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December 05, 2011 | Jesse's Café AméricainRutgers University Working Paper
Categorizing the Unemployed by the Impact of the Recession
By Dr. Cliff Zukin, Dr. Carl E. Van Horn, and Charley Stone
In August 2009, the John J. Heldrich Center for Workforce Development at Rutgers, The State University of New Jersey began following a nationally representative sample of American workers who lost a job during the height of the Great Recession.
The research began with a cross-sectional sample of 1,202 who had said they had lost a job at some point in the preceding 12 months (between August 2008 and 2009). They were resurveyed in March 2010, again in November 2010, and then in August 2011.
A total of 3,972 individual surveys were completed over the two years. Well over half of the original respondents participated in all four waves of the project, meaning they spent, on average, 50 minutes of their time responding to roughly 200 questionnaire items.
This resulting measure combines an assessment of the respondent/family's current economic status with the magnitude of change in the quality of daily life, with an assessment of whether this change represents a new normal or is a temporary stay in limbo. Combining answers to these three questions result in a typology with five groups, defined as follows:
Read the rest of this working paper here.
- Workers who have MADE IT BACK consider themselves in excellent, good, or fair financial shape and have experienced no change in their standard of living due to the recession.
- People ON THEIR WAY BACK have largely experienced a minor change to their
standard of living, but say the change is temporary. They also consider themselves in excellent, good, or fair financial shape.
- Workers who have been DOWNSIZED meet one of three conditions; they have
experienced: a minor change that is permanent; a minor change that is temporary, but they are in poor financial shape; or a major change in their standard of living that is temporary and they are in at least fair financial shape.
- Workers classified as DEVASTATED have experienced a major change to their
lifestyle due to the recession. They can be either in poor financial shape and think the change is temporary, or in fair financial shape but think this change is permanent.
- Workers that have been TOTALLY WRECKED by this recession have experienced a major change to their lifestyle that is permanent and are in poor financial shape.
Nov 19, 2011 | The Big PictureArguing the pro side of the resolution were David Rosenberg and Paul Krugman. Arguing the con side were Lawrence Summers and Ian Bremmer. My take on the essence of each debater's arguments:
- Krugman – There are solutions to our current issues, but our political system is - and will remain - too dysfunctional to enact them.
- Rosenberg – We are undergoing a massive, wrenching deleveraging that must run its course, notwithstanding monetary/fiscal policy.
- Bremmer – Essentially argued that the US will always be the least dirty shirt in the hamper.
- Summers – His most persuasive argument, I thought, was his closing comment that pessimism can be a self-fulfilling prophecy. The audience seemed swayed by this rhetorical flourish, though we certainly all know by now that hope is neither a plan nor a solution.
Rosie was clearly the most fact-based debater. The arsenal of facts he has at his disposal is simply mind-boggling. He could likely tell you the unemployment rate in April 1955 as easily as he could tell you his youngest son's name.
The sad truth of the matter, though, is that we're already mired in an "era of Japan-style era of high unemployment and slow growth." The only real question for debate is how much longer it will last. Consider:
The unemployment rate has been above 7 percent since the end of 2008. The Fed, which has done nothing but downgrade its economic assessments for quarter after painful quarter, did so again earlier this month:
While US may be slowing slowly but Germany and the EU bloc are facing imminent recession. Rising yields and slowing germany make the perfect storm: Capital3x( the bond traders trading room)
Perhaps we are looking at this problem the wrong way.
Perhaps we simply don't need that many people to work to maintain a functioning society and it's only our clinging to our old beliefs that is causing us to mis-identify the problem. Once we were hunter-gatherers and pretty much every single person needed to work all day to sustain the tribe. As we evolved, society evolved and eventually we had liesure time, etc. Now, we produce so much output per person that it's simply not necessary to have 50% of our population working and it's clinging to the belief that they SHOULD work that is causing us problems.
Maybe we should all work 4 days a week and employ 20% more people or maybe we should allow for a better redistribution of wealth that encourages more people to pursue careers in art, music and education. Heck we used to give Philosophers a pretty good living and God knows we could use a few moralists yelling at us from street corners!
Of course there are obvious solutions for unemployment, like the fact that this country has Trillions of Dollars worth of vital infrastructure projects that HAVE to be done eventually and we have Millions of unemployed construction workers that need jobs NOW. Maybe I'm off base here, but wouldn't that seem like a perfect match? One that a rational society would resolve almost immediately…
I voted "pro" but for Rosenberg's reasons, not Krugman's. Until we de-lever individually and collectively, I think it will be hard to make substantial economic progress.
Invictus: Thank you for your link. I'm sorry I missed it.
While the situations look similar, one should probably overlay some other information over the data that might be pointing to a Japan like situation. Demographically we are quite different. They have an aging population as a country, we have one of the only developed nations that is still getting younger due to birth rate and immigration (legal and illegal). This is critically different as it means in Japan the tide was going out versus here the tide is still coming in. While the boats might look similar in the water while it is there, when the tide goes out one is sitting on the rocks while the other is still floating.
Secondly, Japan is a country that is victim to location. An island about the size of California with only a certain percent usable and a need to import nearly every resource. This geographic difference causes the countries to allocate resources and finances in different ways, react to things differently, and ultimately cripples one country while the other survives and thrives in spite of itself.
While the Japan compare is interesting and compelling in a lot of ways, leaving out critical basic information will lead one to the wrong conclusions.
We may suffer for a while longer, but demographics and a geographic blessing will ultimately pull us out of our situation.
November 19th, 2011 at 4:59 pm A recession is simply an economy that produces things people don't want, on the margin, and our economy was forced by Bush policies to produce housing, deman pull financing rose the price over the supply, sending the wrong signalsnfor a few years, leading to a little too much housing bought atmuch too high a price. That's over.
We have had nine straight quarters of decent growth, record corporate profits and resulting equity price appreciation. Our marginal unemployed were in housing_related services, which we don't need/want and which were family inefficient parts of the economy …and not too tasking on our educated work force. The vast majority of structurally unemployeed are not educated (no high school) and we continue to produce the same percent of uneducated eighteen year old year in, year out.
It is inefficient to continue to invest (spend on) in the uneducated, so the GOP is part right. The reason they are mostly wrong is, the services they want to cut go to mostly productive people. The profits from Medicare drive investment in health care. If a rich guy has another two or three percent of capital at the end of the year doesn't change that at all.
Uh, Japan never had high unemployment. Neither really does America. When I think of high unemployment american style, I think of 30-40%. 9-17% percent really doesn't cut it.
The fact is the overall economy overgrew due to the credit boom and REAL growth was weak due to spending cuts in public investment makes deleverging without a collapse impossible. Alot of people still don't get it. They think we delever quickly, in 5 years we will have "full employment"(whatever that means) and will be living in some paradise. Hardly the case. Instead, that would permanently shrink the US economy and the health of the citizenry would collapse. Lifespans would drop and 60 would be the old 80. It would be a deevolution. For rich capital owners and rentiers profitting from the deleveraging, this may sound like a good thing. But for joe blow, it is act of war.
In this mess, you have to have a national plan for a country to follow. How is the banking system going to be remade? How to build new energy markets to replace the dying old ones? How are health care systems going to be redelivered considering the existing one is failing. If you can't come to a agreement, the country will die.
High unemployment and slow growth are way too optimistic.
Some still call this the "Great Recession" even though we have, technically, been out of recession for some time (we do, however, look to be headed towards another, technically).
Technically, I wonder why we don't call it what it is.
I wonder why we torture accounting standards and metrics to create the illusion that it's not as bad as it looks, why we ignore huge and very real negatives on our balance sheet as if they will go away if we don't acknowledge them, why we refuse to root out and correct the causes of our current problems, and why we have doubled down on many of the failed policies that got us here.
I wonder why we don't call a spade a spade.
IMO, we're in a Depression. Of course, no one is calling it that. If we can't even bring ourselves to commit to the idea that we're in a recession, the daunting idea that a rebuild of our economic system from the ground up is what's needed or face an uncontrolled collapse, even if true, is the Voldemort of the political/economic power structure.
Depression: polite people dare not speak its name.
The Colbert Report - 2011-19-10 - Video Clip | Comedy Central
$112,000- The True Cost of Losing Your Job in the Great Recession - Derek Thompson - Business - The Atlantic
Even if the economy accelerated to 200,000 a month, the average monthly rate for the best year of job creation in the 2000s, we would still have to wait until February 2024 to close the job gap.
Unemployment and Earnings Losses- The Long-Term Impacts of The Great Recession on American Workers " Papers " The Hamilton Project
Download (pdf, 396 kb)
Although the U.S. labor market will almost surely rebound from the Great Recession, this article presents a somewhat disheartening picture of its longer-term evolution. Rising demand for highly educated workers, combined with lagging supply, is contributing to higher levels of earnings inequality. Demand for middle-skill jobs is declining, and consequently, workers that do not obtain postsecondary education face a contracting set of job opportunities.
Perhaps most alarmingly, males as a group have adapted comparatively poorly to the changing labor market. Male educational attainment has slowed and male labor force 16 Community Investments, Fall 2011 – Volume 23, Issue 2 participation has declined. For males without a four-year college degree, wages have stagnated or fallen over three decades. And as these males have moved out of middleskill blue-collar jobs, they have generally moved downward in the occupational skill and earnings distribution.
The obvious question, as Scrooge asks the Ghost of Christmas Yet to Come is: "[A]nswer me one question. Are these the shadows of the things that Will be, or are they shadows of things that May be, only?" Is the labor market history of the last three decades inevitably our destiny-or is it just that it could end up being our destiny if we do not implement forward-looking policy responses?
While this article is intended as a spur to policy discussion rather than a source of policy recommendations, I will note a few policy responses that seem especially worthy of discussion.
First, encouraging more young adults to obtain higher education would have multiple benefits. Many jobs are being created that demand college-educated workers, so this will boost incomes. Additionally, an increased supply of college graduates should eventually help to drive down the college wage premium and limit the rise in inequality.
Second, the United States should foster improvements in K-12 education so that more people will be prepared to go on to higher education. Indeed, one potential explanation for the lagging college attainment of males is that K-12 education is not adequately preparing enough men to see that as a realistic option.
Third, educators and policymakers should consider training programs to boost skill levels and earnings opportunities in historically low-skilled service jobs-and more broadly, to offer programs for supporting continual learning, retraining, and mobility for all workers.
Finally, another potential policy response is to consider R&D and infrastructure investments that will have broadly distributed benefits across the economy. Examples might include expanding job opportunities in energy, the environment, and health care. The return of the classic manufacturing job as a path to a middle-class life is unlikely. But it may be that various service jobs grow into attractive job opportunities, with the appropriate complementary investments in training, technology, and physical capital. Perhaps these could be the shadows of what is yet to come.
The automation of more and more work once done by humans is the central theme of "Race Against the Machine," an e-book to be published on Monday.
"Many workers, in short, are losing the race against the machine," the authors write.
Erik Brynjolfsson, an economist and director of the M.I.T. Center for Digital Business, and Andrew P. McAfee, associate director and principal research scientist at the center, are two of the nation's leading experts on technology and productivity. The tone of alarm in their book is a departure for the pair, whose previous research has focused mainly on the benefits of advancing technology.
Indeed, they were originally going to write a book titled, "The Digital Frontier," about the "cornucopia of innovation that is going on," Mr. McAfee said. Yet as the employment picture failed to brighten in the last two years, the two changed course to examine technology's role in the jobless recovery.
The authors are not the only ones recently to point to the job fallout from technology. In the current issue of the McKinsey Quarterly, W. Brian Arthur, an external professor at the Santa Fe Institute, warns that technology is quickly taking over service jobs, following the waves of automation of farm and factory work. "This last repository of jobs is shrinking - fewer of us in the future may have white-collar business process jobs - and we have a problem," Mr. Arthur writes.
Oct 13, 2011 | Economist's View
As this says, everyone expected Republicans to block President Obama's jobs bill, but it's still disappointing to see the "you're on your ownership society" in action:No Jobs Bill, and No Ideas, Editorial, NY Times: It was all predicted, but the unanimous decision by Senate Republicans on Tuesday to filibuster and thus kill President Obama's jobs bill was still a breathtaking act of economic vandalism. There are 14 million people out of work, wages are falling, poverty is rising, and a second recession may be blowing in, but not a single Republican would even allow debate on a sound plan to cut middle-class taxes and increase public-works spending.
The bill the Republicans shot down is not a panacea, but independent economists say it would have a significant and swift effect on the current stagnation. Macroeconomic Advisers ... said it could raise economic growth by 1.25 percentage points and create 1.3 million jobs in 2012. Moody's Analytics estimated new growth at 2 percentage points and 1.9 million jobs. ...
