http://www.jsonline.com/bym/news/jan04/ ... ource=tmj4
Greenspan optimistic on jobs
Fed chairman expects U.S. economy will replace losses to low-wage countries
By MARTIN CRUTSINGER
Associated Press
Posted: Jan. 27, 2004
Washington - Federal Reserve Chairman Alan Greenspan said Monday that jobs lost in the last recession can be replaced, but that unemployed workers might need retraining to qualify for new work.
In a speech prepared for an economic conference in London, Greenspan sought to address fears that many of the 2.8 million manufacturing jobs lost the past 31/2 years could be gone forever to lower-wage countries.
He said competition from low-wage countries was not a new development.
In the 1950s and 1960s, the concern was that U.S. jobs were migrating to Japan, with fears about competition from Mexico rising in the 1990s, Greenspan said. More recently, the concern has been that the United States is losing jobs to China, he said.
Greenspan said people should remember that the economy has always been able to generate enough jobs in cutting-edge industries to replace jobs lost in industries facing the highest competition from low-wage labor.
This has given the U.S. an average of 94% employment of its work force, he said, predicting that this will continue.
"We can thus be confident that new jobs will replace old ones as they always have, but not without a high degree of pain for those caught in the job-losing segment of America's massive job-turnover process," Greenspan said.
Jim Key is one of the people feeling that "degree of pain," and Greenspan's remarks didn't sit particularly well with him.
The Sheboygan man, who with his wife cares for two grandsons, was among those who lost their jobs last month, after Richardson Brothers Furniture Co. shifted production overseas and stopped making furniture in Sheboygan Falls.
"He's looking at statistics," Key said of Greenspan. "He's not looking at the real, actual lives of people."
Key, 46, who is to start working 40 hours a month for his union in February, also questioned the effectiveness of Greenspan's prescription of retraining as medicine for displaced workers' pain.
"Retraining for what?" Key asked. "What is there to go into to retrain (for)? Computer work? That's about it."
Key isn't the only one to express skepticism about Greenspan's stance.
"In states like Wisconsin and Michigan and Indiana, all the lost manufacturing jobs have not been replaced by upscale service jobs that pay anywhere near the hourly rate or benefit package of the lost manufacturing jobs," said Manitowoc Mayor Kevin Crawford, whose city lost hundreds of manufacturing jobs last year with the closing of the Mirro cookware plant. "It doesn't pay to retrain for something that isn't there."
Greenspan, though, warned U.S. policy-makers worried about the loss of jobs not to heed calls for an increase in protectionist trade barriers. He said such a move could be "unexpectedly destabilizing" to the global economy.
"I remain optimistic that we and our global trading partners will shun that path," he said. "The evidence is simply too compelling that our mutual interests are best served by promoting the free flow of goods and services among our increasingly flexible and dynamic market economies."
Fed policy-makers are to begin a two-day meeting today, in which they are widely expected to pledge to keep interest rates low for a "considerable period."
The stock market cheered Greenspan's positive view.
The Dow gained 134.22 points, or 1.3%, to 10,702.51, its highest finish since June 21, 2001. That was slightly more than 1,000 points from the Dow's all-time high close of 11,722.98 on Jan. 14, 2000.
Negative for much of the day, the Nasdaq Composite Index closed up 29.96, or 1.4%, to 2153.83.
The Standard & Poor's 500 index closed up 13.82, or 1.2%, to 1155.37.
And the Russell 2000 index closed at 601.50, less than 5 points below its all-time high of 606.05 on March 9, 2000.
Rick Romell and Thomas Content of the Journal Sentinel staff and Cox News Service contributed to this report.