Archive for the ‘Jobs’ Category

Jobs, productivity and inequality

June 30, 2015

destroying.jobs_.chart1x910_0.

destroying.jobs_.chart2x910

David Rotman, writing in MIT Technology Review, made the case that advances in technology and growth in productivity have not paid off for working Americans.

He considered whether there is something in the nature of technology that rewards highly-trained employees and eliminates the jobs of unskilled employees.

I think the problem is the priorities of the people in charge, not the nature of technology.

It is not technological progress that leads to public libraries having shorter hours, or public utilities have deferred maintenance, or customer service centers keeping people on “hold” for endless minutes.  Rather it is the priorities of the people in charge.

To the extent technology is the cause, I think the reason is that the impetus has been to develop technologies that eliminate jobs rather than technologies that provide better services and improve the quality of life for the majority of Americans.

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How Technology Is Destroying Jobs by David Rotman for MIT Technology Review.

How job choices correlate with political choices

June 3, 2015

20150602_jobsHat tip to zero hedge.

This chart was created by Verdant Labs.  If you click on that link, you can find the original chart, plus an additional interactive chart with information about more occupations.  For example, it shows that, in my own former job of journalist, there are 88 Democrats for every 12 Republicans.

This by the way does support the claim of conservatives that reporters tend to be liberals, but I’m not sure what, if anything, could be done to change this.  An affirmative action program for journalists who claim to be conservatives?  I don’t think that would work.

I often hear that Americans prefer political centrists, but Americans classified by occupation are strongly polarized.   Interestingly, though, if you go to the original Verdant Labs article, you will find that some of the top corporate and business positions are more evenly divided between the two parties than many of the middle-class and working-class jobs.

I can understand while environmental protection workers would tend to be Democrats while oil field workers would tend to be Republicans.  But some of the other political polarizations seem to based on people deciding to fit stereotypes than the actual positions of the two parties.

The claim that off-shoring lowers costs

May 20, 2015

Yves Smith wrote on her naked capitalism blog:

… … The claim that outsourcing and off-shoring lower costs is greatly exaggerated.

Off-shoring and outsourcing … … do lower direct factor and lower-level worker costs.

But they do so at the increase of greater coordination costs of much more highly-paid managers.  And they also increase shipping and financing costs, and downside risk.

Having people work at a distance, whether managerially or by virtue of being in an outside organization where the relationship is governed by contract, increases rigidity (harder to respond to changes in market demand) and the odds of screw-ups due to communication lapses.

And outsourcing also reduces an organization’s skills.  Those lower-level people have a lot of product know-how that you lose when you transfer activities to an outside operation.

It’s nice to think that you can hollow out your organization and just do all the sexy design and marketing stuff and dump the grunt work on other players.  But over time you are breeding future competitors.

Thus off-shoring is best understood as a device for transferring income from the rank and file to middle level and senior executives.

via naked capitalism.

In short, off-shoring lowers the wages of production workers, and raises the salaries and importance of managers.   And who makes the decision about off-shoring?  The managers!

This reminds me of America by Design and Forces of Production, books I read by an economic historian named David Noble.   He wrote that there was no evidence of an overall economic benefit in replacing skilled workers with automatic machinery.  The benefit was in increasing the power of managers and industrial engineers, and decreasing the power of workers.

There’s something called public choice theory, which is about how public officials, when making decisions, consider their own good as well as the public good.  I’d say this theory applies just as much to decisions within corporations or any other organization.

What it means is that when corporate officials say “the market” determines this or that, we the people are entitled to ask—the market for what and for whom?

The changing U.S. economy in four maps

February 22, 2015

The most common job in each state in 1978.

16389997587_0e9959bd23_zThe most common job in each state in 1988.

16574791922_bd081f6292_zThe most common job in each state in 2000.

16574792062_6c7be6e8d6_zThe most common job in each state in 2014

mostcommonjobSource: National Public Radio via Mike the Mad Biologist.

Long story short:  The most common jobs remaining are the ones that haven’t been automated and aren’t being done cheaper overseas.

