Posts Tagged ‘Jobs’

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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Vanishing farmers and disposable workers

February 4, 2014

Yukon raven by gavatronIan Welsh on his web log pointed out the connection between the decline of farming and the growth of sweatshops.  He noted how the connection operated in England during the Industrial Revolution, in Mexico under NAFTA and also in the United States.

After World War II Americans flooded from the farms into the new cities. For this generation, the GI generation, it was a straight upgrade: their lives were better. They worked less hours, they had more food, they had access to power and indoor plumbing, and good jobs with good pay.

Those Americans were treated very well, and if you weren’t black, the 1950s and 1960s are looked back on as the heyday of American prosperity. Good jobs were plentiful and easy to find and they came with healthcare and good pensions. Life was good.

Today, millennials and Gen-Xers don’t have such a good deal. Unemployment is high, if you lose your job you will have a hard time finding as good one, or a job at all, and good pensions and healthcare plans are more and more uncommon, and increasingly restricted to the executive class.

Why? Well, one reason is this, the family farms are gone.  The first generation had to be treated well because they had options: they could go back to the family farm. So their jobs, and their lives as consumers had to be clearly superior to being on a farm.

Click on The Disposable Economy to read his whole post.

The economic scene: Links & comments 8/23/13

August 23, 2013

Here are links to articles I found interesting and you might find interesting, too.

On the Phenomenon of Bullshit Jobs by David Graeber for Britain’s Strike! magazine.

Some 80 years ago the great economist John Maynard Keynes predicted that advances in technology would make it possible to do all the necessary work of society without people having to work long hours at low pay.

David Graeber said that this, in fact, has happened, but the necessary work of society is being crowded out by unnecessary work.  He knows people who say frankly that their work serves no useful purpose, and they do it only to earn an income.

How do you distinguish between necessary and unnecessary work?  Simply imagine what would happen if all the people doing a particular job went on strike?  Society would be seriously inconvenienced if nobody taught school or staffed fast-food restaurants.  But if all tele-marketers ceased work, most people would be glad.

Graeber wrote that it is the people who are doing the meaningful work—teachers, factory workers, health care workers—who are under attack in the current economic struggle, and that they are targets of resentment by people trapped in meaningless work.   This is a good instrument of social control, he thinks.

An Open Letter to President Barack Obama by Ani McHugh, a high school English teacher in New Jersey.

Ani McHugh appealed to President Obama to abandon corporate school “reform” which, she says, prevents teachers from doing their jobs.  She would be an example of people with meaningful and important jobs who are under attack.

How to Become a Part-Time Worker Without Really Trying by Barbara Garson for TomDispatch.

The trend to part-time work is not just a result of fewer factories and more fast-food restaurants.  Barbara Garson described how companies are switching from full-time to part-time work, with the same work requiring the same skills and sometimes by the same people, but with less pay, fewer benefits and no job security.

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An economics lesson from a kangaroo

August 19, 2013

australia.minimum.wage

This is true, although in terms of purchasing power, the Australian minimum wage for fast-food workers is more like $12 in the United States. Click on Australia minimum wage for details from the Real News Network.

Many economists say, without any empirical evidence, that an increase in the minimum wage will automatically result in increased unemployment.  This is because it is a basic principle of economics that if you increase the price of something, people will buy less of it, and so it is with wages.

Under certain conditions, that would be true.  Fewer people would be hired for minimum wage jobs if, say, the U.S. minimum wage was raised to $72.50 an hour.  But there is no evidence that any of the actual increases in the minimum wage have had any adverse measurable effect on U.S. employment.  Indeed, the number of minimum wage and near-minimum wage jobs has increased dramatically since 2007-2009, when the minimum wage was increased from $5.15 to $7.25 an hour.

The basic concept of economics—that the law of supply and demand describes how people respond to economic incentives—is true as far as it goes.  This concept has such beauty and explanatory power that it is easy to forget the other dimensions of human behavior.   Economists who forget this wind up like the physicist in the joke, who could infallibly predict the outcome of horse races, provided there were spherical horses racing in a vacuum.

Why subsidize the job-killer, Wal-mart?