The Republicans offer no actual economic plans, only tired slogans about cutting regulations and spending, and ending health care reform. The party seems content to run out the clock on Mr. Obama's term while doing very little. On Tuesday, Mr. Obama's campaign manager, Jim Messina, accused Republicans of trying to "suffocate the economy" in hopes that the pain would work to their political advantage. They are doing little to refute that charge. ...
In 2010 the public got snookered, plain and simple. Ideological Tea Partiers, tailored by Oligarchs, successfully portrayed Democrats as wild eyed Socialists who wanted to destroy health care for seniors (using 'death panels' if necessary to accomplish their evil goals.)
It worked very well indeed. Even after Republican budgets obviously went after senior health care AND social security, weakening their initial portrayal of Democrats used so successfully in 2010, Republicans remain steadfast.
Obama needs to take even more wind out of this particular sail and portray Republicans for what they are: Do nothings. The jobs drumbeat needs to be louder and more frequent. Down here in muni land, the land of unemployment and neighborhoods made unsafe by police, firefighter and teacher layoffs, this message is finally beginning to resonate.
There is no real remedy until 2012, so more economic damage and hardship is likely. The President must never again relent. If he remains steadfast, the public will force its will in his favor.
"Obama needs to take even more wind out of this particular sail and portray Republicans for what they are: Do nothings."
The Reps are not do nothings, they are obstructionists. Their base has already recovered economically, and are making money and getting bonuses. The lack of recovery of the rest of us suits them fine, because they can use that to attack unions and education and pursue their Starve the Beast strategy. Despite their rhetoric, they do not really want jobs for Americans.
This would be an excellent time for President Obama to get back on the campaign trail, use the bully pulpit, etc. and go all out against the Republicans. But we wouldn't be in this position if President Obama hadn't betrayed us and poked his base in the eyes the past three years.
We still need primary challengers. Here's a rather long list of Presidential candidates: http://www.thegreenpapers.com/P12/candidates.phtml
Can we dispense with the notion that the Republicans are concerned with anything other than raw power and ruling (not governing)? They have clearly become economic terrorists in the pursuit of these goals (I can think of no more appropriate label for their behavior on the debt ceiling and their other threats to shut down the government unless they get their way).
William J McKibbin:
The US has apparently "thrown in the towel" on the long-term unemployed -- those unemployed still left in the ring are on their own -- their remaining choices are dire: a) destitution (or charity); b) marry (into wealth); c) steal; d) emigrate; or e) suicide -- this is America!
"Mr. Carlisle said in 1878 that this was a struggle between "the idle holders of idle capital" and "the struggling masses, who produce the wealth and pay the taxes of the country," and, my friends, the question we are to decide is, upon which side will the Democratic party fight -- upon the side of "the idle holders of idle capital," or upon the side of "the struggling masses"? That is the question which the party must answer first, and then it must be answered by each individual hereafter. The sympathies of the Democratic party, as shown by the platform, are on the side of the struggling masses who have ever been the foundation of the Democratic party. There are two ideas of government. There are those who believe that if you will only legislate to make the well-to-do prosperous their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous their prosperity will find its way up through every class which rests upon them."
-- William Jennings Bryan, Cross of Gold speech
"We live in a society where it's hard to maintain self-respect if you don't have a job," Kwame Anthony Appiah, philosopher at Princeton, said in a recent radio interview, and I can certainly identify. All of my life I've been an achievement junkie. I have two Harvard degrees, practiced law at elite Manhattan firms, and wrote and published two novels, among other things. But of all my accomplishments, by far the most impressive is absent from my résumé: It's my more than two-year stint of job searching and unemployment.
If you've been unemployed you already know this, but if you haven't, here's a news flash: Coping with prolonged joblessness is hugely demanding. It requires deep reservoirs of fortitude, faith, patience, courage and self-control, traditional virtues generally accorded high regard in our nation's pantheon of values. Of course, we're a country that values hard work, and that's as it should be. But don't our values also dictate respect for the efforts of the struggling unemployed?
Two years of job hunting has required infinitely more of me than any of my lauded past achievements. And I, of course, am among the relatively fortunate, with a cushion of savings and a supportive group of friends. And here is what I think: If the experience is still this hard for me, how much harder must it be for the millions who lack these things?
There is a distinct Groundhog Day quality to days spent looking for work: Write letters. Prepare résumés. Search job boards. Make phone calls and brainstorm over coffee. Sleep. Get up. Repeat. After sending off my materials, I often hear nothing back. I've long since lost count of the number of jobs I've applied for.
As an "older worker" -- When did that happen? -- I try to ignore a drumbeat of statistics telling me I face an uphill battle. It's hard not to feel worn down, to succumb to "learned helplessness," our innate tendency to give up when our efforts fail to yield results. Still, like millions of others, day by day I keep going.
My exertions often seem strangely invisible, not only to my family and friends but increasingly to me -- an experience that turns out to be widely shared in job-loss land. And this is just the tip of the iceberg. As Atlantic journalist Don Peck recounts in "Pinched," his sobering account of the changes wrought by the Great Recession, studies show "a growing isolation, a warping of family dynamics, and a slow separation from mainstream society" among the long-term unemployed. Strikingly, no other circumstance triggers a larger decline in well-being and mental health than involuntary joblessness. Only the death of a spouse compares.
...At the start of this year, the average unemployment duration of more than nine months was longer than it's been since the Bureau of Labor Statistics began tracking the figure in 1948, according to Peck.
And yet, daunting as these numbers may be, they only hint at the human suffering that they reflect. In his 2010 book "The Honor Code," Appiah places honor at the heart of what it takes to lead a successful life, noting that throughout history, societies have adopted guidelines for how people "can gain the right to respect, how they can lose it, and how having and losing honor changes the way they should be treated." The result: "[P]eople in an honor world automatically regard those who meet its codes with respect and those who breach them with contempt."
This stark dichotomy -- between respect and contempt -- got me to thinking. You don't have to be a mathematical genius to see that when there are six job seekers for every job, it's simply not possible for everyone to find work. And in fact, as others have noted, the reality is even tougher on the unemployed than these numbers suggest. For one, they (we) are competing for positions not only with other unemployed workers but also with applicants already in the workforce who are looking to move on. They (we) are also contending with subtle -- and not so subtle -- biases against the unemployed, including the proliferation of "unemployed need not apply" caveats on job ads for positions ranging from electrical engineers to restaurant managers. Thanks to my legal background, this shocked me less than it did some of my friends. I knew that current laws don't prohibit discrimination against the jobless.
So how is it that so many have come to disdain the unemployed? To equate unemployment with failure and shiftlessness? If the barometer of popular culture is any indication, this wasn't always so. In the 1962 film classic "A Touch of Mink," plucky all-American Cathy Timberlake (aka Doris Day) is on the way to collect her unemployment check, when a chauffeured limousine splashes her with mud. It's Cathy Timberlake -- not the feckless industry titan played by Cary Grant -- who represents the traditional American values that in the end carry the day. Firmly planted at the dark pole of the film's moral compass is the creepy unemployment office bureaucrat who alternately taunts Timberlake for taking government money and hits on her. The film has plenty of disdain for the titan and the bureaucrat and plenty of sympathy for Timberlake.
July 30, 2011 | Rortybomb
>as there is not enough aggregate demand or a strong-enough workforce to make them hire more.
The problem with economists saying things like this is that it causes the public to believe that if they only spend more money, jobs will be created. One might be lead to assume that even if the amount of work needed to produce the goods one buys isn't high, the people who receive that money could create jobs depending on their pattern of spending.
This assumption is invalidated by the correlations between the amount of income one receives as surplus value from the sale of one's products or services, and the prices one is willing to accept in higher qualities of a good, as described once again in the detailed explanation of how to fix unemployment. One cannot just assume that spent money will "eventually" lead to the same effect no matter how it is spent, since on average purchasing products whose price is not justified based on absolute utility (but only on marginal utility of money for one's specific financial situation) will just cause that money to flow within the wealthy subset of the population at much slower velocities than money spent on cheaper goods, again as mentioned in the above link.
Buying iPods simply does not have the same effect on the economy as purchasing goods made by people who have more reason to be attentive about how they spend their money. The focus on simplifying the economy's problem to "low aggregate demand" ignores this complexity and prevents any improvement of the problem because it causes people to accept overwork as mentioned on this blog several days ago and to spend their money in ways which do not contribute to an increase in the total amount of work done.
This, then, is the result of the failure by the economic profession to understand the implications of patterns of spending. People become uninformed on the best way for them to contribute to the return to a healthy economy.
Unfortunately, there does not seem to be any hope of educating the economic profession on the consequences of their failure, as all efforts have shown there is a high resilience to comprehension or change.
To make this comment even longer, here is part of a similar explanation that was posted on Mr Jared Bernstein's blog:
it may be worth mentioning that the 'iPod effect' may actually be intensified in the social and psychological conditions that persist during a (actual or perceived) recession with high unemployment; spending on expensive status symbols does not actually seem to be "wasting" either money or the raw materials and labour that go into a product, since the consumer understands that some amount of profit is extracted from the purchase and they are explicitly aware the signalling value of the product makes up some of its cost.
It then becomes a way of "hoping that their money reaches someone who needs it without selfishly wasting any products"; in other words, a lack of consumption becomes a virtue exactly as described in the detailed explanation of how to fix unemployment, even while a larger amount of consumption is what would actually lead to a reduction of unemployment.
This train of thought can be described as follows: "Other people are unemployed and suffering. I should therefore work harder in my job to help them." …(it's hard to understand thinking that is as illogical as this)… "Since other people can't afford to purchase products since they're unemployed, I should avoid purchasing those products too so they don't feel bad. If I give away all my money by purchasing expensive iPods instead, this money will magically reach people who are unemployed and not selling expensive iPods, because Apple is a nice company and they know what to do with this money since they help kittens and stuff."
And, after all, it's true! The people who own Apple are giving away their money to help kittens! …But people still don't have jobs.
Misaki (Cross-posting from Mr Jared Bernstein's blog that had a similar mention of consumer spending)
I think I might try something different: the motives of consumer behavior. It's just hard to summarize in a couple of sentences, beyond which it becomes hard to integrate in arguments and people lose interest in reading…
The essential point is that the economic profession needs to stop encouraging people to act in a way that directly leads to the employment situation becoming worse. Working harder because your company doesn't want to hire any of the abundant, cheap labour available due to concerns about future demand, and spending one's income on iPods when one does have a job, are both logical consequences of the average person's understanding of the economic situation, are both intended to improve the situation, yet in reality do nothing of the sort.
Changing the way compensation works would remove the perceived congruence of social benefit with nominal personal benefit, and would lead to the conclusion that the choice of working full time or a lesser amount of time is socially neutral, and whether it should be done depends on the specifics of the company and the individual.
…See, like I said it's too hard to explain and no one seems able to understand it anyway.
Many people I know who are employed are being required to work such long hours I fear for their health, or even that they might die from a heart attack. Employers are making employees work longer hours rather than hire more people.
Patricia Shannon :
They can no longer specify age in ads, so they discriminate in other ways. Eg., I have seen IT adds for people with 3-5 years experience, or up to 19 years experience. When I sent out my resume with only my last 15 years of experience, and left out the years I graduated from college (B.A. and M.A. in math), I got some calls. the first thing they would ask was what year I graduated. When I tried to put them off, they said they couldn't process me any further if I didn't tell them. So I did. Then I never heard from them again. They wouldn't respond to my e-mails, I couldn't get them on the phone. This happened 100% of the time.
I think there are also young people whining "without experience you can't get a job and without a job you can't get experience". bottom line. If you can show a way you add value, you get hired. If you add no value, you won't be hired. When girls turn their head this way or that and grin for a job they call it "self-marketing" or "just highlighting my best attributes". When that same girl/woman gets over age 40 they call it "age bias" and cry foul. It's called reality. Try to get over it.
"Administrative Assistants" often do nothing but menial tasks, attach a much higher utility function to their duties because they are the "gatekeeper", walking around with their nose in the air as they play games online and take their 40th coffee break.
You know what gets chopped off first when times get tough??? The duties which are unnecessary (or easily substituted) to the operation of the entity as a whole. Which gender group does this affect most??? It's an open-ended question…… fill in answer here __________
"bottom line If you can show a way you add value, you get hired. If you add no value, you won't be hired."
"If you can show a way…." are the key words. HR gatekeepers are quite adept at making it difficult for job seekers to prove that they can add value to an organization. (Although shooting your fireproof resume into the CEO's office with a flaming arrow may be a good start.)
Jul 04, 2011 | Calculated Risk
Recoveries following a housing/credit bubble and financial crisis are usually sluggish - so these numbers are not a surprise - but this is a reminder that the top priorities for policymakers remains jobs, jobs and jobs.
