Reporters just donít know
what to make of it: The unemployment rate falls at the same time
that big companies are laying off thousands of workers. These must
be contradictory signals about the health of the economy, right?
Not necessarily, but most
reporters at the networks assumed so. For them, layoffs can only be
a bad sign. ABCís Kevin Newman, on the December 3 Good Morning
America, announced that "big companies [are] shedding employees
as if there is a recession, but of course there isnít," which led
him to wonder: "Can our economy really absorb these layoffs, or is
it just a question of too much greed among corporate America?"
According to Timeís
Frank Gibney Jr., in the December 14 edition of that magazine, "Last
week the Dow Jones stock average slipped on confusing news of
megamergers by some companies and thousands of layoffs at others. It
then recovered slightly after the Department of Labor announced that
the November unemployment rate dipped to 4.4 percent." Layoffs,
however, caused him to wonder if "todayís economic boom will give
way to a brutal post-holiday hangover."
And on the November 18
World News Tonight, ABCís Betsy Stark reported on how big
American steel companies are threatened by inexpensive imported
steel, noting that the price of steel has dropped from $330 per ton
last year to $230 this year. This may be good for manufacturers who
use steel, but "the global economy is not a wonderful thing if
youíre an American steel worker. Prices for foreign steel are so low
that even the most efficient American steel companies say they
cannot match them and still make a profit," causing the industry to
lose 6,000 jobs this year.
All of these stories missed
an important point: If big companies themselves, or foreign
competitors, can produce the same products more efficiently with
less labor, then that will free up workers to produce other products
or services, making the economy as a whole wealthier. "Most of the
layoffs are happening at big firms," notes a report in the December
8 Investorís Business Daily. "But thatís not where the action
is. Small- to mid-sized companies are hiring at a stupendous clip."
While behemoth companies have cut jobs, "new jobs are being created
faster than the government can count in sectors of the economy that
barely existed two decades ago ó personal computers, software, the
Internet, fast-growing discount retailers, and so on."
This is a sign of a healthy
economy, IBD argues: "Jobs that are shed in older, less vital
industries are replaced with new jobs in younger, faster-growing
industries." This contrasts with Europe, where regulations
preventing layoffs stifle the "creative destruction" of the free
marketplace. This leads to slower growth, less innovation, and,
paradoxically, higher unemployment, as companies cease to hire
because of the regulatory and tax burden.
If reporters looked below
the bad news on the surface, they would see that the dynamic,
changing nature of the American labor force is one of this countryís