Finally! Companies are hiring again. Just not in the US. US companies hire overseas.

[Karalysia]

Corporate profits are up. Stock prices are up. So why isn't anyone hiring?

Actually, many American companies are — just maybe not in your town. They're hiring overseas, where sales are surging and the pipeline of orders is fat.

More than half of the 15,000 people that Caterpillar Inc. has hired this year were outside the U.S. UPS is also hiring at a faster clip overseas. For both companies, sales in international markets are growing at least twice as fast as domestically.

The trend helps explain why unemployment remains high in the United States, edging up to 9.8 percent last month, even though companies are performing well: All but 4 percent of the top 500 U.S. corporations reported profits this year, and the stock market is close to its highest point since the 2008 financial meltdown.

But the jobs are going elsewhere. The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute's senior international economist.

"There's a huge difference between what is good for American companies versus what is good for the American economy," says Scott.

American jobs have been moving overseas for more than two decades. In recent years, though, those jobs have become more sophisticated — think semiconductors and software, not toys and clothes.

And now many of the products being made overseas aren't coming back to the United States. Demand has grown dramatically this year in emerging markets like India, China and Brazil.

Meanwhile, consumer demand in the U.S. has been subdued. Despite a strong holiday shopping season, Americans are still spending 3 percent less than before the recession on essential items like clothing and more than 10 percent less on jewelry, furniture, electronics, and big appliances, according to MasterCard's SpendingPulse.

"Companies will go where there are fast-growing markets and big profits," says Jeffrey Sachs, globalization expert and economist at Columbia University. "What's changed is that companies today are getting top talent in emerging economies, and the U.S. has to really watch out."

With the future looking brighter overseas, companies are building there, too. Caterpillar, maker of the signature yellow bulldozers and tractors, has invested in three new plants in China in just the last two months to design and manufacture equipment. The decision is based on demand: Asia-Pacific sales soared 38 percent in the first nine months of the year, compared with 16 percent in the U.S. Caterpillar stock is up 65 percent this year.

"There is a shift in economic power that's going on and will continue. China just became the world's second-largest economy," says David Wyss, chief economist at Standard & Poor's, who notes that half of the revenue for companies in the S&P 500 in the last couple of years has come from outside the U.S.

Take the example of DuPont, which wowed the world in 1938 with nylon stockings. Known as one of the most innovative American companies of the 20th century, DuPont now sells less than a third of its products in the U.S. In the first nine months of this year, sales to the Asia-Pacific region grew 50 percent, triple the U.S. rate. Its stock is up 47 percent this year.

DuPont's work force reflects the shift in its growth: In a presentation on emerging markets, the company said its number of employees in the U.S. shrank by 9 percent between January 2005 and October 2009. In the same period, its work force grew 54 percent in the Asia-Pacific countries.

"We are a global player out to succeed in any geography where we participate in," says Thomas M. Connelly, chief innovation officer at DuPont. "We want our resources close to where our customers are, to tailor products to their needs."

While most of DuPont's research labs are still stateside, Connelly says he's impressed with the company's overseas talent. The company opened a large research facility in Hyderabad, India, in 2008.

Rising middle class

A key factor behind this runaway international growth is the rise of the middle class in these emerging countries. By 2015, for the first time, the number of consumers in Asia's middle class will equal those in Europe and North America combined.

"All of the growth over the next 10 years is happening in Asia," says Homi Kharas, a senior fellow at the Brookings Institute and formerly the World Bank's chief economist for East Asia and the Pacific.

Coca-Cola CEO Muhtar Kent often points out that a billion consumers will enter the middle class during the coming decade, mostly in Africa, China and India. He is aggressively targeting those markets. Of Coke's 93,000 global employees, less than 13 percent were in the U.S. in 2009, down from 19 percent five years ago.

The company would not say how many new U.S. hires it has made in 2010. But its latest new investments are overseas, including $240 million for three bottling plants in Inner Mongolia as part of a three-year, $2 billion investment in China. The three plants will create 2,000 new jobs in the area. In September, Coca-Cola pledged $1 billion to the Philippines over five years.

The strategy isn't restricted to just the largest American companies. Entrepreneurs, whether in technology, retail or in manufacturing, today hire globally from the start.

Consider Vast.com, which powers the search engines of sites like Yahoo Travel and Aol Autos. The company was founded in 2005 with employees based in San Francisco and Serbia.

Harvard Business School Dean Nitin Nohria worries that the trend could be dangerous. In an article in the November issue of the Harvard Business Review, he says that if U.S. businesses keep prospering while Americans are struggling, business leaders will lose legitimacy in society. He exhorted business leaders to find a way to link growth with job creation at home.

Other economists, like Columbia University's Sachs, say multinational corporations have no choice, especially now that the quality of the global work force has improved. Sachs points out that the U.S. is falling in most global rankings for higher education while others are rising.

"We are not fulfilling the educational needs of our young people," says Sachs. "In a globalized world, there are serious consequences to that."

http://www.msnbc.msn.com/id/40827123/ns/business-us_business/

Maybe we should give them another tax cut? I'm sure its going to kick in soon!

Tax cuts! More tax cuts! And cut spending! It'll solve everything! Invisible hand! Free market!

 

[GenMarshall]

Fat cat capitalists always ignoring the American people, typical class warfare.

It should be time to riot and loot the corporate big wigs to get the attention to start hiring Americans and quit outsourcing!!!!

 

[Zelig]

Maybe the unemployed Americans should move to India.

 

[Karalysia]

Or maybe we should remove minimum wage and reduce our wages to $ 1-2 a day so we can compete with India!