August 16, 2013

Walmart has been given $4 million in financial incentives by the city of Darien, Conn., to convert its store there into a Super Walmart.

walmart-logoThe usual justification for tax abatements and other subisidies for new industry is that they create local jobs.   But, as Kathleen Geier of The Washington Monthly wrote in a recent Salon article, there is no evidence of any net economic benefit to a Walmart moving in.

What Walmart does is to put local mom-and-pop stores out of business.  Some studies indicate that Walmart kills more jobs than it creates; others that it is a standoff.

walmart_moralitySam Walton, the founder of Walmart, was an innovator whose just-in-time system of inventory management reduced costs and enabled his company to reduce prices.   But now the company’s strategy for reducing prices is to use its market power to hold down wages and the prices it pays suppliers.  This does not benefit the areas the stores serve.

It is not just Walmart.   I think it is a mistake for any local government to offer subsidies for a new business to come in and compete with existing businesses.  I say let the businesses compete on a level playing field.

I’ll go further.  If it were up to me, the only business subsidy by American local governments would be free job training.

American businesses complain of lack of skills by new hires, but say they can’t provide training because there’s no way to stop the employees from taking their upgraded skills elsewhere.  Very well.  Let community colleges take over the responsibility for job training.

This is a form of aid that does not discriminate between existing business and new business.   It is not something the business owners can pocket and move elsewhere.  It creates value which benefits the people of the community and stays in the community.

Click on Wal-mart’s big lie: No, it doesn’t create jobs for Kathleen Geier’s complete article in Salon.

Re-shoring: the U.S. manufacturing comeback

August 12, 2013

Last year about a third of U.S. corporations with manufacturing in China told the Boston Consulting Group that they are bringing or plan to bring operations back to the United States.

The trend is called “re-shoring,” and all indications are that it is real.  What’s driving it, according to an article in the Paris Tech Review, are falling U.S. energy costs due to hydrofracking for natural gas, closeness to world’s largest consumer market, a shorter supply chain and, especially, U.S. expertise in automation technology.

Manufacturing Employment

Click to enlarge

There’s the catch.  Automation lowers the cost of U.S. labor compared to other countries, but it also eliminates jobs.  Professor Tim Leunig of the London School of Economics estimated that if 10 percent of the Chinese electronics industry relocated to the United States, it would eliminate 300,000 Chinese jobs but only create 40,000 American jobs.

This doesn’t mean that re-shoring is of no benefit.   It is of great benefit.  The hollowing out of the U.S. manufacturing economy has reached a limit.  Manufacturing jobs are increasing only modestly, but they are no longer declining.

The mere fact that more wealth is being generated in the United States should be of benefit for all American workers, whether they work for suppliers and subcontractors of the manufacturing companies, for providers of goods and services who benefit from a bigger consumer market, or for local governments that benefit from an increased tax base.  But to the extent that the U.S. work force consists of temporary, part-time, low-wage workers, the wealth won’t be spread around.

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How to keep unemployment low

July 24, 2013

unemployment-measurement

Click on The New Sick-onomy: a look at the U.S. employment situation by Dan Alpert on his Two Cents web log for a good explanation of the facts behind the unemployment figures.

Click on Summary of U.S. Real Unemployment – June 2013 for an alternative figure by Leo Hindery Jr.  [Added 7/27/13]

Click on Deception in Counting the Unemployed for a profile of Leo Hindery and his ideas by Steve Clemons for The Atlantic.  [Added 7/27/13]

Click on Leftycartoons for more Barry Deutsch cartoons.

The generation gap

July 8, 2013

3utd2t

All too true!   When I attended high school in the late 1940s and early 1950s, we all took for granted that anybody who was willing to work hard could get a job of some kind, anybody with a high school diploma could get a good job, and anybody with a college degree could get an excellent job.

Now the vast majority of Americans have high school diplomas, and more Americans than ever before have college degrees, but this isn’t enough to guarantee them good jobs, or even jobs at all.  All it has done is to raise the bar.

Click on Master’s is the new Bachelor’s to read about the next step in degree inflation.

Source of the graphic: quickmeme


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