The year 2003 is now history as we quickly glide through this new millennium. The first three years were quite difficult, but 2003 was a year in which we experienced a rebound. Or did we?
If you were a major corporation, earnings were quite positive. But what about John Q. Public right here in Queens? While corporate profits have been quickly on the rise with continuation expected in the year ahead, this still has remained for the most part a jobless recovery. Major corporations have eliminated positions only to create new ones to be farmed out to foreign lands. It is the exportation of American labor.
Now companies predominately do not move their firms but hire from foreign lands or employ independent outsourcing. One example of this trend is Swingline Staples of Long Island City, which flew south of the border to Mexico several years back.
Major lending institutions are having their mortgage processing work done in places such as India. And ditto for high-tech firms. Then there are the airlines. Lufthansa German Airlines has moved major portions of its reservations department to Canada because wages there are a lot lower, and it is moving a good portion of its accounting department to Mexico.
And then there is China, whose economy grows at a record rate as it obtains textile and parts manufacturing, thus eliminating even more positions here. And the plot will thicken with the creation of the Central American Free Trade Agreement.
There are many countries competing for American jobs. And what about the small- to mid-sized companies in Queens? With a tight labor market and its accompanied insecurity, employee output has soared, enabling companies to successfully raise productivity by adding little to no workers to their payrolls.
The foundation of our nation is a working America. Americans pay taxes and therefore add to federal, state and local revenues. Working Americans spend their money on goods and services, which raises corporate taxes as well as corporate profits.
For example, it is said that a worker in India costs one-third of the amount of employing a worker here at home. If the budgets of large companies, such as IBM, GE or Cigna, allow for the hiring of 100 employees in India, why not use that same money to take on 33 here at home?
So, how is business subject to low employment growth? Going out for foreign labor at a reduced cost will contribute to immediate higher earnings but will have future consequences. America has always been and still is the very best investment.
Joe Palumbo is the fund manager for the Palco Group, Inc. and can be reached at palcogroup@aol.com or 718-461-8317.