Employment Statistics (Thousands or Percent)1 May-11 Dec-07 Change Civilian noninstitutional population (16 and over) 239,313 233,156 6,157 Civilian labor force 153,693 153,936 -243 Total nonfarm Payroll 131,043 137,983 -6,940 Private Payroll 108,916 115,606 -6,690 Unemployment Rate 9.1% 5.0% 4.1% Unemployed 13,914 7,664 6,250 Part-Time for Economic Reasons 8,548 4,638 3,910 Marginally Attached to Labor Force2 2,206 1,395 811 Discouraged Workers2 822 363 459 U-6 Unemployment rate3 15.8% 8.8% 7.0% Unemployed for 27 Weeks & over 6,200 1,327 4,873
older people are too much trouble." When pressed on that statement, she continued, "You older folks know too much. You call us out on the B-S - that every big outfit uses to keep the kids in line. Face it, you're a threat to the system." Evidently, overqualified also means having a social conscience today. I do pity the young folks today though. They're growing up in a new Dickensian Age.
McKinsey had Yankelovich survey the attitudes of young people a decade ago, and even then, the results were pretty disturbing. Yankelovich projected that college graduates would average 11 jobs by the time they were 38 (!), yet found they were demanding of their employers, wanting frequent feedback (as in lots of attention) and quick advancement. But if you are not likely to be around for very long, no one is likely to want to invest in you all that much (McKinsey, which was competing for a narrow slice of supposed "top" talent and not offering Wall Street sized pay opportunities, might have been more inclined to indulge this sort of thing than other employers).
But these rapid moves from job to job, and now a much weaker job market, are producing behaviors that old farts like me find troubling. One is rampant careerism. I've run into too many polished people under the age of 35 where the veneer is very thin. It isn't hard to see the opportunism, the shameless currying of favor, and ruthless calculations of whom to help and whom to kick, including throwing former patrons under the bus when they are no longer useful (I can cite specific examples of the last behavior). The world has always had its Sammy Glicks, but now we seem to be setting out to create them on a mass basis.
The economic effects are also not pretty. A 30 year mortgage made sense when people would spend a decade or more with a single employer. And more frequent job changes means not only more total time unemployed over one's working years, but also the very high odds of falling out of a highly or even moderately paid career path to a much lower one as the work place continues to be restructured.
A New York Times piece tonight describes the latest stage of this sorry devolution: "job jugglers" who hold down multiple part time jobs to make a living. This sort of thing used to happen only to lower income people, artists, or people who live in resort areas. The article makes clear that this is often a hand-to-mouth, high stress existence, although the interviewees put a brave face on it. And we aren't necessarily talking having one income source in the days and another in the evenings: three of the individuals featured had four jobs. Even then, they barely cover their expenses.
Yet it could indeed be worse:
Still, Ms. [Mia] Branco, who graduated magna cum laude with a degree in musical theater from American University in 2009, says she feels lucky to be employed at all. "The majority of the jobs I have right now are because people were laid off and they didn't want to hire back full-time employees," she said. "My willingness to have a hodgepodge schedule makes me more
But the "marketable" benefits are only short term.
A national study by the Johns Hopkins Institute for Policy Studies found that young women who worked primarily in part-time jobs did not make higher wages in their 30s than in their 20s…The reason is that part-time jobs generally provide fewer training opportunities and often don't put workers on a track for advancement.
And many of these jobs are clearly stopgaps:
More college graduates are working in second jobs that don't require college degrees, part of a phenomenon called "mal-employment." In short, many baby-sitters, sales clerks, telemarketers and bartenders are overqualified for their jobs.
Last year, 1.9 million college graduates were mal-employed and had multiple jobs, up 17 percent from 2007, according to federal data. Almost half of all college graduates have a job that doesn't require a bachelor's degree.
I see this in my own building. One of the new doormen, a clean cut, high energy fellow, is a college graduate who is going to work on his graduate degree at night. One who has been here about a year also went to college. That was unheard of until recently.
Even though the evidence is that these jugglers would do better financially and probably in terms of lifestyle if they got on a career path, some seemed to have been imprinted by their multi-job routine and seemed loath to give it up, even though they recognized that it is not conducive to having a family.
These part-time jobs may just be another feature of this recession, but the odds are that it will become yet another aspect of the "new normal".
Mz Smith; This 'multi-job' paradigm is also creeping upwards in the over 50 age group. Lots of potential employers pass on by over 50s, as I have experienced. When cornered and taken to task, one mid 30s Human Resource Manager for a big box store I had applied to, (for a job I actually qualified for,) said plainly that "older people are too much trouble." When pressed on that statement, she continued, "You older folks know too much. You call us out on the B- S- that every big outfit uses to keep the kids in line. Face it, you're a threat to the system." Evidently, overqualified also means having a social conscience today. I do pity the young folks today though. They're growing up in a new Dickensian Age.
I suspect that that apart from the reasons already given, that there is one more to consider.
Work, in a broad swoth of the economy, is becomeing increasingly project based and the work ends with the end of the project.
For example, if McDonalds wants to put up a half dozen new stores in a region, they will hire the resources they need to acquire and build the stores in that region. Once the stores are built there is no more need for those skill sets in that region until they need to build again. So..lay off the staff that located and constructed the store.
In my work as a program manager for Federal IT projects the work is inherently based the duration of the project and the contract and when the project ends you usually recieve whatever back PTO you have and 2-4 weeks salary. You will likely also get about a month from the end of the project until you get laid off to find something internally or another job.
Another aspect of this way of doing business is that as projects near their end it is very difficult to keep people around to finish the job. Most people with any sense start looking for a new contract about 4-6 months before the end of the one they are on. Often we reach a point where we have to offer bonuses to those who are left to keep them around.
It used to be that if you worked for a consultancy or a contractor that you would simply work very very hard for a period of time and then either take a vacation and move to the next project or you had a couple of months of very slow downtime to do training or catchup on other tasks and then move to the next project. Now…you are billable or you are gone. Nothing to do with skill (though it may have to do with salary), the business just needs to get you off the books.
It was not that long ago that the people in a position to function this way was limited to people like myself, senior analysts with very specific knowledge, or to project managers. Now, a company that shall remain unnamed, just hired a dozen college grads and people with years of experience, to do a bunch of proposals, technical writing and graphics work. They are all on 1099s and they are all gone after about 4 months. Pay your share and that of the employers share of the employment taxes. No benefits. No disability. No retirement contribution.
It is unfortunate, but this is the way we are heading. It is beomeing every man or woman for themselves. But then..that has been the plan of corporate America for 25 years at least.
NOW…all these companies gotta figure out how to deal with consumer that has a variable and insecure income.
How does a 30 year mortgage work in this environment?
Yves wrote, "It isn't hard to see the opportunism, the shameless currying of favor, and ruthless calculations of whom to help and whom to kick, including throwing former patrons under the bus when they are no longer useful"
My, my. Sounds like the general thrust of reality TV, like "Survivor" or that Trump show I never had the stomach to watch. Too much shallow TV may be part of the problem.
"One of the striking difference between the cultures is importance ascribed to job creation. The Japanese understand full well that the workplace for many people is a far more important community to them than where they live"
I think Japanese are much more focused about bonding into social groups (the team or tribe valued higher than the individual – at least relative to the USA). The aspirations of an individual perhaps slightly impeded by this respect for the social unit, but also those in leadership positions balancing greed against the bigger social good.
Some of that is maybe due to longer history and less immigration. In periods of rapid growth a looser, dynamic society is probably good. In our current trend some more respect for social units might ease the extremes of pain until it degenerates down into survival of the fittest.
The me-me-me ego models we are getting from TV now can't be the best examples - Survivor, I Can Sing Better Than You, I Look Good So I Win, I'm Petty or Revolting Enough to Hold Your Attention, etc.
I think the US could use tighter social memes like Japan, but they did teach us about TV shows that turned into Wipeout, so I could be wrong.
Center for Working-Class Studies
(First appeared in Manufacturing a Better Future for America, edited by Richard McCormack)
During the 2008 presidential primary election season, political candidates and journalists from around the world visited Youngstown, Ohio. For the politicians, Youngstown provided dramatic visual backdrops of boardedup businesses and decaying factories for speeches on economic development and the importance of blue collar workers and jobs. For journalists, Youngstown area residents gave faces and voices to stories about economic struggle and questions about how the working class votes.1 This attention was not new. Every four years, reporters and candidates return to Youngstown to test conventional wisdom about economic renewal and political responses in the face of deindustrialization. Since the 1980s, when it lost 50,000 jobs in steel and steelrelated industries, Youngstown has been the poster child for deindustrialization.
Over the next three decades, Youngstown and the surrounding Mahoning Valley have faced a longterm economic struggle, seen declines in population and tax base, and battled persistentlyhigh crime rates, urban decay and questions about whether there just wasn't something wrong with the community. Local leaders have used tax abatements to entice new employers to the area, including prisons, warehouses and most recently computer software companies, all in the desperate hope of digging out of 30 years of economic hardship. While new urban planning and state funding for the development of hightech industries help, the area has continued to hemorrhage jobs, most recently because of the downsizing of the automotive sector, such as at Delphi Automotive.
Yet Youngstown is not alone in this story. Since 2000, the state of Ohio has experienced the worst job losses since the Great Depression, and factories around the country continue to close and downsize.2
The changes wrought by deindustrialization do not affect only places like Youngstown, Ohio, or Gary, Ind., or only industries like steel and automaking. Today, communities with strong hightech industries, like San Jose, Seattle, Austin and Cambridge, are experiencing significant job losses due to offshoring as globalization makes it easier for companies to hire welltrained but less expensive workers somewhere else.3 Most American workers and their communities are vulnerable to dislocation, even when their work and economies have nothing to do with manufacturing. As the U.S. economy struggles in 2009, we see the whole country experiencing the kinds of struggles that places like Youngstown and its sister cities around the nation know all too well. Thousands of American communities are facing economic hardships that could last a generation or more.
When deindustrialization was seen as a matter of losing jobs in "dinosaur" industries, few leaders seemed to care. But as the middle class and "knowledge workers" face the economic and social struggles of major job loss, policymakers and corporate leaders began to take note. Even former treasury secretary and current chairman of President Obama's White House National Economic Council, Lawrence Summers, now acknowledges the "growing disillusionment" among Americans and the growing "anxiety about the market system that is unmatched since the fall of the Berlin Wall and probably well before."4
White collar and professional jobs are now being lost. Forrester Research, a consulting firm, estimates that 3.4 million white collar jobs will be sent offshore between 2003 and 2015. It is a harbinger of a new round of deindustrialization in other economic sectors. Forrester estimates that the exodus will include 542,000 computer jobs, 259,000 management jobs, 191,000 architectural jobs, 79,000 legal jobs and 1.6 million backoffice jobs.5 Alan Blinder, former vice chairman of the Board of Governors of the Federal Reserve and a member of Bill Clinton's original Council of Economic Advisors, estimated that between 30 million and 40 million highend U.S. service sector jobs could be outsourced. "Shipping electrons is a lot easier and cheaper than shipping physical goods," said Blinder, a professor of economics at Princeton University and director of the university's Center for Economic Policy Studies. While still in its infancy, "electronic offshoring has already begun to move well beyond traditional lowend jobs such as call center operators to highly skilled jobs such as computer programmers, scientists and engineers, accountants, security analysts and some aspects of legal work - to name just a few."
Communities around the country are learning that unemployment brings reduced standards of living and a variety of social disruptions not only for displaced workers and their families but also their communities and states. Youngstown's story in the 1980s is America's story today.
In the introduction to their edited collection, Beyond the Ruins: The Meanings of Deindustrialization, Joseph Heathcott and Jefferson Cowie point out that, "Deindustrialization is not a story of a single emblematic place, such as Flint or Youngstown, or a specific time period, such as the 1980s; it was a much broader, more fundamental, historical transformation. What was labeled deindustrialization in the intense political heat of the late 1970s and early 1980s turned out to be a more socially complicated, historically deep, geographically diverse and politically perplexing phenomenon than previously thought."6
Indeed, while deindustrialization is often thought of as a trend of the 1970s and 80s and its history dates back to the early 20th century, it is not merely history. On the one hand, the social costs of deindustrialization persist over decades and generations. Jobs lost in the late 1970s continue to affect communities and individuals today. On the other hand, factories are still closing and industries are still downsizing, so deindustrialization continues to affect American workers and their communities. As scholars such as Cowie, Tami Friedman and others have noted, beginning as early as the 1910s and continuing through the 1980s, one community's plant closing often meant new jobs for another community in another region.7 According to economist Barry Bluestone, the 1980s saw some growth in manufacturing of new products like instruments, paper products and electronic equipment. But today, even plants that opened a few decades ago are closing, and when factories remain open, new technology and increased wage competition due to globalization allow companies to downsize, displacing thousands of workers. As Bluestone suggests, "technologically driven productivity is a doubleedged sword. While manufacturing is holding its own, manufacturing employment continues to shrink."8 Between January 2000 and April 2009, manufacturing employment dropped by 5 million jobs.9
Conservative commentators and economists have long claimed that deindustrialization is merely a "natural" shift from a manufacturing to a service economy. Using Joseph Schumpeter's concept of "creative destruction," they argue that deindustrialization and disinvestment allow for the mutation of assets and individuals from older industries to more productive and efficient uses.10 Seen in a national context, this concept suggests that deindustrialization frees capital for more efficient use in new industries and ultimately creates new jobs for displaced workers. But deindustrialization is not necessarily natural or creative, nor does it reliably generate good jobs to replace those that are lost. Rather, it is the result of a complicated set of factors including globalization, offshoring, deregulation, downsizing and technological change that are inherently interconnected. For example, technological change not only allows for more efficient production but also makes the movement of money and material goods, communications and management easier across great distances. Consequently, reinvestment is not confined to any particular country and so may not generate an economic or industrial transition for the nation or displaced workers. In addition, deindustrialization is largely controlled by corporations to enhance stockholder value. Put differently, the economic shifts of the past 35 years are the direct result of decisions made by corporate and government leaders to pursue economic profit rather than the good of either communities or the environment.
