Corporate profits are up. Stock prices are up. So why isn’t anyone hiring? Actually, many American companies are. 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 US. 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 US, edging up to 9.8% last month, even though firms are performing well.
But 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 US The additional 1.4 million jobs would have lowered the US unemployment rate to 8.9%, says Robert Scott, the institute’s senior international economist.
“There’s a huge difference between what is good for US companies versus what is good for the American economy.”
Many of the products being made overseas aren’t coming back to the US. Demand has grown dramatically this year in emerging markets such as India, China and Brazil. Meanwhile, consumer demand in the US has been subdued. “Companies will go where there are fast-growing markets and big profits,” says Jeffrey Sachs, globalisation expert and economist at Columbia University.