The White House Has Been Bragging About Falling Wages - News and Current Events | futures trading

Go Back

> Futures Trading, News, Charts and Platforms > Traders Hideout > News and Current Events

The White House Has Been Bragging About Falling Wages
Started:January 15th, 2012 (10:47 AM) by kbit Views / Replies:211 / 0
Last Reply:January 15th, 2012 (10:47 AM) Attachments:0

Welcome to

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community. It's free and simple, and we will never resell your private information.

-- Big Mike

Thread Tools Search this Thread

The White House Has Been Bragging About Falling Wages

Old January 15th, 2012, 10:47 AM   #1 (permalink)
Elite Member
Aurora, Il USA
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
kbit's Avatar
Posts: 5,839 since Nov 2010
Thanks: 3,275 given, 3,321 received

The White House Has Been Bragging About Falling Wages

150 factory workers in China threatened to jump off the roof of an iPhone factory unless they received a raise.

Similar stories are accumulating. Inflation, especially in food and other essentials, has been rampant over the last few years—and to make ends meet, desperate workers sometimes take drastic measures. These anecdotes underscore a major trend in China: skyrocketing cost of labor.

In the US, it’s the opposite. Since 2000, real wages (adjusted for inflation) have declined. The White House even touts this horrid statistic in its paper, Investing in America: Building an Economy That Lasts.

Clearly, the paper is not intended for the rank and file. It outlines how current policies are making America competitive with low-wage countries like China. And one of the principal strategies is ... lowering wages. Graph from the White House paper:

Please register on to view futures trading content such as post attachment(s), image(s), and screenshot(s).

The paper also touts the administration’s claim of having created 3.2 million jobs over the last 22 months. But these numbers are based on surveys, formulas, and statistical adjustments. The BLS’s Employment Population ratio, which the paper wisely leaves unmentioned, measures the percentage of people age 16 and older who have jobs.

It’s the least corruptible employment number available—and at 58.5%, it's only a fraction above the August level, which, at 58.1%, was the lowest reading since 1983. And it’s far below its peak of 64.7% in April 2000. From the Bureau of Labor Statistics:

Please register on to view futures trading content such as post attachment(s), image(s), and screenshot(s).

The long decline from 64.7% parallels another statistic mentioned in the paper: from 2001 - 2007, three million manufacturing jobs were lost. Those were the Bush years, obviously. But what happened during the Obama years? Unmentioned, but just as bad. From the White House paper:

Please register on to view futures trading content such as post attachment(s), image(s), and screenshot(s).

The tiny hook at the bottom is the ballyhooed uptick. But during the next economic downdraft, the line will likely plunge again. And the slack in employment will continue to contribute to the decline in real wages.

The problem for a high-wage country in a globalized economy is that jobs will be globalized as well. The decision whether or not to offshore production comes down to calculating the total cost of doing business overseas.

This includes worker productivity, transportation, supply chain risks, legal and political risks, currency risks, intellectual property risks, expenses for expats, delays, flexibility, taxes, import duties, etc. Hence, for US manufacturing to be competitive, wages don’t need to match Chinese wages, but they need to be closer. That approach in wages has been happening—at a great expense to US workers. And now there are some results.

The paper mentions Ford and Caterpillar as examples of large companies that have announced investments in the US to ‘insource’ jobs from overseas. Those announcements, when they do occur, are made with great political fanfare.

Yet the same companies are still making massive investments in China and other low-wage countries, though no US politician takes credit for that. And there are many others. Merck disclosed from its headquarters in New Jersey that it would build a new facility in Beijing, part of its $1.5 billion investment in China.

Nissan, which has large plants in the US, just announced that it would build a plant in Mexico. And government-subsidized solar panel makers, well, for how they just started a trade war, read... The Trade Debacle with China.
So the net of outsourcing and insourcing among large companies still favors outsourcing. But under certain circumstances, companies might try to insource. And that is a step in the right direction.

Smaller companies face different dynamics. It has always been expensive, difficult, and risky for them to offshore production. Many have done it, lured by cheap wages, only to learn costly lessons. And now anecdotal evidence is piling up that they’re having second thoughts.

The paper lists KEEN, a footwear maker, and Master Lock as examples of companies that have brought back jobs. I personally know one consumer products company that shut down its manufacturing operations in China and relocated production back to the US (though it still operates plants in other parts of the world). And this is a trend that will likely accelerate.

But low-wage countries will continue to draw jobs away from the US. The numbers couldn’t be clearer: in 2011, the trade deficit with China hit another record north of $320 billion. So taking credit for a wave of ‘insourcing’ from China, as the paper does, has an aura of political grandstanding.

Even the US auto industry, which is relatively cost competitive, isn’t immune from China. Practically every car or truck sold in the US today contains Chinese-made components, though Chinese-designed vehicles haven't arrived yet. But it’s a priority of the Chinese government. And it’s through the back door. Read.... The US Auto Industry Drifts Off To China.

Read more: Testosterone Pit - Home - When The White House Touts FallingWages

Reply With Quote

Reply > Futures Trading, News, Charts and Platforms > Traders Hideout > News and Current Events > The White House Has Been Bragging About Falling Wages

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Upcoming Webinars and Events (4:30PM ET unless noted)

NinjaTrader 8: Programming Profitable Trading Edges w/Scott Hodson

Elite only

Anthony Drager: Executing on Intermarket Correlations & Order Flow, Part 2

Elite only

Adam Grimes: Five critically important keys to professional trading

Elite only

Machine Learning Concepts w/FIO member NJAMC

Elite only

MarketDelta Cloud Platform: Announcing new mobile features

Dec 1

NinjaTrader 8: Features and Enhancements

Dec 6

Similar Threads
Thread Thread Starter Forum Replies Last Post
House subpoenas White House for Solyndra documents kbit News and Current Events 0 November 3rd, 2011 11:33 AM
White House Tax Plan Would Ask More of US Millionaires Quick Summary News and Current Events 0 September 18th, 2011 08:00 AM
Austan Goolsbee to leave White House kbit News and Current Events 0 June 6th, 2011 09:43 PM
White House: Downgrade of US Debt a 'Political Judgment' Quick Summary News and Current Events 8 April 20th, 2011 09:39 PM
No Sign Foreclosure Problems 'Systemic': White House Quick Summary News and Current Events 0 October 20th, 2010 06:30 PM

All times are GMT -4. The time now is 12:10 PM.

Copyright © 2016 by All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts

Page generated 2016-10-28 in 0.07 seconds with 19 queries on phoenix via your IP