Yet America still makes things. While much of today's economy could be described as either a service economy or, to use a buzz phrase, a "knowledge economy," manufacturing continues to play a key role, employing 9 percent of all U.S. workers (12.3 million) and 9 percent of all scientists and engineers. Manufacturing produces 12 percent of the total gross domestic product and is responsible for 60 percent of the nation's research and development.11 Stephen Cohen and John Zysman argue that "we are experiencing a transition not from an industrial economy to a service economy, but from one kind of industrial economy to another."12 In other words, while manufacturing continues to be a major part of the U.S. economy, the quality of industrial jobs has changed in significant ways, and this combines with ongoing major job losses in the manufacturing sector to create a real crisis not only in the economy but in the quality of American community life.
This is not just an American phenomenon. Across the developed world and increasingly in developing countries, social, political, technological and economic changes have enhanced the ability of companies to move work to wherever labor is cheapest. So even in China, which is widely seen as the winner in the global battle for industrial jobs, workers have been displaced, first by privatization and more recently by companies moving factories to Indonesia and other countries where they can pay even less and face fewer environmental regulations. While our focus is on the American situation, we must keep in mind that deindustrialization reflects changes in the global economy.
The social costs of deindustrialization are significant, longlasting and wideranging, if for no other reason than sheer numbers. The deindustrialization of the 1970s and 80s was "cataclysmic"; more than 32 million jobs were lost, according to Bluestone.13 More recently, Howard Rosen has found that between 1995 and 2004, almost 700,000 firms closed each year, affecting 6.1 million workers, and an additional 1.7 million firms contracted annually, affecting another 11.8 million workers.14 But job loss does not affect individuals only, although it touches many who, having dedicated their lives and sometimes their health to employers, now feel betrayed and economically expendable. As a laidoff Johnson Controls worker in Louisville, Ky., explained, "I've always been a hard worker....You go in there and give a guy a day's work for a day's pay." But, he lamented, the company didn't see it that way: "I gave them 110 percent. They paid me for 110 percent but they did everybody out there wrong."15 Another laidoff worker suggested that U.S. companies were "letting the people of America down," and this would "eventually come back to them."16
Deindustrialization undermines the social fabric of communities, states and the nation. The social costs of deindustrialization include the loss of jobs, homes and health care; reductions in the tax base, which in turn lead to cuts in necessary public services like police and fire protection; increases in crime both immediately and longterm; decaying local landscapes; increases in suicide, drug and alcohol abuse, family violence and depression; declines in nonprofits and cultural resources; and loss of faith in institutions such as government, business, unions, churches and traditional political organizations.
Even when workers find new jobs or when communities succeed in bringing in new employers, these new jobs often pay less, offer fewer benefits, are less likely to provide union protections and, in many cases, are temporary, contingent or parttime. Finally, widespread job loss, especially in communities that rely on just one or two industries, undermines the community's identity and sense of competence. Deindustrialized communities too often become sites of persistent struggle, creating a cycle of failure from which it is difficult to escape.
Economic Struggle as a Social Cost
Whether caused by offshoring, outsourcing, new production methods, technological change or privatization, and regardless of industrial sector, deindustrialization creates economic struggles that affect both individuals and their communities.17 While most measures of deindustrialization emphasize how many workers have lost jobs, the real figures both of people affected and economic costs are much larger. Many of them cannot be measured. Individual workers and their families face several specific economic challenges because of unemployment - challenges that are exacerbated when unemployment is concentrated by largescale plant closings or industry cutbacks. But these individual struggles are just part of a large, complex economic web that shares the social costs of economic struggle with whole communities. Further, because communities in economic distress often turn to state and federal governments for assistance, the social costs of deindustrialization affect every citizen in the nation.
Job loss creates economic crises for workers and their families as they lose wages and often benefits - losses that can create longterm financial difficulties. This is especially true when unemployment lasts more than six months. Over the past three decades, as American industries have declined, longterm unemployment has become a larger portion of overall unemployment. In 1979, 8.6 percent of the unemployed had been out of work for more than six months; in 2005, 19.6 percent experienced longterm unemployment. Since 2001, this has become particularly significant as a result of "jobless recoveries" that varied from historical, cyclical patterns of unemployment. After six months, many individuals have exhausted government assistance and largely depleted their savings. Many resort to increased personal and credit card debt, reducing retirement savings, and, if necessary, incurring relocation expenses.18
Longterm unemployment occurs most often in communities where many people have lost jobs due to plant closings. Local economies simply cannot absorb so many displaced workers, and widespread unemployment persists, often for years. In Flint, after several years of cutbacks at GM and the closing of its Buick plant, unemployment in 1980 was over 25 percent.19 In 1982, after a series of staffing decreases and closings at several companies in Newberry County, S.C., unemployment tripled in the course of a year to 16 percent, four times higher than normal.20 In Gary, a few years after a major downsizing in the steel industry, onefifth of local households lived below the poverty line.21
Similar patterns occurred in other Rust Belt cities like Detroit, Cleveland, St. Louis and Milwaukee. More recently, consistent unemployment associated with deindustrialization stretches from Baltimore and Philadelphia to Oakland, Fresno and Sacramento.22 The highest unemployment rates in the nation are mostly in the Far West. Among the 14 American cities with the highest unemployment rates in the nation, 10 were in California. El Centro, Calif., had the highest unemployment rate in the nation, topping out at 24.5 percent in February 2009, followed by Merced, Calif. (19.9 percent), Yuba City, Calif. (18.9 percent), Elkhart, Ind. (18 percent), Visalia, Calif. (17 percent), Modesto, Calif. (16.9 percent), Salinas, Calif. (16.2 percent) and Stockton, Calif. (15.8 percent).
While the economic crisis associated with job loss may not hit immediately, before long even workers who were earning good hourly wages (and who therefore may have some accumulated savings) encounter difficulty securing basic needs like food, clothing, utilities and transportation. Many workingclass families regularly live paychecktopaycheck, and the loss of a job can throw them quickly into poverty. In Flint, the local United Way reported a 25 percent increase in calls for assistance during the months after GM closed its plant there.23
Unable to keep up with mortgage payments, or forced to move in search of work, some families lose their homes. While this can occur with any type of unemployment when major local employers shut down, local housing markets can become glutted, making it as hard to sell a house as it is to find a new job, and for the same reasons. In Rock Island, Ill., after International Harvester, John Deere and Caterpillar all closed plants or reduced their workforces, the unemployment rate was more than 10 percent, a number of houses had been abandoned and home prices fell by about 20 percent.24 For many workingclass households, the home represents the family's largest and in some cases its only investment. Losing that home due to foreclosure or losing money on the sale of that home represents a significant reduction in the family's worth.
Of course, jobs provide more than just wages to families. Despite COBRA programs, many displaced workers and their families lose access to health care. A recent report by the Urban Institute predicts that each time the unemployment rate rises by one percentage point, another 1.1 million people become uninsured.25 While some workers retain some form of health insurance when they are laid off, they may nonetheless find themselves unable to afford copays and deductibles and so avoid seeking treatment. For others, the loss of the job means losing both insurance and the ability to pay outofpocket health care costs. Along with exacerbating health problems, lack of access to health care creates an additional source of stress. As a laidoff worker from the KEMET factory in Shelby, N.C., explained in 1999, "We're up a creek [if] anybody gets sick or dies. There's just that little feeling in the pit of your stomach like please don't let disaster come."26
Industrial jobs also brought the promise of good pension programs. When factories close, the best scenario for displaced workers is that they would stop accruing pension funds and have to work for more years in another job. In their study of workers laid off from two plants near Louisville, Ky., Joy Hart and Tracey K'Meyer explain that "the reward for hard work in brutal conditions was not just high wages, which people felt they deserved, but the promise of a comfortable and early retirement. These workers felt robbed of the latter, coloring the lessons they would take from the whole experience."27
Bitterness and a longer worklife are only part of the problem. For many workers, companies ultimately defaulted on pension programs altogether. In some cases, pension programs have been underfunded, and some companies have used bankruptcy to escape their pension obligations. When this occurs, the Pension Benefit Guarantee Corporation (PBGC) steps in to provide payments. While workers affected by such moves may still receive pension payments, the value of those payments can decline precipitously.
For example, a typical steelworker with 30 years of service in the 1980s might receive about $1,800 a month, including a $1,000 pension payment, $600 for health care and a $200 shutdown bonus. But by declaring bankruptcy, some steel companies shifted the burden to the PBGC, which guarantees only 80 percent of the pension benefit and provided no other benefits. Thus, the PBGC would pay the same worker just $800 a month, less than half of what he had been promised. That $800 would have to cover health care costs as well as any other household expenses.28 In some cases, displaced workers have been offered early retirement. But as pension programs falter, many older workers must find new jobs, often in the lowwage retail and service sector. This combined with the move to defined contribution pension plans, reduced access to health care and the recent declines in housing and stock values, makes "early retirement" a misnomer. Worse, this pattern not only reduces the standard of living of these workers, it also reduces opportunities for young workers to enter the labor force.29
Dramatic hardships for workers and their families filter directly into communities. The sources of economic challenge for cities are a bit different, but as with families, communities lose their source of income: taxes. Cities rely on local sales, property and income taxes to provide various community services. Largescale plant closings drastically reduce cities' budgets, and this is especially true for smaller cities where a single employer or industry dominates. The closing of a major local employer often creates a ripple effect.
As other local businesses lose customers after a plant closing, they, in turn, lay off workers. In Anaconda, Mont., for example, within two months of the closing of ARCO, other local businesses had laid off about 20 percent of their workers. Over time, many local businesses simply closed.30 That can create a cycle of fiscal problems for cities, as Camden, N.J., discovered when it began to lose jobs in the 1950s. Federal assistance helped for a while. Then the state stepped in, but ultimately, the city grew increasingly isolated. As Howard Gillette, Jr. writes, "Disinvestment is not a onetime process. It has cumulative effects."31
The loss of tax income for cities creates a variety of social problems. Among the most obvious cumulative effects of plant closings are cutbacks in local services. From police and fire protection to maintenance of city parks and streets to garbage collection, cities must cut their costs when they lose a significant portion of the local tax base. Those cuts create further problems. Cuts in police and fire protection make it difficult to respond to the increases in crime or waves of arson that often accompany unemployment and the threat of losing homes. Lack of maintenance or reduced garbage collection makes the local landscape look rundown and unattractive, which in turn makes it difficult to attract new businesses or residents. These changes can bring down property values, which reduce taxes even more. Deindustrialized cities often find themselves trapped, without the funds to improve their circumstances and, as Gillette points out about Camden, N.J., with "few tools available to alleviate its permanent fiscal crisis."32
Crime increases in deindustrialized communities for several reasons and over a long period of time. While some crime occurs as laidoff workers run out of money and options, and decreased police presence contributes to the problem, crime is a longterm problem for such communities. Criminologists have found that street crimes increase as unemployment spreads, but after a lag period, more serious criminality can develop.33
In the 1990s, a decade or more after Gary and Youngstown were both hit by deindustrialization, the two cities traded back and forth the embarrassment of having the highest per capita murder rates in the United States.34 During that period, criminal justice experts determined that most of the murders in the Youngstown area were being committed by young adults who were born between 1977 and 1984, the most intense period of the deindustrialization. But for the mill closings, Youngstowners of this age might have been earning a decent living in the steel industry. Having a reputation for crime also creates a tough challenge for local boosters in bringing new jobs to the area.
In order to preserve police and fire protection, many cities cut back on maintenance. As a result, local streets may not be repaired regularly and street lighting may be cut back. Landscaping in pedestrian areas may not be maintained or cleared of trash quite so often. All of this creates a kind of "broken window syndrome" in which decay begets more decay. Such problems are often exacerbated by other economic costs.
