Do you remember the late 1990's? Out-of-this-world salaries. Below full-employment (>5% unemployment). Budget surpluses. Record stock market levels.
Aside from that last part about the stock market, we're looking at a completely different situation today from 15 years ago. You see, in 1998 employers couldn't find enough bodies to fill all of the need they had for regular needs. Then you add on the tech boom, the dot-com boom and Y2K programming on top of day-to-day needs and salaries went through the roof. Increased disposable income led to an inflated economy. There was a compounding effect. And then there was the influence of a Republican Congress forcing spending down, further compounding the economic effect.
Again, today lacks that last part. Although with the present sequester we see an attempt on the part of Republicans in Congress to replicate their role from the 1990's.
But the main difference today is that the jobs are not filled by Americans--we have discovered India! And they just happen to have an incredibly technically-skilled workforce that speaks English and has significant technical skills.
And a billion people willing to work for dimes on the dollar!
The reason for outsourcing is not for the salary implications of reduced expenses. That comes with the corresponding cost of lost customers who had to interact with a call center in some place unpronounceable. Today we even see outsourcing in the employment recruitment industry, with recruiters based in India contacting American workers via Voice-Over Internet Protocol (VOIP) phone lines. These 'sourcers' call and appear on caller ID as being from New Jersey, Pennsylvania or Georgia while they are actually located in India.
And this is standard in IT services, call centers and even accounting operations now as well. Outsourcing American jobs allows the employer to escape the employer's matching of employee withholding taxes, which outweighs salary and regulatory savings. Reduced salaries save money while foreign accents on the phone cost money. Reduced regulations save money while Tonka trucks with lead paint and other such problems cost money. However, withholding savings are a dollar-for-dollar savings for the US employer.
And the impact on the bottom line is noticeable immediately. In fact, it is impossible to ignore!
I have worked in the accounting operations of three major corporations in recent years. And each was going through outsourcing and each was noticing tremendous impact on their bottom line due to outsourcing. One even commented internally on the incredible impact on human resources-related expense savings that outsourcing resulted in. Another actually expanded the scope of their outsourcing initiative upon seeing the initial benefit. The detriment of foreign labor performing US GAAP accounting functions was still outpaced by the impact on the bottom line that the savings produced.
And that is what is driving the present stock market performance. Not tax rates. Not Washington legislation. Even the prospect of Obamacare taking effect has not swayed the stock market's rocketing into record territory yesterday. Profits are everything, as it turns out. And companies that don't hire American workers are simply not worried about such issues, for if they do not hire American workers they are not subject to US employment laws.
The stock market is not being driven by the economy. It is being driven by savings corporations enjoy by sending US jobs overseas. And neither the media, nor the government (currently being run by Democrats), nor Republicans in Congress, nor companies are discussing this matter.
At least not publicly. Openly.
The fact that savings are more important at this stage than revenues, generated by a roaring economy enjoying beyond-full employment, is a problem. It has resulted in a President being re-elected who really, by all historical measurements, should not have been. His policies have not contributed to a better economy. His rhetoric and administration have not instilled confidence in employers that his administration will support policies that will be beneficial to their hiring Americans.
And that is a problem.
Nobody is discussing what is driving this "investor's economy." It is foreign employment. And poor domestic employment policies that make it more conducive for employers to hire in another land than where their revenues come from.
And this is a topic which deserves to be discussed. Unless you are a Democrat. Democratic policies have done this and will continue to do so. For nothing is being proposed to solve the issues since nobody is discussing the problems.
They're blaming it all on George Bush. And Republicans are letting them do so.