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The emerging American job market

January 15, 2015

Tom the Dancing BugVia Tom the Dancing Bug

What’s wrong, and what to do about it

December 3, 2014

whatswrongwithuseconomy_a_final1_infographic350w

The AFL-CIO has an excellent series of infographics about what’s wrong with the U.S. economy, which I have put into this post.  For those who have a little time, I link to four articles explaining the infographics.  For those who have more time, I then link to background information on which the articles are based.

My only argument with the AFL-CIO is that they attribute bad economic policies exclusively on Republicans, while ignoring Wall Street Democrats such as Bill and Hillary Clinton, Barack Obama, Joe Biden, Chuck Schumer and Christopher Dodd.

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‘Assembled in the USA,’ but made in China

November 26, 2014

mftg&walmart-v4-1024x839

Walmart is selling TV sets with the label, “Assembled in the USA,” but the Association for American Manufacturing has complained to the Federal Trade Commission that the TV sets are actually made in China.

FTC rules say that a product can’t be labeled as assembled in the USA unless the principal assembly takes part in the USA, and the assembly work is substantial.  Walmart’s supplier, Element Electronics, doesn’t do enough assembly to qualify, the complaint says.

One reason American manufacturers have shifted production overseas is to meet Walmart’s demand for low prices.  Walmart is the USA’s largest importer.  That’s something for American Christman shoppers to think about.

∞∞∞

How Walmart Destroyed U.S. Manufacturing by Molly McGrath and Brad Markell for the Walmart 1 Percent.

Walmart Workers Ramp Up Protests for Black Friday by Diane Krauthamer for Labor Notes.

Public employment fails to keep up

October 14, 2014

EPIpublic-sector-jobs-gapEPIsnapshot-teacher-gap-10-08-2014

My e-mail pen pal Bill Harvey sent me links to articles with the charts shown above, both from the Economic Policy Institute, whcih the seriousness of the current attack on the public sector and the decline of public employment.

Public employment, unlike in previous economic recoveries, is still depressed, especially at the state and local level.  In and of itself, this creates a drag on the whole economy, just like job losses in any other category.

And after a certain point there aren’t enough public employees left to do their jobs adequately.   Teachers with too-large classes teach less effectively.  Firefighters with too-long shifts and too-small crews fight less effectively.  Nurses with too many patients may not be able to keep track of them as they should.  Public roads and public utilities aren’t maintained.

While there can be featherbedding in public employment, this is not the situation now.  Public services in many places are in dire straits.

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When profits and productivity aren’t enough

July 9, 2014

Losing Sparta by Esther Kaplan on VQR tells the following story.

A Philips lighting fixtures plant in Sparta, Tenn., was named by Industry Week in 2009 as one of the 10 best factories in the USA.

Workers and managers had worked together to increase output on some lines by 60 percent, lower changeover time between small orders by 90 percent, and reduce defective parts by 95 percent.  As a result the plant generated a good profit.

Yet in 2010 an executive showed up from corporate headquarters in the Netherlands and announced that the plant was closing, and its operations moved to Monterey, Mexico.

To people in Sparta, this didn’t make sense.  Local business leaders did a study that showed that any savings on wages (which generally are no more than 10 to 15 percent of manufacturing costs) would be offset by increased transportation costs of Philips’ markets in the Northeast and Midwest.  They were unable to make contact with anyone in Philips who was willing to listen or who had authority to make the decision.

Esther Kaplan thinks that the decision probably was based not on study of the Sparta plant specifically, but on an overall policy of centralizing manufacturing in low-wage countries.

I know from reporting on business years ago that there are fashions in management.  In one era, the fashion was diversification, so that your business is not dependent on any one market; in another, it was divestment and concentration on core competency.  And I know there are managers who think that willingness to cause human suffering is a sign of realism and tough-mindedness.

I also know from my own experience that when managers tell employees it is necessary to do X in order to keep their operation going, they almost always will do everything humanly possible to achieve X—provided that they think the statement is being made in good faith.

Workers in Sparta did everything management asked of them, but to no avail.  Kaplan wrote that this is the story of American workers as a whole.   Americans by many measures are the most productive workers in the world, and U.S. productivity continues to increase, but this does not keep manufacturing jobs in the USA.

The U.S. jobs market has recovered (or has it?)