When companies abandon factories, they often leave behind significant soil and water pollution. This can create large swaths of unusable or undesirable land. In Youngstown, for example, much of the area where the steel mills once stood remains empty 30 years after the structures were torn down. Although Environmental Protection Agency regulations push companies to clean up these areas, such rules sometimes backfire. When Anaconda, Mont., was named a Superfund site, selling homes and bringing in new industries became even harder, because no one wanted to buy a home or build a business in an area known to be polluted with dangerous toxins. While the community eventually built a golf course on the brownfields near the abandoned mines, the course has speciallytrained workers to retrieve golf balls that land in areas where parts of the mine are still exposed, and other rules strive to ensure that golfers don't contribute to erosion that would release toxic chemicals into local drinking water.35
But a site doesn't need toxic chemicals to scare away visitors or new residents. The downtown areas of many former industrial towns fell into decay and gained a reputation for crime and ugliness when the local economies declined. Bryant Simon describes how this decline occurred in Atlantic City as that city struggled economically in the 1960s:"With department stores and small shops closing, taking people off the sidewalks, the few middleclass patrons who did come downtown to see a film hustled back to their cars when it was over and raced home...
Without customers milling around, storeowners locked up before dark and turned their shops into fortresses. The few window shoppers had to peer through metal gates. German shepherds barked back at them as they glanced at shoes and cabana wear. The dogs and bars replaced the eyes of the street, the freeform dance of people that the influential urbanist Jane Jacobs has argued kept traditional mixeduse urban areas, like Atlantic City's Main Street, safe and alive."36
Deindustrialized communities across the country have witnessed similar transformations. When small shops close because of lost business, their boardedup facades create a sense of abandonment, even though neighboring businesses may still be operating. As Simon suggests, this creates a ripple effect. Decades later, cities may still struggle to entice area residents downtown. In Youngstown, for example, neither new businesses and entertainment venues nor a crackdown on street crime has persuaded some residents of nearby suburbs that the city is a safe and attractive place to spend an evening. Yet again, disinvestment becomes cyclical. If people won't patronize downtown businesses, the area will continue to struggle long after real problems may have been solved.
Decay affects residential neighborhoods, as well. When displaced workers cannot keep up with mortgage payments or move away in search of work, their abandoned homes create problems for neighbors and the city. In some cases, drug dealers have taken over abandoned properties. Elsewhere, abandoned homes have been looted and vandalized. Any items worth selling, such as moldings, light fixtures, copper pipes, and oldfashioned door knobs, have been stolen, making the home less attractive to any potential buyer. Eventually, such properties become not only unsightly but also dangerous, and they must be demolished. This cost is often borne by cities, which can ill afford such additional expenses.
In some communities, people have turned to an alternative "solution": arson. As economic distress increases, homeowners who are threatened with foreclosure have a strong economic incentive to engage in arson, because that may be the only way to hold on to some of their investment. Similarly, neighbors in areas where many homes have been abandoned and are falling into disrepair may view arson as a way of protecting their own property values.37 This is one of the reasons why Detroit became known as the arson capital of the world.
In some cases, the declining tax base of deindustrialization directly undermines a city's ability to redevelop. In Ohio, city governments use property taxes to repay loans for development projects, but this creates a double trap. As property values in deindustrialized areas decline, loans taken out 10 years ago for redevelopment projects are harder to repay today because the city takes in less tax money but owes the same amount. Moreover, state law requires voters to approve property tax hikes to pay those loan costs, and workers who have experienced job loss are not likely to support new taxes. Thus, Ohio cities like Cleveland face an additional challenge in creating economic development.38
In most communities, nonprofit organizations help to address the needs of families and neighborhoods that have fallen on hard times. When job loss and the associated problems are widespread, the need is even greater. Unfortunately, the economic woes that face displaced workers also lead to declines in donations to local nonprofits. Similarly, cultural institutions that provide inspiration and enrichment also struggle with funding. Not only do these declines affect local residents directly, they also make the community less attractive to new businesses. Disinvestment creates an almost inescapable cycle.39
As Howard Gillette illustrates in his study of Camden, N.J., when cities falter they usually turn to state and federal governments for assistance. Some of this involves direct appeals for aid, but much of it takes the form of increased demand for services. When unemployment increases and wages and hours decline, workers turn to welfare and food stamps. While the demand for public assistance has fluctuated over the years due to changing economic conditions, eligibility rules, enlistment drives and natural disasters, the dramatic increase in recent years is the result of the continued downsizing of America's industries. In 2008, 27 million Americans were receiving food stamps and the average enrollment in the food stamps program surpassed the record set in 1994.40 This is higher now than during previous recessions and is expected to grow even higher. Not only is this occurring in areas traditionally associated with manufacturing, such as Ohio, Michigan, Illinois and Pennsylvania, but also in Arizona, Florida, Maryland, Nevada, North Dakota and Rhode Island, despite apparent economic growth.41
Demand may also increase for higher education, as displaced workers seek training for new jobs, and this means more requests for loans and grants as well as increases in state subsidies and funding for colleges, universities and training programs. Demand may also increase for mental health programs, many of which get at least some of their funding from government sources.
All of these demands make deindustrialization costly not only for local communities but also for states and the federal government.
At the same time, deindustrialized communities are likely to lose political clout. On the one hand, communities lose political power because of population loss, which may lead to consolidation of state and federal legislative districts, declines in local donations to state and national political parties and candidates, and the fact that legislators can no longer claim that their districts represent important industries. On the other hand, as deindustrialized communities demand more support from state and federal sources, they can come to be seen as problems rather than as assets. Where such regions once contributed significant economic strength to a state or region, they may now be seen as draining public resources. So at a time when a struggling community most needs to enlist support from state and federal governments, it may find itself with the least political influence.
Job Loss and Health Problems
Deindustrialization and job cuts often lead to long periods of unemployment, intermittent employment and increased underemployment, and the effects transcend simply the loss of pay, medical benefits and purchasing power. Financial strain creates stress, depression and family tensions, which can manifest in a variety of ways, from increased use of drugs and alcohol to suicide and domestic violence. At the same time, unemployment correlates with increased physical health problems. Reduced access to health care makes it less likely that displaced workers and their families will receive appropriate care. The mental and physical health costs of deindustrialization do not harm only patients; increased demand for health care combined with decreased economic resources leads to health care workers and systems that are overburdened and ultimately unable to meet the community's needs.
Displaced workers, especially primary breadwinners, are likely to feel significant pressure and anxiety about providing for their families. But job loss causes more than just financial distress; work plays a key role in shaping individual identity and social relations. The loss of work can disrupt an individual's sense of self and his or her value and competence. As Al Gini writes, "To work is to be and not to work is not to be."42
Even when clear external reasons exist for layoffs, individuals may internalize the loss, blaming and doubting themselves. Given that job loss undermines both financial and personal security, it's not surprising that many studies have shown that unemployment correlates with higher levels of anxiety and depression.43 A 1988 study showed that workers displaced by the closing of an Indiana RCA plant reported significantly higher levels of symptoms of depression. While 5 percent of employed workers indicated on a survey that they "very often" felt "hopeless about the future," 38.2 percent of the displaced workers gave the same response.44 More than half of physicians surveyed in the southsuburban area of Chicago indicated that they were seeing higher rates of alcoholism after a series of plant closings.45
While it might be expected that men struggle more than women with the loss of work - given their traditional role as breadwinners and the image of masculinity associated with some industrial jobs (such as steel making) - studies show that women, especially single mothers, display more symptoms of depression and anxiety after being laid off.46
Plant closings limit workers' economic opportunities, and "anxiety, depression, and other forms of anguish may be the normal result of rational calculation of these life chances," according to Hamilton.47 Finding a new job does not entirely alleviate these fears, because the experience of being laid off can generate persistent fear about losing the next job. The security that workers once felt, especially those who worked for local companies that seemed to be dependable employers, disappears.
These problems are exacerbated by the loss of social networks that come with deindustrialization. Workplaces provide connections for most people that are built on shared experience and daily interaction. Many workers describe their coworkers as being "like family." For many, the workplace becomes a site of their most intimate relationships. When plants close, workers lose this easy daytoday interaction. Feelings of shame, anger and sadness may make it difficult for coworkers to maintain close ties once their shared work disappears. To lose such networks during a time of personal crisis is doubly hard. Displaced workers without good social support networks show higher rates of both physical and mental illness.48 For a significant number of individuals in a single community to lose a major support system at one time is devastating.
Job loss also correlates with increases in family violence. Perrucci found that almost onethird of displaced workers (31.7 percent) indicated that the financial strains of unemployment were undermining marital relationships. Job loss also undermines men's feelings of selfsufficiency and disrupts household structures. Such tensions related to gender roles increase the probability of domestic violence.49 A 2002 study found that the risk of domestic violence increased 30 percent when a man's contributions to household income declined and increased 50 percent for every period of unemployment.50 This probability is increased even further when economic distress exists throughout a community.51 Increases in interpersonal violence may not be limited to the family. According to Steve May and Laura Morrison, "observers have begun to note the relationship between deindustrialization and workplace (and domestic) violence, workplace litigation and workplace stress and injury."52
Laidoff workers also experience declines in physical health. Studies consistently report that physical health problems, such as headache, high blood pressure, cardiovascular disease and digestive problems, as well as mortality rates, increase when people lose their jobs. Increased death rates result from disease as well as from suicide and accidents.53
As M.H. Brenner has shown, in crosscultural studies conducted over the last 25 years, unemployment contributes to elevated mortality rates.54 These effects can appear quite quickly: within a year after a major mine closing in Lewis County, Wash., the county public health office reported that it was already seeing increased rates of death due to heart disease as well as an increase in the death rate for people between ages 25 and 44.55
When unemployment is combined with other problems associated with economicallystruggling communities, such as poor housing, increased levels of drug use and higher crime rates, the result is what the Executive Intelligence Review terms "death zones" - areas where the death rate for various age groups exceeds the national average.56
Health problems caused by deindustrialization also affect local clinics and hospitals, and this may reduce access to health care for everyone in the community. Public hospitals, which provide care for patients in financial need, including the poor and unemployed, feel the strain when demand from such patients increases. These hospitals already struggle to provide care as they face cuts in Medicare reimbursements and increased demand as the percentage of Americans without health insurance rises. Add increased demand from a significant number of laidoff workers and their families, and they face a serious crisis.
Hospitals have attempted to address the financial strains by cutting services and staffing, including emergency rooms, which further reduces both access and quality of care, but sometimes even these cuts are not enough. A 2005 report shows that public hospitals in cities and the surrounding suburbs, especially lowerincome suburbs, are already closing at significant rates.57 While these closings may not be traced directly to deindustrialization, they illustrate the connection between economics and public health.
A recent report by the Urban Institute suggests that the problem will only worsen, as rising unemployment could add hundreds of thousands of children and adults to state and federal health programs, requiring an increase of $3.4 billion for Medicaid and the State Children's Health Insurance Program. Of the additional money needed, $1.4 billion would come from the states.58
Deindustrialization Undermines the Quality Of Jobs for Everyone
Although unemployment in deindustrialized areas often remains high for a number of years after major plant closings, many workers do find new jobs. What is too often left out of this discussion is any consideration of how old and new jobs compare or how declines in largescale manufacturing and industrial unions have affected the quality of jobs in other sectors.
When so many steelworkers in Youngstown lost their jobs in the 1980s, anyone with a pickup truck and toolbox could move into construction. The flooding of the labor market with displaced steelworkers reduced employment opportunity and wages for union contractors and their employees. Called "independent contractors," the displaced steelworkers became part of an underground economy that evaded government regulation, especially in relation to occupational safety and health and workers' compensation.59
Deindustrialization harms workers and communities not only by eliminating existing jobs but also by undermining the quality of the jobs that remain, and when families and communities rely on lowerquality jobs, there are social as well as economic costs.
Conservative commentators and traditional economists often argue that the job losses associated with plant closings and widespread declines within specific industries reflect larger trends that are part of a "natural" economic change. Among the most common variation of this argument has been the claim that the manufacturing economy is giving way to a service economy. But this shift has contributed to the nation's growing inequality. Between 1979 and 2005, the employment share of goodsproducing industries dropped by over 11 percent while the service sector grew by almost the same amount. Many of the job losses were in highpaying sectors, including manufacturing, that have been affected by deindustrialization.60 Employment gains were made in the lowwage and benefit service sector. This may explain why New York Times business writer Louis Uchitelle found that even when displaced workers find new jobs, within two years of being laid off they still earn only about 40 percent of their previous income.61
If servicesector wages and benefits in the United States were more closely aligned with those in manufacturing, as they are in European countries, deindustrialization wouldn't reduce household income as much, and income inequality would not continue growing so quickly.62
The idea that deindustrialization is part of a "natural" economic shift reinforces the argument that the solution to job loss is retraining. The assumption is that plenty of good jobs are available, but that workers are not appropriately prepared for them. This belief in the power of education runs deep in American culture, in part because it fits well with the "pull yourself up by your bootstraps" view of the American Dream. A belief in education also reflects a modernist, progressive view of history that assumes that something new and better is always coming.
