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Pace of Job Growth Was Never in Bush’s Hands

If ever it seemed like a presidential candidate had been handed the perfect issue to run on, it was Sen. John F. Kerry and jobs.

After all, as the Massachusetts Democrat was fond of reminding folks, President Bush has a shot at becoming the first occupant of the Oval Office since Herbert Hoover to have created not a single net new job during his first term in office.

Historically, pocketbook issues have been determinative in presidential contests. Forget the famed Washington Redskins barometer. Heading into Tuesday’s showdown, economist Donald Straszheim had declared that “the best election predictor is job growth during the six months prior” to voting, having “given a false signal only once since 1960.” And with growth lower than eight-tenths of a percent since April, Bush looked destined to be a loser.

By early morning Wednesday, however, it had become clear that the American people weren’t prepared to make the employment picture, unsettling though it may be, the key factor in the election. This was true, of course, even in hard-hit manufacturing states such as Ohio, where the 2004 race was ultimately decided.

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What gives?

Perhaps the reason that the public looked past the dearth of jobs -- allowing them to focus on morals and values instead -- was quite simple: They recognized that today’s labor market was being influenced by a set of forces far beyond the control of any one man, even the guy who occupies 1600 Pennsylvania Ave.

Thanks to technology, outsourcing, changing management practices and global competition, the traditional link between economic expansion and job generation has been snapped.

“Economic growth has diverged from job growth -- and we are not going back,” says Lakshman Achuthan, managing director of the Economic Cycle Research Institute, a 50-year-old center in New York that studies when the economy falls into recession and when it comes out.

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Even Friday’s employment report, showing a net 337,000 positions added to payrolls in October, did nothing to shake Achuthan’s contention that we were in the midst of a great “structural change.” He says the latest Labor Department data add up to little more than “a head fake.” Other economists agree, citing construction work in Florida to repair hurricane damage -- jobs that are sure to prove temporary.

Indeed, we’ve seen false starts before. In the spring, it looked as if employment growth was finally revving up, only to slow again come summer.

And when you think about it, who’s really surprised?

The entry in the 1990s of China, India, Eastern Europe and other formerly closed areas into the world economy has opened up enormous sources of cheap goods and services, pinching hiring at home. At the same time, the steady computerization of American business -- investment in information technology is growing by 15% annually -- has caused productivity to soar, again cutting into the number of hands that any enterprise needs.

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In a recent paper, Charles L. Schultze of the Brookings Institution in Washington noted that after the 2001 recession, economic output in the U.S. “rose substantially. But output per worker -- productivity -- jumped so sharply that instead of rising, employment declined.”

“That,” he concluded, “is the real cause of the jobless recovery.”

So what are we to do for job opportunities in America? One answer is to embrace foreign trade rather than fight it. Here in Southern California, distribution and logistics companies employ 550,000 people, according to Redlands-based economist John Husing. That makes it our largest single industry.

Another answer is brainwork. For all the emphasis on products assembled in other countries, the invention, design and marketing of toys and cellphones, dresses and electronics originate in the U.S.

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In fact, the higher-end job market for technical specialists, middle managers and executives is particularly bright right now, says Gary Burnison, chief financial officer of Korn/Ferry International, the Los Angeles-based recruitment firm.

Yet for many people, particularly those without the means to a higher education, such positions remain far out of reach. And that’s not going to change anytime soon.

Meanwhile, the bigger forces of globalization continue to pound away at the American labor market. Even as the economy grows, jobs won’t materialize as quickly or as easily as they have in the past (piling up at a rate of more than 236,000 monthly during the Clinton boom years).

The world, as the electorate seems to understand quite fully, has changed much too much for that.

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James Flanigan can be reached at jim.flanigan @latimes.com.


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