Thoughts on Jobs Czar Jeffery Immelt

Posted on February 2, 2011

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Jeffery Immelt is our new “jobs czar” on Obama’s new Council on Jobs and Competitiveness. Emptywheel at Firedoglake is calling it a “kabuki jobs council,” noting GE had just signed a deal with China to share our jet technology that will allow China to compete with GE and Boeing. Emptywheel also noted GE has been shutting plants and repurposing them in China.

From Empty: “Recently, [mid 2009] ATI made $30 million worth of investments to buy, convert, and modernize a shuttered factory in economically ravaged Michigan so the company could provide more parts to GE as the green economy expands with federal stimulus funding. But a Chinese firm underbid ATI, and the factory faced having to lay off 302 union workers and shutter the plant. In an aggressive bid to keep the factory open, ATI offered to match the price of the Chinese producers. GE once again said they would prefer to buy from China. The ATI plant is now closed, the jobs gone.”

Immelt sat on Obama’s Economic Recovery Advisory Board at the time this occurred. His GE company received $16 billion in bailout funds from US taxpayers, taxpayers like the 302 workers at the ATI plant whose jobs Immelt had outsourced to China. Now, why would GE outsource those jobs to China if ATI had underbid China? Is partnering with and pandering to China’s interests all that? Or is it the that the tax incentives to American companies to outsource that powerful? Would changing the tax incentives to outsource help repatriate jobs back home?

Comment from Immelt on his new role as jobs czar on Obama’s Council on Jobs and Competitiveness:  “A sound and competitive tax system and a partnership between business and government on education and innovation in areas where America can lead, such as clean energy, are essential to sustainable growth.”

The CBO estimates that “As the recovery continues, the economy will add roughly 2.5 million jobs per year over the 2011–2016 period.” That is more than 200,000 jobs being created per month every month for the next 5 yrs. Moody’s estimates 270,000 jobs will be created per month on average in 2011.

But since American companies have been incentivized through tax structures to outsource since the 1980s, jobs simply disappear to overseas markets during economic recoveries. There are no longer any V-spikes in the jobs mkt when the US comes out of a recession. During the housing boom, the peak job growth in 2004-2006 at best averaged 200,000 jobs.

However, there is no housing boom in the US in 2011-2016. The excess supply of homes will take to 2013 to absorb according to JPM.  With no housing related jobs to create at least until 2013, there is simply no way the US can create 200,000 jobs per month on average in 2011-2012. And jobs in new growth industries like clean energy are largely going overseas.

As per recent trends in outsourcing: outsourcing trends are expected to persist:

http://www.rttsweb.com/outsourcing/statistics/

More than 1.3 million additional Western jobs will vanish by 2014 due to “the accelerated movement of work to India and other offshore locations,” says the study released Nov. 15.

http://economyincrisis.org/content/outsourcing-americas-stimulus-jobs

In a March 2010 letter sent to Treasury Secretary Timothy Geithner Tuesday, Sens. Chuck Schumer (D-NY), Sherrod Brown (D-OH), Bob Casey (D-PA) and John Tester (D-MT) said that taxpayer dollars designed to boost the struggling American economy should not be used to create jobs overseas.

“Companies located in New York, Pennsylvania, and elsewhere across the United States are fully capable of manufacturing the range of clean-energy components, and U.S. wind farms and other clean-energy projects financed with stimulus money should be buying American-built parts,” the letter reads. The report estimates stimulus funding for wind projects have created roughly 6,000 manufacturing jobs overseas and just hundreds in America.  At a press conference Wednesday, the Senators pointed to a specific wind farm project in West Texas that is seeking an award of $450 million in stimulus funds for a $1.5 billion project.  According to Schumer, the Texas project would create around 3,000 Chinese jobs and just 300 American jobs.

The letter comes on the heels of a report by the Investigative Reporting Workshop and ABC News, which found that eight of every $10 spent on wind energy projects through the stimulus package went to a foreign company.  Total recovery funds spent on wind energy projects total nearly $2 billion.

by John Bougearel…….So, to our new jobs czar Jeffery Immelt: Jeff, I wish you the very best in your efforts to create 200,000 plus jobs a month for the next 5 yrs when the existing tax incentives favor continued outsourcing of US jobs, even in the most prized growth industries such as the clean and green energy industries, whereby (according to Senator Schumer) 90% of the new wind energy jobs are going to China and whereby $8 out of every $10 spent on wind energy (80%) goes to a foreign company according to an ABC Investigative Reporting Workshop

Artilce .insidefutures.com/

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