In recent years there has been much talk about the growing "knowledge economy," and displaced workers are increasingly encouraged to seek training in hightech areas. This encouragement has been widely supported by state and federal aid to both individuals and educational institutions.63 To be effective, however, training programs must be geared to emerging labor needs in the local area. Otherwise, the implicit promises of education prove empty.
In the Youngstown area in the years after the steel mills closed, hundreds of local workers enrolled in training programs in refrigeration or computer repair. Yet there were almost no jobs in refrigeration, and computer repair jobs disappeared as simple modular replacement, which required little or no special training, became the industry standard. The training proved largely useless.
More recently, after a major textile plant closing in Kannapolis, N.C., the local community college was not given permission to develop training programs for small business skills, even though the local area needed more people with these skills to work in small businesses like real estate and cosmetology.64
Ironically, both cases reflect a conflict between training needs and government programs that were intended to help displaced workers. When education programs provide irrelevant training, workers' frustration increases. Some will internalize the experience, blaming themselves for failing, while others will feel more resentful and angry toward local institutions and government regulations. The result is the growing politics of resentment and the loss of faith in basic institutions and the American Dream.65
Even when retraining programs work, new jobs are often not as good as the jobs from which workers were displaced. In manufacturing, especially, while the work was sometimes dangerous, physically difficult and tedious, unionization ensured good wages and benefits. Working in a major local industry or for the largest local employer offered a sense of belonging as well as security. Despite irregular work patterns due to slowdowns, workers in the steel and auto industries had job security and seniority that balanced occasional economic strain with longterm certainty, until plants closed permanently. In many cases, new jobs offer less of everything, from wages to security.
In many communities, tourism and entertainment have been touted to revitalize deindustrialized communities. While bringing in visitors' dollars does help the local economy as a whole, for displaced workers, the jobs associated with the entertainment industry represent a sharp and dramatic decline. When a new Wendy's fast food store opened in downtown Gary in 1985, local officials saw it as a sign of economic growth, but S. Paul O'Hara points out that "several of the new employees of the restaurant were former steelworkers who had traded their mill wages for $3.35 an hour." As one local worker explained, they had little choice:
" 'Sure we would rather have the $15to$20anhour jobs that the steel mills used to provide, but that is not reality.' "66
At the same time, the shift from industrial to retail and service jobs may hit workers of color especially hard. As Robert O. Self argues in writing about deindustrialization in Oakland, "The service sector was extraordinarily slow in absorbing AfricanAmerican and Latino workers, except in lowpaying 'back of the house' occupations."67
The shift to lower wages, fewer benefits and less unionization has occurred not only in the service sector but also in manufacturing, where restructuring, technology, and specialization have created a niche for smaller companies. Even within unionized industries such as the auto industry, restructuring has created lowerwage tiers for many workers, especially newer employees. Some might argue that lower wages simply reflect a correction of the "inflated" wages and benefits unionized workers once earned in the steel and auto industries - labor costs that some claim were the cause of America's industrial decline.
Starting in the 1950s, American industrial workers began to earn high enough wages to gain middleclass lifestyles, and they bargained for benefit packages that included good health insurance and pensions. The pay and benefits negotiated by unions rippled through the national economy, raising the standard of living for all workers in what economists call wage pull. But deindustrialization and associated deunionization have had the reverse effect. As unionized industries close, wages and benefits have fallen across the board, for all workers. At the same time, benefits are declining, as workers are being asked to pay for all or part of their health insurance. To put this differently, one of the social costs of deindustrialization is the declining economic security of the entire American middle and working class. Even workers who were never displaced by plant closings or industry declines have been affected.
Job security has also declined, again not only for the individual workers displaced by deindustrialization but across the board. Especially in the service sector, jobs are more likely to be temporary, parttime and contingent. Workers without unions have little or no protection against layoffs.
For companies, these policies reflect a move toward greater flexibility, even as they allow employers to offer lower wages and fewer benefits to more workers. Those who work less than 40 hours per week and those who remain on a specific job for less than six months can more easily be denied raises and benefits.
The lack of job security no doubt helps the corporate bottom line, but for workers - and perhaps especially for workers who once enjoyed the benefits and protections of unionized jobs - the financial insecurity of the new employment patterns can be devastating. For many, replacing a single good industrial job requires working two or three service industry jobs, adding to household stress and increasing vulnerability to sickness and injury.
These patterns can be traced not only to changes in business management practices but also to the overall decline in unionization. While government and business policy play an important role in this trend, workers' own experiences of deindustrialization also play a part.
Displaced workers often lose faith in institutions of all kinds, including unions. If the union couldn't protect them from losing a factory job, how could it provide protection in a different industry? At the same time, workers have been encouraged to fear that unionization activism will drive employers away.
Tami Friedman notes that this pattern appeared in Yonkers, N.Y., as early as the 1950s. After local companies began to downsize, the local newspaper "warned unionists to consider the enormous need for caution against upsetting our breadwinning applecart." When one company sought wage concessions, even during a period of record sales and profits, "frightened union members quickly accepted the firm's proposals by a nearly threetoone margin."68
More recently, a PBS Nightly Business Report story during the 1998 General Motors strike in Flint, Mich., used images of abandoned buildings and steel mills in Youngstown to illustrate a warning that the demands of workers could drive the company to move jobs to Mexico, something that had already happened in the Youngstown area. The story closed with reporter Stephen Aug's comment that autoworkers "may have jobs now, but what about next year, and the year after?"69
In an environment where workers are afraid of losing jobs - and in communities that have experienced widescale job loss such fears are endemic. Warnings like these are likely to be taken to heart. The problem is that without unionization, workers earn less, receive fewer benefits, endure poorer working conditions and have less job security.70
Deindustrialization and deunionization have additional effects. When displaced workers in Youngstown entered the construction industry in 1980s and 1990s, employment opportunities in construction became more episodic. This led many younger workers to reject the idea of entering apprenticeship programs in the building trades. Employers began to worry about the "graying" of the workforce.
In other industries, lower wages and benefits have led to higher turnover rates, which means that companies have fewer skilled employees. The "churning" of the workforce may undermine the quality of American manufacturing. In 2008, Ohio Policy Matters researchers found that despite the weak labor market in Ohio, employers were having difficulty hiring skilled workers. The report cites evidence of declines in apprenticeship programs and occupational shortages in both manufacturing and health care. They argued that recent employer concerns about occupational shortages and skill deficits should be taken seriously. Furthermore, government and business leaders must work together and engage in a "comprehensive longterm human resource strategies that provide meaningful career opportunities for workers."71
While deindustrialization may not be caused by a "natural" economic shift, it has clearly contributed to wideranging changes in the nature of work in America. Those changes are making economic stability and upward mobility increasingly elusive for many workers.
New employment patterns developed in what some call the "postindustrial era" are affecting workers in many industries, from manufacturing to health care, education to the media, finance to government. Job security, good benefits and longterm relationships between employers and workers are becoming relics of a fading past. The result is economic vulnerability, constant change and uncertainty that are reshaping the experience of work as well as the management of companies.
While current management theory extols the virtues of flexibility, in the long run it remains to be seen whether this shift will contribute to or continue to undermine the American economy.
Deindustrialized Communities Face LongTerm Economic and Social Challenges
Any community in which a significant portion of the population loses good jobs at the same time will face a crisis. For communities that have relied primarily on one or two key industries, the social costs of deindustrialization can be especially damaging. In both structural and social ways, communities lose the essential resources that allow them to function well. As Robert Bellah argued in his 1985 study of American community life, Habits of the Heart, communities thrive when they have a shared sense of history and identity, a "community of memory" that facilitates common visions of the community's strengths and weaknesses and collective faith in the community's ability to take effective action on its own behalf.72
A "community of memory" is not idealized or nostalgic; rather, it embraces the triumphs and difficulties of a community's past, identifying in a shared story of "who we are" the basis for moving ahead. Industrialization provided many cities with clear identities, tying Pittsburgh to steelmaking, Detroit to automaking, Lowell to textiles and so on. When this shared identity is lost, communities struggle. The loss of population, decline of the local landscape, loss of faith in both the community and its institutions, and internalization of an image of the community as a site of failure undermine the social resources that might otherwise allow communities to recover and redefine themselves. When this happens, communities can become desperate, and the economics of desperation can further undermine a city's wellbeing.
Deindustrialization often leads to population declines, both immediately after major job losses and in subsequent years, as some displaced workers move in search of work. While such moves may or may not provide workers and their families with more secure futures, their departures undermine the effectiveness of the communities they leave behind. As Robert Putnam and Lewis Feldstein have argued, social capital is an important resource for responding to community challenges, and social capital is created through human networks. By working together, playing in softball or bowling leagues and serving on church or neighborhood committees, people who live near each other create community. They come to know each other, build trust and develop a sense of investment in the place where they live, its culture and its people.73 Especially in cities where many people work for the same company or industry, shared work contributes to this sense of belonging, so social networks in places like Youngstown, Flint, the Silicon Valley, or various mining towns become especially strong. When people leave these areas, the loss involves more than simply numbers.
Social capital involves not only people's relationships with each other but also their relationships with place. Lost jobs in a major industry ripple through the community, affecting other businesses, leading to home foreclosures and increases in crime and reducing the tax base that allows cities to respond to problems like abandoned houses and rising crime rates. As a result, an almost iconic marker of deindustrialization is urban decay: boardedup businesses, abandoned buildings, oncevibrant neighborhoods that become eerily quiet and seemingly dangerous. At the same time, when industries shut down, they often leave physical markers on the landscape - crumbling factory buildings or brownfields where factories once stood. This landscape of loss also undermines social capital, in two ways.
First, as Dolores Hayden has argued, landscape is an important "storehouse" for memory, providing visual cues that represent major events and aspects of individual and community life.74 When buildings are torn down or allowed to decay, communities lose a resource for the shared memory that is the basis for effective action. At the same time, the altered landscape creates a new sense of place. To put it simply, living in a deteriorating environment reinforces feelings of hopelessness that often accompany job loss. Further, this response affects not only displaced workers but the community as a whole. Anyone who visited the downtown area of a place like East St. Louis, Braddock, Penn., or Compton, Calif., during the years after their local industries shut down, understands this effect.
Over time, a struggling community may become divided, as those who promote a new vision of the city blame displaced workers for the area's problems. For example, civic leaders and developers in Anaconda, Mont., blamed former smelter workers for having the "wrong mentality." As one planner explained, the community's main problems were "not the economic loss or ecological impact that had torn the social fiber of the city, but a particular mentality embraced by the community."75 Another stated that she hoped the redevelopment would, " 'inject' the community with new kinds of residents," an attitude that, as Kent Curtis suggests, reflects the "marginalization of members of the traditional workingclass community, who, like the ruins of the hillside, were mere props to be trotted out when circumstances seemed to demand, but who were otherwise useless to the future of the town."76
The division between workers and developers in Anaconda shows that even when communities begin to revitalize, economic growth can happen at the expense of local cohesion and community memory. As Curtis explains, displaced workers saw the development of a new golf course "as only the latest stage in a long process of change that has been alienating them from their place in the community since the early 1970s."77
Dissolving social networks and decaying landscapes work together with unemployment and declining local tax bases to undermine deindustrialized communities' confidence. While those who study deindustrialization understand that corporations shut down plants for a variety of reasons that usually have little to do with local culture, affected communities often move from initial anger at the departing company to selfdoubt. Some area residents, and too often local leaders, begin to wonder whether a plant closing could be attributed to some quality of the community and its people, and this can in turn persuade area residents that the city's failure to bounce back is its own fault. In some cases, this attitude is couched in specific terms.
In Yonkers, N.Y., for example, Friedman reports that local leaders began to worry about the city having a "bad labor name" as early as 1954. They suggested that the area couldn't attract new business due to its reputation for a strong local labor movement.78
In Youngstown, some local residents have come to assume that their community is almost naturally incompetent. When the public address system at Youngstown State University's football stadium ran into problems during a game a few years ago, one exasperated fan was heard to comment, "Well, what do you expect? This is Youngstown." Such attitudes both reflect and contribute to the community's loss of confidence in its ability to take effective action.
For many residents of such communities, loss of confidence in the community is part of a larger pattern of lost confidence in institutions. Area workers paid their taxes, tithed at church, devoted their work lives and sometimes their health to corporations, maintained union memberships and faithfully voted for whatever political party dominated in the local area for years, expecting that they could count on these institutions to reward their loyalty and to have the power to protect them from serious problems. For many, these institutions represented reciprocal and core community relationships.
