US export economy fails to import jobs
THIS month, brace yourself to hear plenty of rhetoric coming out of Washington about "exports" and "jobs". As a new Republican-dominated Congress starts work, energy companies are lobbying to drop a decades-old ban on exports of crude oil, arguing that such sales will create thousands of American jobs. As pitches go, it is a powerful one. But there is another question about exports and jobs that Congress should be debating more urgently: the fact that US businesses are becoming so efficient that they require fewer workers than ever before to deliver growth, even - or especially - for exports.
Take a look at some fascinating data compiled by the Commerce Department, and quietly released last year. This shows that in the past few years, the number of American jobs supported by exports has risen as overseas sales have grown. In 2009, exports created 9.7m jobs; by 2013 the tally was 11.3m.
This is cheering. And since overseas sales rose further in 2014, amid a wider economic recovery, there is every reason to think that when the commerce department publishes the 2014 tally the number of export-linked jobs will have grown again. But there is a billion dollar catch. Look at how many jobs are being generated per dollar of sales and the graph steadily slopes down. Back in 2009, each billion dollar's worth of exports was creating 6,763 jobs. In 2013, it was 5,590 jobs. That is a fall of 17 per cent - in just four years.
There are two ways to interpret this trend. If members of Congress want to feel cheery at the start of a new year, they could celebrate the fact that American companies are becoming more innovative and competitive on the world stage. This partly reflects lower energy costs. But another factor is that as recovery has taken hold in the US, levels of automation and digitisation are rising sharply too.
That is prompting more US companies to develop production inside America, since it holds down labour costs. While Chinese workers might be cheaper than their American counterparts, robots are more cost effective than both - and often more competent. Take Alcoa, the world's third-largest aluminium company. Having previously expanded production in places such as Mexico and Asia, it is now focusing heavily on the US. This winter, for example, it is remodelling a plant in Savannah, Georgia, that uses pioneering processes to forge metal to withstand ultrahigh temperatures. A decade ago, such work might have been placed outside America. But Klaus Kleinfeld, Alcoa chief executive, says that it now makes sense to keep it in Savannah, to be closer to customers and research units. "The pressure to automate is huge," he says. "We are not doing it for cost, but for innovation reasons?.?.?.?a precision is required that no human hand or eye can deliver."
Companies such as Whirlpool, General Electric and Ford are taking similar steps. Even clothing companies are doing the same. Levi Strauss, for example, still makes its jeans outside America. But it recently brought its innovation centre - and those jobs - from Turkey to San Francisco. Boston Consulting Group reckons that over half of all large US manufacturing companies are either actively re-shoring activity, or considering this, as America becomes a more competitive destination.
There is a more pessimistic twist to all this: what will the surplus workers do? An optimistic answer is that the economy will eventually adapt to generate new jobs, as it did 150 years ago when farm workers were forced off the land. A downbeat scenario is that this trend will exacerbate the bifurcation that has developed in the jobs market in the past decade, as mid-tier manufacturing jobs have disappeared. In a world of hyper-efficient companies there is swelling demand for a highly trained elite; indeed, Thursday's jobless claims data suggest that companies are actually finding it hard to hire enough skilled workers. Alcoa needs plenty of computer programmers. But what it does not need (as much) are traditional metal-bashers. Exports can boom - but with fewer blue-collar workers.
Mr Kleinfeld has recently started working with community colleges on retraining programmes, in a bid to help workers to adapt. Other companies are doing the same. But what is lamentably missing is any coherent policy from Washington to support such endeavour. Indeed, Congress seems to be paying woefully little attention to the issue, compared with the focus it is devoting to other topics, such as those energy exports. That needs to change - well before the current recovery loses steam.