“I’m incredibly optimistic about our prospects,” Obama said about the economy after meeting with more than a dozen corporate and small business leaders whose firms have succeeded, to one degree or another, in bringing jobs back to the United States.
A day after his Republican adversaries competed in the New Hampshire primary, Obama sought to grab back the spotlight and underscore his focus on the economy by convening a high-profile White House forum on how to increase employment and stem the hundreds of thousands of jobs that have been sent overseas.
Obama did not mention any of his potential Republican challengers during his public remarks. But two participants in the forum, Atlanta Mayor Kasim Reed and United Steelworkers President Leo Gerard, compared Obama favorably to Mitt Romney, who on Tuesday won the New Hampshire Republican primary and solidified his lead over the GOP presidential field.
Gerard said his union represented workers in companies that had been acquired by Romney’s former firm, Bain Capital, and that eventually shut down. “From our point of view, this president from day one has tried to create jobs not cut jobs,” he said.
Obama highlighted big and small firms ranging from Ford to a North Carolina specialty furniture company as examples of enterprises that have invested in the U.S. rather than abroad. He called on other companies to do the same with the help of government incentives.
The White House says the president will propose $12 million in his 2013 budget to promote business investment from overseas in the United States.
Obama has already proposed tax incentives for businesses, including a cut in employers’ Social Security taxes, to encourage more hiring. Congress has not acted on those measures.
As if to underscore the political stakes, Obama called for new jobs to take root, not in China or Germany, but “in places like Michigan and Ohio and Virginia and North Carolina,” all crucial states in his bid for re-election.
“Right now, we’re at a unique moment, an inflection point, a period where we’ve got the opportunity for those jobs to come back,” Obama said. “And the business leaders in this room, they’re ahead of the curve, they recognize it.”
But among the causes behind the new spate of hiring is the lack of wage growth in the United States over several years – a fact that Obama often cites as an impediment for those wishing to rise to the middle class.
Indeed, Hal Sirkin of Boston Consulting Group, a participant in the forum, told reporters that not only are U.S. workers more productive than Chinese workers, wages in countries such as China are rising at rapid rates.
“It’s a simple mathematical equation. It’s changing,” he said. “And it will mean that it is a lot easier to retain jobs in the U.S. and it will be a lot easier to attract jobs back to the U.S. It’s not about the patriotism – although I know everybody on stage with me here is just as patriotic. But it is about the underlying economics. And the economics are favoring the U.S. at this point at this time. And by 2015, we expect to see the beginning – and these people are the absolute beginning – of the wave of ‘reshoring’ back to the U.S.”
But any move towards insourcing is fighting a powerful trend: U.S. multinational corporations have been adding jobs overseas partly because that’s where an increasingly large share of their sales are. Companies in the Standard & Poor’s 500 index now earn more than half of their revenue from overseas.
That has fueled a shift in jobs, with large U.S. multinational corporations reducing their U.S. employment while adding jobs in other countries. U.S. multinationals cut more than 800,000 jobs in the United States in 2000-2009, according to the Commerce Department. They added 2.9 million overseas in the same period, the most recent data available.
The Great Recession and the sluggish recovery may have blunted that trend. Labor costs have fallen, particularly in manufacturing, as unions in many industries have accepted lower pay to preserve jobs. At the same time, businesses have cut costs and boosted efficiency. Productivity grew at the fastest pace in 18 months in last year’s third quarter.
“The U.S. is becoming a pretty reasonable place to manufacture,” said Gary Clyde Hufbauer, senior fellow at the Peterson Institute for International Economics. “We are more competitive.”