But there's a twist to this alleged economic recovery. It seems to be jobless. That is to say that it is not producing jobs. Historically, when an economic recovery is under way in the U.S., people start finding jobs. In fact, that's been the case in virtually every economic recovery the U.S. has experienced ... until now. Unemployment remains high. There isn't a lot of hiring going on. Many of the people who are unemployed have been so for a very long time. And many of the people who have found jobs are underemployed - which means they are way more qualified than the work they're doing.
Now the so-called experts are talking to us about why this particular recovery is so peculiar. They go off on some kind of rhetorical dialogue about how the structure of the economy has changed, how globalization has changed the dynamics of economic recovery, etc. Some tell us that the jobs are simply lagging the rest of the economy ... and there'll be strong hiring in the future. Others say that the jobs that were lost aren't coming back. Instead they'll have to be replaced with new jobs that the market has never had before. (But so far, there's nothing on the horizon that would indicate where those new professions might come from.)
One of the things I find the most curious about this economic recovery is that corporations in America are reporting record profits. Seriously, many of them are reporting profits the likes of which the world has never seen. And many of the biggest companies are sitting on the largest stock piles of cash the corporate world has ever seen. They're simply taking profits and piling them up. They're not using these record profits to invest in new business or expansion of any sort. They're not using it to hire more people. They're not paying dividends to their investors. In fact, these companies with record profits are not doing anything with this money. It's literally piling up by the billions of dollars.
But let's take a look at one place where all that corporate cash is being spent --- compensation for the top executives in the firms. We have seen the compensation for top executives soar into the stratosphere. Even guys who do a poor job and get fired can leave with severance pay in the tens or even hundreds of millions of dollars. Truly they are the richest people in the world. And for the most part, they didn't invent or build anything. I mean to say that there's a difference between someone like Bill Gates (Microsoft) or Steve Jobs (Apple Computer) or Michael Dell (Dell Computer). They were innovators, risk takers and their genius paid off. But that's not the typical scene in the executive suite at most of America's largest companies today.
The gap between CEO compensation and a typical worker's pay has widened exponentially over the last several years. According to the Economic Policy Institute (http://www.epi.org/), in 1965, U.S. CEOs in major companies earned about 24 times more than a typical worker. By 2007, they make 275 times more. The EPI further documents the fact that CEOs in the U.S. make far more than CEOs in other advanced countries around the world.
So what's going on here? Millions of people are jobless - but corporations are piling up cash like never before. And the top executives in these companies are being paid like never before and like nowhere else. How are they doing it?
Talk to any major corporation in America today and chances are you'll hear about their "offshore" or "best shore"' strategy. (At least they think it's a strategy.) They're laying off American workers and sending those jobs overseas. Typically manufacturing goes to China and technology or service jobs go to India (although several other third world countries are in the mix). So, for example, we lay off a software analyst in Des Moines, Iowa that was making about $50,000 per year (and the company typically spent another 22% of that on benefits). The replacement worker in Bangalore? They're making an average of $5,000 per year - which is actually less than unemployment in the U.S. would pay.
How big is this problem? Here are some statistics, courtesy of the AFL-CIO (http://www.aflcio.org/):
- More than 3 million manufacturing jobs in the U.S. were lost since 1998
- More than 600,000 professional services jobs in the U.S. were lose in recent years
- Between 2000 and 2003, more than 372,000 service jobs in the U.S. were lost. 104,000 of them in the information technology industry.
- Forrester Research predicts U.S. employers will move 3.4 million white-collar jobs overseas by 2015.
- The outplacement firm of Challenger, Gray and Christmas estimates the number of service-sector jobs moving overseas each year hit 588,000 back in 2005 - and has been climbing ever since.
- A University of California at Berkeley report found 14 million U.S. jobs at risk of being sent offshore - and predicts that the actual job losses will exceed the Forrester Research prediction.
- A Deloitte Research survey found that the world's 100 largest financial services firms (mostly banks) shifted more than $356 billion worth of operations and about 2 million jobs to low-wage countries.
- Another Deloitte Research survey found that 275,000 telecom jobs (mostly phone operators) were sent offshore by 2008.
Statistically, the American middle class is shrinking. More middle class Americans are slipping into poverty. According to the U.S. Census Bureau (http://www.census.gov/), 14.3% of Americans lived in poverty in 2009. That was up from 13.2% in 2008. The Census Bureau says 43.6 million Americans are officially poor.
In reality, the true number of poor people may be even higher. The government's method for measuring poverty hasn't changed since 1963 and doesn't take into account soaring costs for medical care, energy, etc. Additionally, the wealth that has been created over the last 25 years by increases in productivity hasn't trickled down at all. Wages stagnated or even declined during those same 25 years. Another way to think about that is to consider that about 80% of the increase in total U.S. income went to the top 1% of Americans during those same 25 years.
And that helps explain why America has never had so many millionaires. According to CNN (http://www.money.cnn.com/) U.S. households worth $1 million or more grew to 7.8 million. That was an increase of 16% from the prior year. The number of ulra-net-worth households, worth $5 million or more, grew to 980,000 - an increase of 17% over the prior year.
So if you've read my blogs for any length of time, you know that I find a Biblical perspective for just about any situation mankind can encounter. Truly, I believe the Bible is replete with wisdom for everyone and everything ... at all times. So James, Jesus' half brother, wrote a five-chapter book in the New Testament that is rich with exhortation. He minces no words in telling believers how to live godly lives.
"Now listen, you rich people ... You have hoarded wealth ... Look! The wages you failed to pay the workers who (did your work) are crying out against you ... You have lived on earth in luxury and self-indulgence." (James 5:1-5)
And what does James have to say about this situation? "... The cries of the (workers) have reached the ears of the Lord Almighty." (James 5:4)
What James is saying is that the rich people are sinning. They're getting rich off the backs of the workers who've served them so well. And God doesn't like it. In context, they will have to answer to God for their selfish, greedy behavior.
So there are some conclusions that God's chosen people can draw. It is that the rich are getting rich at the expense of both the poor and those that are becoming poor. Don't get me wrong, it is good that someone climbs out of desperate poverty in India to take a call center job that moved from America. But it is ungodly when this happens at the unfortunate expense of someone else in America ... who has no other job and no other alternative.
Consider that the guy in India who gets a job and moves into the middle class becomes a taxpayer in his nation. He wasn't on the government dole before that, so there's no relieving the public burden for welfare. On the other hand, the American worker that he displaced can find no other job and becomes a burden on the taxpayers who must fund his unemployment, health insurance and other welfare issues.
I've always said that godly professions must work at creating real value. To simply move value around from one place to the other is frankly quite ungodly. God's people are to do decent work that contributes something. Our fat cat executives in America are robbing the American people and the American government --- to line their personal and corporate pockets.
Unemployed Americans are desperate for jobs. And our bankrupt government is desperate for them to get jobs. Meanwhile, the cash is piling up in the corporations and in the executive suites of those corporations. Folks, this isn't progress. This is misguided selfishness. It is foolishness.
So let's be clear about this. America is facing a so-called jobless recovery because its business leaders are greedy and selfish. Any questions?