In exchange for workers' support, cities were supposed to maintain streets, churches would provide spiritual comfort, employers would provide and unions would protect jobs, and politicians would protect the community, and all failed. When the organizations that people count on all prove unable to bring back old industries or attract new jobs, people become skeptical and resentful. In some cases, people become insular and wary of outsiders, trusting only their closest social networks. If people come to see institutions as inherently ineffective, they may view most efforts at development or addressing crime and urban decay as doomed from the outset. Lacking strong leadership or faith in the effectiveness of local institutions, some communities have become paralyzed and unable to launch effective responses to deindustrialization.79
Deindustrialized and economically struggling communities risk losing control of their identities as citizens lose faith in the community. Outsiders, especially the media, are left to define the area's story. Too often, deindustrialized communities are assigned negative images as places of failure and loss. Places like Gary and Youngstown know this difficulty all too well. O'Hara suggests that loss of its former identity made Gary vulnerable to being defined in entirely negative terms:
"Without the sense of itself as a producing steel town, Gary lost the ability not only to create or control its own urban image but also to defend itself against its harshest critics. Instead, Gary became a national example of deindustrialized rustbelt decay. This dramatic change in the composition and viability of local image is one of the strongest and longestlasting effects of deindustrialization."80
During the two decades after the mills closed, Youngstown was defined first as a site of struggle. Immediately after the shutdowns, local religious and labor leaders organized an effort to buy and operate the mills locally. As the city fell into decay and lost more jobs, Youngstown became one of several places (together with Gary and Flint) that took on iconic status as "symbol[s] of the failure of American industry."81
When the city did not recover within a decade, as the crime rate rose in the early 1990s and when a series of incidents made local patterns of political corruption visible nationally, Youngstown became known for corruption. During the same period, as the city grabbed at every possible opportunity for economic development - often coming up empty handed - the area gained a reputation for desperation. These versions of Youngstown's story told by the national media resonated in the community because local residents were themselves frustrated about the continuing problems.
When deindustrialized communities are defined in persistently negative ways, that image becomes an additional barrier to recovery. The city must fight even harder to attract new businesses, engage community members in development efforts and promote their cause in the public arena.
Combine this image problem with the competition for jobs, and we see former industrial areas going to great lengths - and often undermining their own stability - in order to attract new economic opportunities. In some cases, deindustrialized cities have pinned their hopes on tourism, hoping to attract visitors and their dollars through convention centers (Youngstown's Chevrolet Center), amusement parks (Flint's Auto World), casinos (Gary, Ind.), golf courses (Anaconda, Mont.), shopping malls (Homestead, Penn.), or historic sites built around and sometimes literally on abandoned industrial sites (Bethlehem, Penn.). Such efforts provide construction jobs initially, and the more successful efforts bring in new tax dollars, but they rarely bring highquality jobs. City tax coffers may gain, but area workers continue to struggle.
Elsewhere, deindustrialized communities have welcomed public and private prisons. Northumberland County, Penn., a former mining community, built two prisons in the 1990s, creating jobs for about 550 people, and in 2001 they considered building another. As the chairman of the County's Board of Commissioners explained, "Anything that can bring recessionproof jobs, we want it here."82
Similarly, Youngstown saw prisons as a growth industry in the 1990s, supporting the development of four new prisons within a fiveyear period, including a state super max facility and a private prison operated by the Corrections Corporation of America (CCA). While some area workers found jobs building these facilities and later as guards, neither the pay nor the working conditions made them highquality jobs.
When six prisoners escaped from the CCA prison, investigations suggested that they were assisted by guards whose low pay had made them susceptible to bribes. Worse, the city's reputation for crime and economic desperation was exacerbated when it became known as a prison economy, which made it more difficult for the area to attract other kinds of businesses.83
Among the tools that struggling communities use to attract new businesses are tax abatements. By deferring or waiving taxes, cities lower the cost of establishing a company in the hope of attracting new jobs. But the idea that such deals generate new jobs is often simply a myth.
Greg LeRoy has found that companies often take advantage of deindustrialized communities, rely on taxpayers' confusion about the relationship between subsidies and job creation, and are rarely held accountable for the promised investments and jobs.84
Even when tax abatement succeeds in attracting new employers, it may also bring its own problems. First, because new industrial sites often require less extensive or complex physical structures, companies easily leave communities behind once the tax abatements end. This process is facilitated by the ongoing competition among communities for jobs. As Robert Self argues, "...the frantic competition for private capital investment" creates a "savage rivalry" among cities as they fight to attract jobs and investors.85
This benefits the corporations but puts cities at risk as they gamble on whether the businesses they attract by waiving taxes will stay long enough to make a real contribution to the local economy. When these opportunities fail to transform the local economy, people's expectations of failure are further reinforced.
In the long term, communities face significant challenges in redefining their identities and rebuilding their economies. In a 2007 report, MIT researchers identified some 150 cities, mostly in Northeastern, midAtlantic and Midwestern states, that continue to struggle long after major plant closings. Three chronic problems affect communities like Camden, Allentown and Hartford, according to the report: "a lack of civic engagement and institutions, inadequate governing capacity and a chronically negative collective mindset." They have "been left behind by the global economy, the media, major foundations and policy trends." These "forgotten cities," as MIT calls them, have difficulty creating effective coalitions and revitalization schemes.86
Yet while these cities may have been forgotten by some, they still matter to the people who live there. Some can't leave and others choose to stay and continue to struggle economically. Some of these "forgotten" areas are experiencing a boomerang effect, as a combination of loyalty to place, family ties and affordable housing lure former residents back home. Urban development specialist Hunter Morrison notes that such communities often have a "loyal diaspora" for whom their home towns, regardless of economic struggles, remain at the core of their individual identities. That loyalty, authenticity and a sense of a real place may serve as countervailing resources to help deindustrialized communities recover, even after long periods of economic difficulty.87
At the same time, deindustrialized communities continue to wrestle with some core structural problems, especially declining populations, economic development, crime and poverty. Some have come to accept economic decline and the hollowing out of neighborhoods and are trying to redefine themselves as smaller cities. As part of a planning process begun in the early 2000s, Youngstown decided that the only way to move forward was by embracing a new identity as a shrinking city. A community planning effort, forcefully directed by a local city planning agency, created the "2010 plan" for rezoning some areas for light industry, turning some largely abandoned residential areas into green spaces, and discontinuing city services in some neighborhoods.88 In its annual "ideas" issue in 2006, the New York Times Magazine named Youngstown's "Creative Shrinkage" plan one of the nation's best ideas.89
On the one hand, the 2010 plan acknowledges and attempts to deal proactively with one of the most immutable realities of deindustrialization: declining population. On the other hand, it's unclear whether shrinking the city will in fact contribute to economic development. Turning decaying neighborhoods into green space may prove to be just another phase of the "undevelopment" story, or worse, another injury to an already wounded community.
While MIT's "Forgotten Cities" report highlights communities that continue to struggle, other areas have been held up as shining examples of recovery, including places like Cleveland, Providence and Pittsburgh. In these and other former industrial towns, one can see new office buildings, riverfront parks, gentrified neighborhoods and increased pedestrian traffic downtown. No doubt, such cities should be applauded for reinvigorating their urban cores.
Yet localized development, such as downtown projects, can provide the appearance of recovery while masking deeper continuing problems. Despite new areas of development, unemployment, crime and poverty rates remain high long after plant closings occur. In the past decade, Cleveland has revitalized its lakefront area with new museums, attracted visitors downtown with an annual film festival and revitalized old workingclass neighborhoods with ethnic restaurants and loft housing, but it still has among the highest poverty and crime rates of any city its size in the United States.90 Similar stories could be told about other supposedly recovered cities, because the wounds of largescale job loss and major economic shifts simply do not heal quickly.
Nor is the poverty caused by deindustrialization confined to urban areas. Suburbs are also suffering. While the suburban areas around Cleveland, Cincinnati, and Columbus, Ohio, do not look like deindustrialized cities, they are among the 16 U.S. metropolitan areas with the highest poverty rates in 2008.91
The development we see today in Cleveland may well be the first signs of a more widespread recovery that will eventually reduce the area's poverty rates and in turn lower crime. But such a recovery cannot be built on tourism and entertainment alone. Cities and regions that have been devastated by the major economic shifts of the past three decades need secure, highpaying jobs that are not in constant danger of disappearing.
Hundreds of cities in America now know what Youngstown learned in the 1980s. Youngstown learned about the social costs of deindustrialization, but the community also, sadly, came to understand just how difficult it is to recover from the loss of major industry and the injuries done to thousands of workers, their families and the community itself.
Deindustrialization is not a new story. Nor does it, as some have suggested, follow the traditional historical narratives about natural economic evolution. Those who have lived in deindustrialized communities have long argued that the social costs and significance of deindustrialization are larger and more lasting than the dominant economic discourse about "creative destruction" and the fading of the old industrial economy. Deindustrialization is the direct result of corporate and governmental decisions that have not only displaced millions of American workers, but also done major harm to American communities. These injuries to our cities create social and economic costs that everyone pays.92
Unfortunately, many economists still don't get it. In Outsourcing America: The True Cost of Shipping Jobs Overseas and What Can be Done About It, Ron and Anil Hira have described the current public debate over the outsourcing component of deindustrialization as "misleading." In fact, they have been "amazed at the lengths they [proponents of outsourcing] are willing to go to throw away any semblance of objectivity in their analysis."93
Unfortunately, public policy toward globalization, outsourcing, technological change and unemployment has largely remained wedded to increasingly discredited neoliberal economic concepts. The result is what New York Times reporter Steve Greenhouse describes as a "...glaring disconnect between the way government and business leaders talk about globalization and the way average Americans view it."94
The point here is not to say "we told you so." It is, rather, to suggest two things. First, because the social costs of deindustrialization affect every American, policymakers should take more seriously the longterm and widespread consequences of major industrial declines, regardless of industry. Second, addressing the social costs of deindustrialization and preventing further industrial losses in the U.S. will require a dramatic rethinking of the nature of the economy and the corporation as well as the role of government in creating a business environment that promotes investment and generates good jobs.
As William Galston argues in The American Prospect, "we should use public policy to spread the gains of economic growth, create equal opportunity for all and insure workers against wage and income losses against which they cannot protect themselves."95
We should advocate a new vision of capitalism that takes social and human capital every bit as seriously as it does materials and money. And we should advocate policies that encourage forms of economic development that build strong communities as well as strong companies.
1 Kaufman, Jonathan, "White Men Hold Key for Democrats: Contest May Hinge on Blue Collar Vote: Opening for McCain?" Wall Street Journal, February 19, 2008, 1. MacGillis, Alec, "How to Read the Buckeye Vote," The Washington Post, March 6, 2008, A 11. Muscat, Sabine, "Weifs, Mannlich, wichtig," Financial Times Deutschland, March 5, 2008, 15. Other examples include the St. Louis Post Dispatch, BBC America, National Holland News Service, Swedish National Radio, PBS Nightly Business Report, and The Asahi Shimun (Japan News Service).
2 McMillion, Charles, "Ohio's Job Losses: 20002007 Worst Since the Great Depression," MBG Information Services, Washington, D.C., February 2008.
3 Greenhouse, Steven, The Big Squeeze: Tough Times for American Workers, New York: Knopf, 2008, page 203.
4 Ibid, page 210.
5 McCarthy, John C., "3.3 Million U.S. Services Jobs To Go Offshore," TechStrategy(tm) Research Brief, Forrester Research, November 11, 2002. Outsourcing can also have a negative effect on the workers who remain in the United States. A study by three Harvard economists estimates that for every 1 percent that employment falls in a manufacturing industry because of moving overseas, wages fall by fivetenths of 1 percent for workers who remain. As the recent concessionary bargaining at American Axle suggests, those numbers may be an underestimate.
6 Cowie, Jefferson and Heathcott, Joseph, "The Meanings of Deindustrialization," in Beyond the Ruins: The Meanings of Deindustrialization, Cowie & Heathcott, eds. Ithaca and London: Cornell UP, 2003, 2.
7 See Cowie, Jefferson, Capital Moves: RCA's SeventyYear Quest for Cheap Labor, Ithaca and London: Cornell UP, 1999, and Friedman, " 'A Trail of Ghost Towns across Our Land'" in Cowie & Heathcott.
8 Bluestone, Barry, foreward to Cowie & Heathcott (7).
9 "Employment in NonFarm Payrolls by Major Industrial Sectors," Department of Labor, Bureau of Labor Statistics, 2008.
10 Schumpeter, Joseph A., Capitalism, Socialism and Democracy, 1942, New York: Harper, 1972, 8285.
11 "Manufacturing, Agenda for Shared Prosperity," Economic Policy Institute. www.sharedprosperity.org/topicsmanufacturing.htm.
12 Quoted in Lisa Fine, The 'Fall' of Reo in Lansing, Michigan, 19551975, in Cowie & Heathcott, 46.
13 Bluestone, (9).
14 Rosen, Howard, "Designing a National Strategy for Responding to Economic Dislocation," testimony before the House Science and Technology subcommittee on investigation and oversight, Washington, D.C., June 24, 2008.
