Wednesday, August 4, 2010

Brave(?) New World

      A Commerce Department report Friday showed that the economy grew at an annual rate of 2.4% after reporting 5.0% at the end of 2009, and 3.7% in the first quarter of the year. Meanwhile the Bureau of Labor Statistics is reporting that there are five applicants for every job opening. Obviously the economy is slowing down.
      But if that is true, manufacturers apparently are not aware of it. For the quarter, industrial spending for buildings, equipment and software increased at an annual rate of 17.0% compared with a 7.8% increase in the first quarter. If businesses are investing at an increasing rate, why are no more jobs available? There are several reasons why this is happening.

     (1) Efficiency. If machines or computers can do the job that a human being was doing, that is one less worker for the same amount of production. The machine does not require a salary, payroll taxes (in many cases the manufacturer gets a tax break for installing the new equipment), unemployment insurance or close supervision. The job problem is compounded if the equipment does the work of dozens, or even hundreds of humans. Workers are becoming obsolete!
      In the past, increased efficiency was shared with the workers through incentives such as piece work or other bonuses. Not any more – with five applicants for every job, employers have the muscle to decree no more raises, more layoffs of unneeded employees, and less hours for those workers remaining on the job.
      (2) Inventory. Many producers have stockpiled inventory while demand was low. They are not likely to be hiring new employees as long as their warehouses are full of finished products.
      (3) Outsourcing. Many jobs have been outsourced overseas, where labor is cheap; this is especially true of jobs that are labor intensive. Manufacturers have no particular obligation to their employees; if they can hire employees for $5.00 per day in Indonesia, why would they pay workers $20.00 per hour in the United States?
      (4) Distance is irrelevant. Distance does not matter any more – an employee sitting at the telephone in India will cost much less than an American worker doing the same job. And foreign workers have been quick to recognize the opportunity – in India there are classes to teach people how to speak with an American middle western accent. Foreign workers are competing with each other for jobs that were formerly done by domestic workers. India is now subcontracting some jobs to Peru and other very low income areas.
      It’s a new world out there, and we need to adapt to it.
      In lock-step with the rapid expansion of concepts, the actions of the believers were also affected by the Spirit. New concepts were accompanied by new human activities.
      Man Takes Control – The Spirit Runs Through It.

      The book or a free download is available in paperback or on Kindle.

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