Thursday, June 16, 2011

Where Have All The Jobs Gone?

     Some time ago I mentioned Ross Perot's “giant sucking sound” of jobs leaving the country in the wake of NAFTA (See February 16, 2011). As I stated, “If that sound is a whisper, today's sound of American jobs heading all over the globe is a space shuttle liftoff.” As of today that sucking sound has grown even louder.
     According to the Bureau of Labor Statistics, the US unemployment rate for May was unchanged from the April figure: 9.1%. Private sector employment increased by 83,000; this is really a net loss because 125,000 new jobs are needed each month just to keep up with the increase in the number of individuals entering the labor force.
     Also in May the number of long-term unemployed increased by 361,000. That number now stands at 6.2 million.
     It is important to note that the BLS's definition of unemployment includes only job seekers who have looked for work at some time during the past four weeks. It does not include those who have been out of work for so long that they have given up looking, nor does it include anyone who is working part time but really wants a full time job. Economists estimate that if these people were included in the definition, the rate would be in the neighborhood of 16%.
     A recent poll by the Business Roundtable Survey showed that 51 percent of CEOs polled expect to increase hiring in the near future. In addition, more than 60 percent plan to buy more items such as computers, software and machinery. And this brings me to the subject of today's posting.
     According to a New York Times article on June 9, 2011, “Workers are getting more expensive while equipment is getting cheaper, and the combination is encouraging companies to spend on machines rather than people.” The article goes on to tell of a company that has invested $450,000 in new technology during the past year, while in the same period it has hired only two new workers.
     During the recently ended industrial era, when an employer purchased a new piece of equipment, he usually needed a new employee to operate it. But not any more. Now when a company invests in new equipment, software or other technology (often made in China or other off-shore location), it usually replaces human workers.
     Now I am not against technology – far from it – but it seems obvious to me that the practice of giving huge tax breaks to stimulate the purchase of equipment to replace workers is counter-productive to job creation.
     But to be fair, I must admit that American workers today are priced out of the world-wide job market. An employer would have to be insane to pay $20 per hour when he can get an unlimited supply of workers for $10 per day in China.
     During the industrial era, the mantra for success in business was “location, location, location.” Today location, particularly of manufacturing facilities, is immaterial in light of our vast communications and transportation networks.
     The current conservative mantra is “lower taxes, lower taxes, lower taxes.” During forty years as an accountant, not once did I hear of any business that laid off or hired an employee because of the tax consequences. The rationale behind such decisions has always been customer service.
     So the mantra in today's post-industrial era is what it should have been all along: “customers, customers, customers.” And they can be found wherever the jobs are, whether it's in the USA, China, Peru or anywhere else in the world.
     So what do we hear coming out of Washington? The national budget, the debt ceiling, and getting rid of President Obama and “Obamacare.”
    What should we hear? Because the s-word is a no-no these days, I will offer a few concrete suggestions aimed at getting money into customers' pockets:
  • Make it easier for people with mortgage problems to renegotiate their loans.
  • Exempt a portion of wages from payroll taxes.
  • Create employment by repairing and upgrading highways, railways, electrical grids and other public sector facilities.
  • Create business tax incentives for investment in people instead of equipment to eliminate employees.
     Of course the conservatives will howl that the liberals are back to their old budget-busting ways, so here are a few suggestions as to how to pay for these items:
  • Discontinue our “adventures” in Iraq, Afghanistan, Libya and anywhere else which is not a threat to the US.
  • According to Wikipedia, the US is trying to police the world by deploying troops to 150 different countries. Bring them home from every location which is not essential for national defense.
  • Give the Pentagon enough resources to maintain an adequate national defense instead of what the generals ask for, or what some Congressman thinks they should have.
  • Eliminate foreign aid to unfriendly nations, e.g. Pakistan and Afghanistan.
     Today Perot's “giant sucking sound” could also apply to the sound of resources rushing from the pockets of the have-not-so-much to those of the already-super-rich.
     Without a serious reality check on the part of the government, the training for tomorrow's jobs will be simple: Memorize the following: “Would you like fries with that?”
     The Freudian system has been analyzed countless times since it was first created, so in this book I am going to zero in on the Times system; not only is it more easily understood, it is more fun.
     Introduction – There Are Only Seven Jokes.

“There Are Only Seven Jokes” and “The Spirit Runs Through It” and are available in paperback, or at the Kindle Store.

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