June 7, 2014

jobs.recovery.am

The number of Americans with jobs has at long last gotten back to where it was before the state of the recession.

As the chart above shows, this has taken much longer than after any previous recession since World War Two.

But this doesn’t mean the U.S. economy is back to normal.  The population has grown since then, and so we still have a higher number of Americans than before who are out of work.

Economists define a recession as two quarters of a year in which GDP (output of goods and services) has fallen, and a recovery as two quarters in which GDP has risen again.

In theory this would automatically mean an increase in jobs.  If the output of goods and services is increasing, then supposedly more people are being put to work to produce these goods and services.  But this time around, there is a disconnect.

The percentage of working-age Americans with jobs is far below pre-recession levels.  Most Americans, based on their personal experience, think the United States is still in a recession.

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Cheap steel, free trade and U.S. jobs

May 22, 2014

The world steel industry is going through a shakeout.  The world’s steel industry is producing more steel than can be sold on the market, which means some steel producers are doomed to go out of business.

USW-Calls-for-Action-amid-Surge-in-Unfairly-Traded-ImportsThe question is: Which ones?  As things stand now, it is the U.S. industry that is at risk, according to the Economic Policy Institute, a pro-labor think tank.   They say that’s because the U.S. market is more open to imports than other countries’ economies, and more vulnerable to dumping.

This means the 125,000 jobs in the U.S. steel industry are at risk, plus, according the EPI, up to three times that many whose jobs indirectly depend on the steel industry.

Senators Sherrod Brown, D-Ohio, and Jeff Sessions, R-Alabama, have asked the U.S. Commerce Department for penalty tariffs against South Korea and other countries.   This may be necessary to enable the U.S. steel industry survive the current shakeout, but it is not a long-term solution to the industry’s problems.

It is an example of Robert B. Reich, writing more than 30 years ago, called industrial policy by historic preservation.   Reich, who later served as Secretary of Labor in the Clinton administration, said the U.S. government will spend money to rescue industries on the brink of failure, but not to help make these industries successful in the first place.

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High minimum wage and small-biz job growth

May 15, 2014

Growth in small-business jobs is greatest in Washington state, which has the highest state minimum wage, and in San Francisco, which has the highest urban minimum wage.

That conclusion is based on the Paychex | IHS Small Business Job Index, a survey of more than 350,000 small-business clients of Paychex, a payroll processing firm, in partnership with IHS, a consulting firm.

20140429_national

U.S. Small Business Jobs Index

The federal minimum wage is $7.25 an hour.  Overall, the United States had a Small Business Job Index of 101.26, which meant that the number of small-business jobs was up 1.26 percent from 2004, when the survey began.

Washington state, with a minimum wage of $9.32 an hour, had a Job Index of 103.51 and San Francisco, with a minimum of $10.74 an hour, had a Job Index of 104.02.

During the past 12 months, small-business jobs increased by 2.2 percent in Washington state.  Seattle’s small-business jobs grew by 2.66 percent, the highest 12-month growth rate among large U.S. cities.  Small-business jobs in San Francisco’s increased 1.13 percent during the same period.

Maybe this job growth is due to a higher minimum wage giving workers more money to spend at local small businesses.  Maybe it is for reasons completely unrelated to minimum wage.

But it provides an answer to the argument of many economists and the Congressional Budget Office that any increase in the minimum wage automatically results in a loss of small-business jobs.

LINKS

Paychex | IHS Small Business Jobs Index.   Tables of data.

Paychex | IHS Small Business Jobs Index Increases to 101.26 in April.  A press release.

Washington state defies minimum wage logic by Katie Loboso for CNNMoney.  Hat tip to Barry Ritholtz.

Why the economic recovery is so slow

March 6, 2014
Current job losses compared with previous recessions

Current job losses and recovery compared with previous recessions

The chart shows how slow the current U.S. economic recovery is compared to recoveries from  previous recessions.  When and if the number of U.S. jobs returns to the pre-recession level (the 0.0% line on the chart), the jobs recovery will not be complete because the number of working-age Americans will have increased in the meantime.