 

[eoc]

Americans salary is much more expensive than Indians. Who won't pay for the cheaper?
Besides, they can do the same and better

 

[GenMarshall]

No, just bring in tariffs (or whatever they are called), and tax the snot out of the companies that outsource jobs oversees while neglecting job creation at home. Give the companies who DO create jobs at home a tax break or a tax credit for hiring the unemployed at home.

 

[JerichoHill]

No, just bring in tariffs (or whatever they are called), and tax the snot out of the companies that outsource jobs oversees while neglecting job creation at home. Give the companies who DO create jobs at home a tax break or a tax credit for hiring the unemployed at home.

Developing economies were not as hard hit by the global recession as developed economies, so why is it surprising that they'd recover first?

CivGeneral,

Tariffs inevitably harm domestic competition, and create huge dead weight losses on society. They almost never keep jobs and almost never add any $$$ to an economy. Protectionism (if you are a developed nation) is a ruinous economic platform.

You should brush up on Economics 101.

 

[Karalysia]

Developing economies were not as hard hit by the global recession as developed economies, so why is it surprising that they'd recover first?

Good for them. Maybe it would be better if they didn't recover off American jobs.

 

[JerichoHill]

We had a claim to jobs in other countries who economies weren't as messed up by the crisis?

Is there any evidence to back up your claim that these overseas jobs would be US jobs if we didn't fill them overseas?

Is there an understanding that foreign economies that grow will demand more exports from us, and thereby stimulate our economy's export sector?

 

[GenMarshall]

Developing economies were not as hard hit by the global recession as developed economies, so why is it surprising that they'd recover first?

CivGeneral,

Tariffs inevitably harm domestic competition, and create huge dead weight losses on society. They almost never keep jobs and almost never add any $$$ to an economy. Protectionism (if you are a developed nation) is a ruinous economic platform.

You should brush up on Economics 101.

Does an economist care about the struggles of the unemployed?? most certainly not. I don't give a damn about "harming" competition and all that other nonsense. we want to see results NOW and seeing fat cat capitalists exporting our jobs is just boiling our tempers. We want jobs created HERE, not outsourced.

Screw India and the other developing nations.

 

[Karalysia]

From the article:

The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute's senior international economist.

These are US companies spending their hoarded corporate profits which they've amassed through large tax cuts and welfare programs on creating jobs for cheap labor in China. Yes those are our jobs. That is our money. And we are being robbed.

 

[GenMarshall]

@Karalysia - Not to mentioned ticked off.

 

[Dumanios]

I say we make Overseas part of the American Empire Nation.

 

[Ajidica]

Does an economist care about the struggles of the unemployed?? most certainly not.

I would argue that they do. Chronic unemployment creates social problems and social problems create economic problems, which are detrimental to forecasting.

I don't give a damn about "harming" competition and all that other nonsense. we want to see results NOW and seeing fat cat capitalists exporting our jobs is just boiling our tempers. We want jobs created HERE, not outsourced.

What sort of jobs do you want? If the minimum wage law was ditched and companies were not obliged to provide anything (along with the anti-striking provisions I am sure are in the contracts) then the jobs would come back to America. The question is, would you want them at that rate?

 

[amadeus]

Good for them. Maybe it would be better if they didn't recover off American jobs.

What makes a job an American job? The company is based in the U.S.? Would it be better for us if the job created in India was by an Indian company and we here in the U.S. saw no profit whatsoever?

 

[aimeeandbeatles]

What makes a job an American job? The company is based in the U.S.? Would it be better for us if the job created in India was by an Indian company and we here in the U.S. saw no profit whatsoever?

'Cos the job was created by American tax cuts?

 

[JerichoHill]

Does an economist care about the struggles of the unemployed?? most certainly not. I don't give a damn about "harming" competition and all that other nonsense. we want to see results NOW and seeing fat cat capitalists exporting our jobs is just boiling our tempers. We want jobs created HERE, not outsourced.

Screw India and the other developing nations.

How dare you even suggest that I don't care, or others do not care about the struggles of the employed. You don't know me, you don't know what I do. Hell, maybe there's a pertinent fact that I tutor folks on personal finance, a semi well known fact that many posters here know. What do you do for people who are struggling to make ends meet? Do you donate hours a week with zero monetary compensation, just to help? Do you?

You think that there can be results now when we almost had a depression? Do you realize how much that's like the attitude of a child who wants their candy now? You don't recovery from near disaster over-night.

Screw India? The same India that's going to demand American culture and American products as they get wealthier, and spend to $$$ to import that, thus boosting our export industries, and boosting our tourism industries, both of which are lower wage industries which took a beating in the recession? Yeah, because holding people down somehow pulls you up.

@Karalysia

He is saying that if for some reason we had those 1.4 million jobs we'd have 8.9% unemployment, but that is assuming that those jobs could have been supplied in the US instead of overseas. That is a huge assumption and is one I would not make. I would expect EPI to make such an assumption, they're more of a policy driver than a research driver.

@Aimee

They were created by American tax cuts? Where?

 

[Verbose]

From the article:

These are US companies spending their hoarded corporate profits which they've amassed through large tax cuts and welfare programs on creating jobs for cheap labor in China. Yes those are our jobs. That is our money. And we are being robbed.

How do you know they didn't make that money allowing expansion abroad, well, abroad?

If US corporations get forcibly sequestered to the US and the US alone, of course it will cause a kind of "natural limitation" to US corporations, who will very perceptibly remain US corporations. It's just that then that possible expansion will be made by a bunch of Chinese, Europeans, Japanese etc., not Americans.

 

[amadeus]

'Cos the job was created by American tax cuts?

The job was also created by favorable investment conditions overseas.

 

[Fugitive Sisyphus]

Wow, it's almost as if the economy outside the United States is bigger and has more room to grow than the one inside it.