U.S. companies are reaping record profits, yet the unemployment rate remains stuck at nearly 10 percent. These firms are prospering because overseas demand is growing, while U.S. demand remains stagnant. To meet that demand, U.S. companies are creating jobs overseas.
Job creation overseas exceeds U.S.
U.S. companies are creating more jobs overseas than here at home. According to the Economic Policy Institute, U.S. companies created less than 1 million jobs in the U.S. in 2010. Overseas, U.S. companies created 1.4 million jobs. If those U.S. overseas jobs would have been created in the United States, the current unemployment rate would be 8.9 percent, rather than 9.8 percent, which was reported by the Labor Department at the end of November.
International sales outstrip U.S.
Overseas jobs are growing because sales for U.S. multinational corporations are growing nearly twice as fast internationally as they are domestically. The Associated Press reports that Wall Street stalwarts UPS and Caterpillar Inc. are both hiring more people overseas than at home. More than 50 percent of 15,000 jobs created by Caterpillar in 2010 materialized in other countries. Caterpillar is building three new plants in China as its sales in Asia grew 38 percent in the first three quarters of 2010. The company’s U.S. sales grew just 16 percent.
U.S. consumer demand depends on job creation
Jobs are being created overseas as U.S. companies sit on trillions of dollars in excess cash. Corporate executives say that money will be invested in new jobs and equipment when U.S. demand warrants it. But U.S. consumer demand is tied to the unemployment rate. The fact that foreign countries are churning out better-educated workers than the U.S. can manage adds to the vicious cycle. In the transition to globalization, U.S. companies, looking after their own interests, are leaving the U.S. workers they can’t depend on anymore behind.