Innovation is ''Fueling Economic Boom''
Outsourcing, other growth indicators called ''misleading''
SAN FRANCISCO - 03/16/04 - Small to mid-size companies will continue to foster job growth in 2004 according to Dr. H. Robert Heller, chief economist for SDR Capital and former Governor of the Federal Reserve.?
In an address March 12th'to the Alliance of Chief Executives Summit, a gathering of Northern California chief business executives to discuss leadership strategies, Heller indicated that global outsourcing and loss of manufacturing jobs are "misleading indicators" and that "economic growth is booming thanks to new stimulus from innovative companies."
In assessing the employment picture, Heller, an expert in international banking, finance and payments, noted that productivity increases are being blamed for the current "jobless recovery," but in reality the traditional unemployment indicators are misleading.
The Payroll Survey - sponsored by the Department of Labor, which shows that corporations cut payroll - continues to show a decline in jobs, while the Labor Department's Household Survey, which measures the number of people who consider themselves employed, has shown strong growth.
The difference between the two surveys shows about 1.7 million jobs being added to the market.
"In fact," Heller said, "a 5.6%, the unemployment rate is lower than the average for the last 30 years."
Many industries "dominated by small, independent businesses are notoriously underreported," said Heller. "While the Labor Department is very good at counting people in large organizations, they are much less adept at counting people in small business enterprises. Self-employed people and partners in unincorporated businesses are not counted at all in the Payroll survey. Yet, that's where much of our job growth is occurring."
Heller also indicated there is "a lot of confusion about the shrinking manufacturing job sector."
Manufacturing jobs, he said, "are not falling victim to outsourcing or cheaper overseas labor, but rather are vanishing because of increases in efficiency and productivity."
According to Robert Reich, former Secretary of Labor for the Clinton Administration, 22 million factory jobs disappeared between 1995 and 2002. Whereas the US lost 11% of manufacturing jobs, other countries were harder hit, such as Japan with 16% and Brazil with 20%.
Similarly, agriculture jobs are shrinking with advances in technology and productivity. Whereas 33% of Americans were employed in farming in 1900, today only some 3% are farm workers.
With overall employment on the rise, where are the new jobs coming from?
"They are in the knowledge industries, where people invent new things; they are in the service sector; and they are in biotech," said Heller. "Let us never forget that productivity increases are the friend of new high-quality job creation. Yes, low-paying, routine jobs may be lost in this continuous process of creative destruction, but they are only to be replaced by new, more advanced and sophisticated jobs."
"It's clear that innovators like our members are driving employment and economic growth," said Bart Penfold, president of the Alliance of Chief Executives. "Dr. Heller's comments reaffirm a recent Alliance survey polling member companies throughout Northern California. Contrary to conventional economic barometers, our executive members, who come from both private and public companies, say they are hiring and expect to grow in 2004."
The findings from the annual survey of the 200-member, Bay Area-based Alliance,?released in January, indicated that 76.3% of Alliance executives see strong growth in 2004, and 81.5% plan to expand their workforce in sales and marketing (81%) and operations (73.5%).
A complete text of Heller's speech is available at www.allianceofceos.com
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