Why is the current economic recovery so slow?  Here is what I think:

  • Almost all the benefits of economic growth during the past 20 or 30 years have been flowing to a tiny minority of the population — the upper 1% or 0.1% of the population.
  • These segment of the population spends less of their income than most Americans do.  Instead they save their money so that they can become even richer.
  • Contrary to what “supply-side” economists hoped in the 1980s, they have not been investing their money in enterprises that create American jobs.  People don’t invest money just because they have money or just in order to create jobs.  They invest money in a business because they have reason to think there is a market for that business’s products and services.
  • Prior to the 2008 crash, U.S. economic growth depended on the willingness and ability of the American middle class to take on debt in order to maintain their spending power.
  • Since the 2008 crash, banks, wisely, have tightened their requirements for lending.
  • Since the 2008 crash, middle class Americans, wisely, have been paying down their debts rather than taking on more.
  • These leaves us with the situation that John Maynard Keynes wrote about — an economy that does not grow because people have no money to spend, and people without money to spend because the economy is not growing.

I don’t believe in government spending money for the sake of spending money, but there are a lot of things that need to be done that in the long run will add to US economic strength, and this would be a good time to start.  One useful way to increase jobs is for governments at all levels to start to repair our deteriorating bridges, water mains and other physical infrastructure.

LINKS

FORGET THE 1% by J.D. Alt for New Economic Perspectives.

Inequality and the Weak Recovery by Joe Weisenthal for Business Insider.

Americans Shut Out of Home Market Threaten Recovery by Pashant Gopal and John Gittelsohn for Bloomberg Business News.

Inequality, austerity are enemies of meritocracy

February 27, 2014

A smart economist named Tyler Cowen has written a book entitled Average Is Over, in which he foresees a world of advanced technology in which maybe 15 percent of the population will have the ability to keep up and grow rich, while everybody else falls behind.

He said new technology will make the population more legible to the job creators, so that those who have merit will rise more quickly, but those who make bad choices early in their lives will be marked forever.  He has no problem with this because, like many economists, he thinks anything is all right if it is the result of market forces.

I don’t have standing to criticize Cowen’s book because I haven’t read it, but I think that, as a general principle, the greater the degree of inequality and the fewer the openings at the top, the less likely that these openings will be allocated on the basis of merit.  Rather the gatekeepers will first make sure that their families and loved ones are taken care of, and then will look to do favors for those who can do favors in return.

Equality of opportunity entails risk for those at the top, but that risk is minimized when prosperity is widely shared, and people who miss out on one thing have a fair shot at something else.

The rise of the surveillance workplace

February 20, 2014

spying

Increasing numbers of American businesses are using NSA-type surveillance technology to monitor employee behavior on a minute-by-minute basis.  The data gathered by these monitors will be used to create algorithms for judging in advance which employees will be productive and which won’t.

One striking example of this technology is the Hitachi Business Microscope, a device that resembles an employee name tag.  An HBM can generate data on how an employee spent their day, when they stood up and sat down, when they nodded their heads, waved their arms, pointed their fingers or stretched, who they talked to and in what turn of voice, when they went to the bathroom or coffee machine and how long they spent doing it.

Hitachi says this data can be used to maximize “employee happiness.”  I can think of less benign potential uses.

The HBM is part of a new industry of manufacturers and consultants that purport to use surveillance technology to improve employee productivity.

I question how much improvement will actually take place.  Data is only useful to those who know how to interpret it correctly.  Having more data than you can comprehend is counter-productive.

What the new surveillance technology will do is to increase managerial control, which most managers fail to realize is an entirely different thing.

Developments like this make me glad I’m 77 years old and retired.   The great thing about being a newspaper reporter during the 40 years I worked in journalism was that you were free to do your job as you saw fit, and were judged by results.

I remember talking to some machinists for Eastman Kodak Co. in the late 1970s, who marveled that I in my job as a newspaper reporter was not only free to go to the bathroom without asking permission, but also to get up at will and go to the vending machine for cup of coffee.

Later on I was thankful not to be a telephone operator, telemarketer and customer service representative, who was monitored on whether he or she followed scripts and completed calls within an allotted time, or a data processor, whose work was measured keystroke by keystroke.

But the new technology takes workplace surveillance to a whole new level.   It is like the difference between Tsarist Russia and Soviet Russia.

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