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.
“There’s no one silver bullet on job creation,” said Jeffrey Immelt, GE’s chief executive. “This is going to be dozens of programs with metrics and accountability.”
The group presented ideas that members said would help U.S. businesses, such as streamlining regulations, improving vocational training, and speeding up the process for tourist visas to draw more foreign travelers to the United States.
“Job growth is going to be driven by the private sector but we can make some smart decision to encourage businesses to feel like this is the right time to invest and that America’s the right place to invest,” Obama said at the council’s meeting.
The United States is facing stiff competition from foreign governments who already offer rich incentives to lure U.S. companies — and the jobs they create.
For decades there has been a connection between corporations and the rest of the economy. As the saying went in Detroit: “What’s good for GM, is good for America.”
Multinational firms added millions of jobs here and abroad in the 1990s. But those companies cut back on hiring in the United States in the past decade.
“In the last couple recoveries, and especially in this one, you’ve seen corporate profits improve and even reach their pre-recession levels much quicker than the labor market,” said Josh Bivens, an economist at the left-leaning Economic Policy Institute. Multinationals “can latch on to a global economy where parts of it are doing much better than the U.S.”