of the tools and parts we would need are being manufactured by China and other somewhat unstable countries. If we were to have an altercation with China, for example, we might have to do it barefoot, because years ago, our government, in its infinite wisdom, gave the contract for making our military's boots to that country.

Interest rates will continue to rise to keep China vested in the U.S., and higher rates will eventually spill over into the mortgage market. Rates have been kept low over the past several years to enable the U.S. economy to rebound from the last slowdown, but real estate prices have gotten out of control. Lots are flipped several times and millions made without ground even being broken for a new home. Tiny condos and double-wides in desirable locations have sold for well in excess of a million dollars. Higher prices have forced buyers, including investors, to seek out creative financing, and the banking industry is willing to please. About half of new mortgages are variable, and the holders of these loans are soon going to be looking at much bigger monthly bills. Add to all this the fact that nearly half the economy is being supported by real estate in one way or another and you have to wonder where the tipping point might come at which real estate slows, those jobs go away, and the number of consumers who can support the system sinks. Unfortunately, the real estate bubble is not limited to the United States. The global implications of a pop could be catastrophic.

But the government continues to pass out the pork and corporations continue to overpay their top people as the gap between the classes grows ever wider. And after all we've done for them, they still take our sons and daughters, leave our homeland unprotected, limit our personal freedoms, and make enemies of people with whom we wish to peaceably share a living planet. When corporations make bad choices, as in how investments in retirement funds are managed, the government tells us we have to pick up the tab, even though most of us don't even have pensions. They work hand in glove.

I expect that we will see some very hard times in the years ahead. Workers may have to evacuate their big unaffordable homes in the suburbs and return to small apartments closer to manufacturing centers, sort of the way we did it in the post-war years. We'll have learned a hard lesson and be saving again and living more simply just to survive as we settle down and regain some of our common sense. We can organize to protect our jobs and workers and run candidates who have grease under their fingernails and calluses on their palms. We can clean house in Washington and organize third parties whose platforms will focus on the care of our families and health and environment. There are so many possibilities, and maybe we really need to fall to make it happen. And if we do, maybe we will have a snowball's chance in hell after all.

Sheila Velazquez lives and writes in Bozeman, Montana. She can be reached at:

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