The total number of those officially classified as unemployed in this country is 12.73 million people. That’s massive given there are less than three million jobs available in the U.S. jobs market. But the unemployed numbers are vastly misleading, as they exclude those workers who have exited the jobs market unable to find appropriate employment. In reality, there are about 22.95 million Americans looking for work who are unemployed or underemployed. The jobs situation in Europe is even worse, which I discussed in Eurozone Weakness: Don’t Take It Lightly!
These are not good jobs market metrics, as many of these people are taking minimal wage jobs just to fight off the creditors and put food on the table. There are about 46.32 million Americans needing to rely on food stamps just to get by. For this country, one of the richest in the world, these jobs market numbers are atrocious.
So, when Korean automaker Hyundai announced it was opening a third shift at its plant in Montgomery, Alabama, and was planning to add 877 jobs, the response was unbelievable. By the June 2 deadline, close to 22,000 applicants had filed online for these sought-after production line assembly jobs that paid $16.25 an hour to begin. The applicants to jobs ratio of 25:1 is daunting and clearly shows the continued jobs market issues in the country.
After a great beginning to 2012 in which over 200,000 jobs were generated in January, the jobs market situation has worsened, with the non-farm payrolls coming in at an extremely disappointing 69,000 jobs in May, well below the estimate of 150,000 and estimate for 115,000 in April. The unemployment rate jumped to 8.2% from 8.1%; it’s actually higher if you count the true number of unemployed.
And, to make matters worse, the economy, while growing, is not booming to the point where there’s strong job creation.
We are instead seeing some cracks in the jobs market indicated by major job cuts. Hewlett-Packard Company (NYSE/HPQ) recently announced it would cut 27,000 jobs worldwide by the end of 2014. In fact, U.S. CEOs are negative towards the second half, citing the soft jobs market here and the uncertainties of Europe and their impact on the U.S. economy and gross domestic product (GDP).
As I have said in past commentary, millions of jobs have vanished from the U.S. jobs market to faraway places such as China, India, Mexico, and Latin America. These jobs are not coming back despite President Obama’s idea of increasing tax or cut credits to U.S. companies that don’t bring jobs back to America.
President Obama suggests he will add taxes to U.S. multinational companies that employ cheap labor, but I really don’t think it will have a major effect on the jobs market. Adding to the cost of American manufacturers by adding taxes could backfire, as it would increase the price of the goods sold to Americans, which is counter-productive and inflationary.
The reason is simple. It’s all about producing goods in the cheapest way and making profits.
For instance, the average hourly wage of factory workers in southern China is around $0.80 per hour, $32.00 per week, and $1,664 annually based on a 40-hour week, according to averagesalarysurvey.com. In the U.S., the average annual salary is $47,000.
Even in the rich metropolis of Hong Kong, the minimum wage there is around $3.00 an hour.
Similar jobs numbers comparisons are found in the other emerging countries, where workers would be more than happy to receive low pay just for the opportunity to work.
I hate to say it, but the fact is that wages are too high in this country for jobs to come back home. I wish this were different, but it’s the current reality of a global workforce.
Hey, at least those who get the new jobs at the Hyundai plant in Alabama will be happy.