This month’s article addresses some of the things that we are doing to prolong the recession.  First I will share some statistics from various sources that will give a historical perspective as well as an overview of the present.  The lack of job growth starting March 2001 has resulted in the longest sustained period without job growth since World War II.  Other factors contributing to the recession such as increased productivity, moving jobs off-shore and the continuation of the L-1 Visa will be discussed.  The article will conclude with some suggestions for businesses that would help us to come out of the recession sooner without destroying profitability. 

The following are some statistics that will put the subject of this article into perspective: *

1. Since March 2001, the official start of the recession, more than 2.5 million jobs have disappeared.
   
   
2. The unemployment rate for June hit 6.4%, which was the highest level in more than nine years.  However, the last two recessions had 10.8% in 1982 and 7.8% in 1992. 
   
   
3. The total number of unemployed counting both those seeking work and those who have stopped looking was about 10 million in June 2003 compared with 6.6 million in May 2000, when the unemployment rate was 3.8%
   
   
4. 4.6 million people are working part-time because they can’t find full-time work versus 3.3 million when the recession began in March 2001.
   
   
5. The average work week for non-exempt employees was 33.7 hours in June which is the lowest level since the government began keeping such numbers in 1964.
   
   
6. There are 2 million people who have been out of work for more than 27 weeks versus 690,000 in March 2001.
   
   
7. There were 478,000 people as of June 2003 that stopped looking for work versus 349,000 in March 2001.

 Obviously the fact that we are in a recession is a significant factor in accounting for some of the above.  However, I believe there are several other factors including:  

1. Increased productivity.  Since the fourth quarter of 2001, productivity has increased at an annual rate of 3.7% which is 1% point higher than the growth of the gross national product.
   
   
2. Record levels of imports versus exports resulting in a record unfavorable balance of trade. 
   
   
3. Moving jobs off-shore. 
   
   
4. L-1 Visas have continued to rise and now there are an estimated 325,000 temporary workers who are allowed to stay between 5 and 7 years on such.
   
   
5. We are replacing capital goods at a slower pace.

Some of the above, especially increased productivity, is good, should continue and in the end results in healthier companies and better jobs for those that are left.  However, other factors, particularly increased imports and L-1 Visas need to be seriously examined by companies and by the federal government because they appear to be counter-productive and/or the common good can be better served by a change in policy.  Finally the factors of moving jobs off-shore and using equipment longer will be examined in terms of the wisdom of doing such and in light of what I will call the Henry Ford perspectives.

While I am certainly a believer in the global economy and against restrictive tariffs, I think that some of the trade agreements, such as NAFTA, are unnecessarily detrimental to US workers.  How fair is it to ask our companies to sell goods with the production incomes we expect them to provide and all of the regulations we impose (many rightfully for the sake of the environment) whereas much of the global competition comes from countries who pay poverty wages and have no concern for the environment.  I believe that each of us needs to keep these factors in mind when we buy products.  For me Made in America is key.  Whether it is made by a US or foreign company is secondary.

The L-1 Visa issue to me is even clearer in terms of what we need to do.  While the H-1B Visas are capped, have restrictions and starting next October the limit will go down from 190,000 to 65,000 annually, there is no cap on L-1 Visas and very few restrictions.  They were originally intended to allow international companies to bring their top management and experts here to work with their US subsidiaries.  If you agree write to your congressman and senators and also to Senator Saxby Chambliss, Chairman of the Senate Judiciary Sub-committee on Immigration, to voice your concerns about how we are handling L-1’s and the fact that well trained US workers are being replaced by the holders of such Visas.

Now for the Henry Ford perspectives, as I dub them.  First there is the story of Henry Ford showing Walter Reuther, the president of the United Automobile Workers, new equipment at one of his plants and bragging about how many people would be replaced.  Reuther looked at Ford and said, “tell me Mr. Ford how many cars will these new machines buy?”  The second Ford perspective is less substantiated but supposedly Ford decided he wanted to pay his workers enough so that they could afford to buy a new automobile.  This certainly helped the sale of his automobiles which more than offset the additional cost of the extra compensation.  Using Reuther’s question let me ask you, the managers of American industry, how much of your product is going to be purchased by those foreign employees replacing your US workers?  My answer is very, very little because most of these foreign workers aren’t receiving enough compensation to afford them and/or restrictive trade practices wouldn’t have them available.

One of the most strident comments about outsourcing to foreign countries comes from syndicated columnist Charley Reese.  In a July 14, 2003 article he said of US companies who close a plant here to open one in a cheaper labor market, “it is, in fact, immoral and socially detrimental . . . they should be shunned by their fellow citizens”.  Yet another response was reported in the July 14, 2003 Wall Street Journal.  “At least five states introduced legislation aimed at keeping jobs in the US , among other things, by blocking companies from using foreign workers on state contracts”.  Remember states purchase billions of dollars of products annually.

The equipment being kept longer somewhat fits into the “Ford perspective”.  There is also the question of what are the real savings given reduced productivity, increased down time, increased repair cost, etc. These factors can more than exceed the cost of replacing this equipment.  Further the recently enacted tax decrease package gives more incentive to buy new equipment now.  Also, by doing such it helps the economy now.

As the old Pogo cartoon said, “we found the enemy and it was us”.  Comprehensive Search is about jobs from both the employer as well as the employee perspectives.  Presently, there is a lot of personal hurt and inhibitors to economic recovery out there as people can’t find jobs or have to take part-time positions just to make ends meet.  Some of this is unavoidable as it is part of the normal adjustments of our economy.  However, some of it can be helped by all of us as detailed above.

 * Most of these statistics come from a July 6, 2003 article in the Atlanta Journal Constitution written by Marilyn Geewax.  She in turn gathered her information from numerous sources.