Some of the powerful executives who advised President Obama on Monday about how to solve the unemployment problem in the United States are themselves focused overseas for growth.
Five of the biggest companies on Obama’s jobs council, General Electric, Citigroup, Intel, Procter & Gamble and DuPont, rely on foreign revenues for a majority of their sales — a shift that’s occurred just in the past several years for most of these firms. As other countries’ economies recover more quickly, these corporations have taken advantage. Earnings at GE were up 77 percent in the latest quarter. Intel is enjoying record profits.
A central assumption in Obama’s economic plan is that private-sector growth will translate into more jobs in this country.
But that strategy could be less potent as decades of globalization have loosened the connection between the health of large U.S. firms and the economy, analysts say.
As a whole, U.S. multinational firms reduced their workforce in this country by 2.9 million between 1999 and 2009, according to recent data from the Commerce Department. Meanwhile, they added 2.4 million workers overseas.
Corporate profits have largely returned to their levels from before the financial crisis, and executive pay has come roaring back. But income for most workers has been stagnant and the unemployment rate remains stubbornly high at 9.1%.
“The bottom line is, U.S. companies can do very well,” said Clyde Prestowitz, president of the Economic Strategy Institute and an adviser to the Commerce Department during the Reagan administration. “That doesn’t mean the U.S. economy is doing well.”
The 26-member jobs council, which the president formed in January, set a goal Monday for companies to create 1 million jobs within two years.
Read more at The Washington Post.