15 Hart, Joy L. and K'Meyer, Tracy E., Worker Memory and Narrative: Personal Stories of Deindustrialization in Louisville, Kentucky, in Cowie & Heathcott, 293, 284.
16 May, Steve and Morrison, Laura, Making Sense of Restructuring: Narratives of Accommodation Among Downsized Workers, in Cowie & Heathcott, 274, 278.
17 This includes such terms as downsizing, rightsizing, delayering reengineering and/or forms of contingent labor - consultants, independent contractors, contingent staffers, special assistants, representatives, flexible staffers, hired guns, floaters, temp slaves, 1099ers, lone rangers, permalancers, elancers, information backpackers. The use of contingent labor has become known as the "vanguard of insecurity or America's migrant labor." Michael Jonas, "Lone Rangers," Commonwealth Magazine, Summer 2005, page 62.
18 Mishel, Lawrence; Bernstein, Jared; Allegretto, Sylvia, The State of Working America 2006/ 2007, Ithaca and London: ILR/Cornell UP, 2008, 226230.
19 Scherer, Ron, "What a GM downturn does to Flint," Christian Science Monitor, August 21, 1980, 11. Online, 222.lexisnexis.com, July 21, 2008.
20 "South's Textile Mills Closings Continue From '74 Recession," New York Times, February 17, 1982, A13, online wwwlexisnexis.com, July 21, 2008.
21 O'Hara, Paul S., Envisioning the Steel City: The Legend and Legacy of Gary, Indiana, in Cowie and Heathcott, 230.
22 "Local Area Unemployment Rates for Fifty Largest Cities, 20002007, City Data Tables, Local Area Unemployment Statistics," Bureau of Labor Statistics: Washington, D.C., http://www.bls.gov/lau/#tables.
23 Horak, Kathy, "Cries for Help on the Rise in Michigan," Associated Press, July 6, 1980, online, wwwlexisnexis.com, July 21, 2008.
24 Greenhouse, Steven, "Bitter Time for Quad Cities," New York Times, December 25, 1984, online www.lexisnexis.com, July 21, 2008.
25 Sack, Kevin, "Study Warns Job Losses Will Strain Government Health Programs," New York Times, April 29, 2008, online, www.nytimes.com, July 11, 2008.
26 Quoted in May and Morrison, page 272.
27 Hart and K'Meyer, page 298.
28 Discussion with Youngstown steelworkers and with Dennis Brubaker, staff representative, United Steelworkers Union, Subdistrict Office, Niles, Ohio.
29 Morrissey, Monique, "How Economic Conditions Affect Retirement," Economic Snapshots, Economic Policy Institute, June 25, 2008.
30 Curtis, Kent, Greening Anaconda: EPA, ARCO, and the Politics of Space in Postindustrial Montana, in Cowie & Heathcott, page 99.
31 Gillette, Howard, Jr., The Wages of Disinvestment: How Money and Politics Aided the Decline of Camden, New Jersey, in Cowie & Heathcott, page 157.
33 Linkon, Sherry Lee; and Russo, John, Steeltown USA: Work and Memory In Youngstown, Lawrence, University of Kansas Press, 2002, page 196.
34 Linkon and Russo, 193.; O'Hara, page 232.
35 Curtis, pages 101, 110.
36 Simon, Bryant, Segregated Fantasies: Race, Public Space, and the Life and Death of the Movie Business in Atlantic City, New Jersey, 19542000, in Cowie & Heathcott, page 75.
37 Morrison, Hayli, "Reports of Arson Increase Alongside Foreclosures," Realestate, February 3, 2008, www.banks.com/blogs/realestate/2008/02/03/reportsofarsonescalatealongsideforeclosurerates/.
38 Gomez, Henry, "City of Cleveland Faces Credit Squeeze," The Plain Dealer, December 11, 2007, online, www.cleveland.com/plaindealer/, July 21, 2008.
39 Morrison, Hunter, personal interview, May 2, 2008.
40 Wolf, Richard, "New Breed of American Emerges in Need for Food," USA Today, May 18, 2008.
41 Eckholm, Erik, "As Jobs Vanish and Prices Rise, Food Stamp Uses Nears Record," New York Times, March 31, 2008, online www.nytimes.com/2008/03/31/US/31foodstamps.html.
42 Gini, Al, My Job, My Self: Work and the Creation of the Modern Individual, New York, Routledge, 2000, ix.
43 See for example Carolyn C. Perrucci, Robert Perrucci, Dena B. Targ, and Harry R. Targ, "Plant Closings: International Context and Social Costs," New York: Aldine de Gruyter, 1988; V. Lee Hamilton, Clifford L. Broman, William S. Hoffman, and Deborah S. Renner, "Hard Times and Vulnerable People: Initial Effects of Plant Closings on Autoworkers' Mental Health," Journal of Health and Social Behavior, Vol. 31 (June 1990), page 123140; Margaret W. Linn, Richard Sandifer, and Shanta Stein, "Effects of Unemployment on Mental and Physical Health," American Journal of Public Health 75:5 (May 1985), pages 502506, online www.ajph.org/cgi/reprint/75/502.pdf, July 11, 2008; and Ronald C. Kessler, James S. House, and J. Blake Turner, "Unemployment and Health in a Community Sample," Journal of Health and Social Behavior, March 28, 1987, pages 5159, among others.
44 Perrucci, et al, pages 91, 94.
45 Perrucci, et al, page 84.
46 Perrucci, et al, page 88; Hamilton et al, page 129.
47 Hamilton, et al, page 137.
48 Linn, Sandifer, and Stein, page 502.
49 Weissman, Deborah M., "The Personal is Political - and Economic: Rethinking Domestic Violence," Brigham Young Law Review 2007, online, findarticles.com, July 15, 2008.
50 Fox, Greer, Litton; Benson, Michael L.; DeMaris, Alfred A.; and Van Wyk, Judy, "Economic Distress and Intimate Violence: Testing Family Stress and Resources Theories," Journal of Marriage and Family 64 (August 2002), pages 793807, 803.
52 May and Morrison, page 261.
53 See Perrucci, et al, Kessler, House, and Turner; and Linn, Sandifer, and Stein. For a useful summary of a number of international studies correlating unemployment and health, see Colin D. Mathers and Deborah J. Schofield, "The Health Consequences of Unemployment: The Evidence," Medical Journal of Australia 168 (1998): 178182, online www.mja.com.au/public/issues/feb16/mathers/mathers.htm, July 11, 2008.
54 Brenner, M. H., "Estimating the Effects of Economic Change on National Health and Social WellBeing," Joint Economic Committee, U.S. Congress, Washington, D.C., 1984; Brenner, M.H., "Unemployment and Public Health in Countries of the European Union, European Commission," Director General for Employment and Industrial Relations and Social Affairs, Luxembourg, 2003.
55 Lewis County Public Health, "Health Impacts of Unemployment," January 30, 2007, online https://fortress.wa.gov/lewisco/home/Files/Departments/Public_Health/ docs/ TAreport.pdf, July 11, 2008.
56 EIR Economics Staff, "The Case of Baltimore: Deindustrialization Creates 'Death Zones,' " EIR, 6 January 6, 2006, 5.
57 Siegel, Bruce, "The Emergency Department: Rethinking the Safety Net for the Safety Net," Health Affairs, March 24, 2004, online http://content.healthaffairs. org/cgi/reprint/ hlthaff.w4.146v1, July 14, 2008. See also Janice Billingsley, "Public Hospitals in Poor Suburbs Closing Doors," PharmDaily (2005), online, www.pharmdaily.com, July 11, 2008.
59 Russo, John, "New Directions in the Construction Industry in Northeastern Ohio," Report for the Builders Association in Northeast Ohio and Western Pennsylvania and Western Reserve Building Trades Association, 1994.
60 Bernstein, Michel, and Allegretto, pages 168171.
61 Uchitelle, Louis, The Disposable American: Layoffs and Their Consequences, New York, Knopf, 2006, page 46.
62 Mishel, Berstein, and Allegretto, pages 168171.
63 Moore, Jeanie, "The Rebirth of Kannapolis," in testimony before the House Science and Technology subcommittee on investigation and oversight, Washington, D.C., June 24, 2008.
65 Russo, John, in testimony before the House Science and Technology subcommittee on investigation and oversight, Washington, D.C., June 24, 2008.
66 O'Hara, page 231.
67 Self, Robert O., California's Industrial Garden: Oakland and the East Bay in the Age of Deindustrialization, in Cowie and Heathcott, page 179.
68 Friedman, pages 3335.
69 Nightly Business Report, Miami: Community Television Foundation of South Florida, July 10, 1998.
70 Shaiken, Harley, "Unions, the Economy, and Employee Free Choice," EPI Briefing Paper 181, February 22, 2007.
71 Honeck, Jon, "Occupational Shortages in Healthcare and Manufacturing: A Report from Ohio Policy Matters," July 3, 2008, online, www.policymattersohio/occupationalshortages2008.htm, July 9, 2008.
72 Bellah, Robert N., et al., Habits of the Heart: Individualism and Commitment in American Life, Berkeley, University of California Press, 1985, page 153.
73 Putnam, Robert D.; Feldstein, Lewis; and Cohen., Donald J., Better Together: Restoring the American Community, Simon & Schuster, 2003.
74 Hayden, Dolores, The Power of Place: Urban Landscapes as Public History, Cambridge, MIT Press, 1996, page 20.
75 Curtis, page 108.
76 Curtis, pages 107, 111.
77 Curtis, page 106.
78 Friedman, page 34.
79 See Lorlene Hoyt and Andre Leroux, "Voices from Forgotten Cities: Innovative Revitalization Coalitions in America's Older Small Cities," PolicyLink, CHAPA and MIT School of Architecture and Planning, 2007.
80 O'Hara, page 221.
81 Williamson, Michael, quoted in Linkon and Russo, page 160.
82 Wiggins, Ovetta, "A Rural PA Township Seeks Out a 3rd Prison," Philadelphia Inquirer, January 21, 2001, online, www.lexisnexus.com, July 9, 2008.
83 Linkon and Russo, pages 234236.
84 Greg LeRoy, The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation, BartlettKohler Publishers Inc., San Francisco, 2005.
85 Self, page 161.
86 Hoyt and Leroux, page 8.
87 Morrison, Hunter, telephone interview, July 16, 2008.
88 "The Plan," Youngstown 2010, online www.Youngstown2010.com/plan/plan.htm, July 22, 2008.
89 Lanks, Belinda, "Creative Shrinking," New York Times, December 10, 2006, online, www.nytimes.com/2006/12/10/magazine/10sectionB.t3.html, July 21, 2008.
90 "Cleveland is the Poorest Big City in U.S.," Associated Press, September 24, 2004.
91 Price, Rita; Ferenchik, Mark, "Suburbs Share in Suffering," The Columbus Dispatch, June 1, 2008.
92 Greenhouse, Steven, The Big Squeeze: Tough Times for American Workers, New York: Knopf, 2008, page 203.
93 Greenhouse, page 203.
94 Greenhouse, page 210.
95 Galston, William, "How Big Government Got Its Groove Back," American Prospect, June 9, 2008, online, www.prospect.org, July 21, 2008.
April 19, 2011 | Economist's ViewLarge firms are moving jobs to other countries:Big U.S. Firms Shift Hiring Abroad, by David Wessel, Commentary, WSJ: U.S. multinational corporations, the big brand-name companies that employ a fifth of all American workers, have been hiring abroad while cutting back at home, sharpening the debate over globalization's effect on the U.S. economy.pThe companies cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million, new data from the U.S. Commerce Department show. That's a big switch from the 1990s, when they added jobs everywhere... [graph]
pThe data ... underscore the vulnerability of the U.S. economy, particularly at a time when unemployment is high and wages aren't rising. Jobs at multinationals tend to pay above-average wages and, for decades, sustained the American middle class. ...pWhile small, young companies are vital to U.S. economic growth, big multinationals remain a major force. A report by McKinsey Global Institute ... estimates that multinationals account for 23% of the nation's private-sector output and 48% of its exports of goods.pThese companies are more exposed to global competition than many smaller ones, but also more capable of taking advantage of globalization by shifting production, and thus can be a harbinger of things to come. ...
The manipulation of data in order to spin the economic situation in this country in the best light possible has become so blatant that only the most ignorant could possibly believe it. The corporate mainstream media dutifully reports the propaganda, without ever critically assessing what is being distributed by the government. The percentage of the American working population in the workforce consistently ranged between 66% and 67% from 1998 through 2008.
Then, suddenly in 2008, after the economy went in the tank, a couple million Americans found better things to do with their spare time and left the workforce. Anyone with an ounce of brains knows these people gave up and are really unemployed. The percentage of people in the labor force should be 66.5%. Using this 20 year average would add 5.5 million people to the civilian labor force and the unemployment rolls. This exercise in reality gives a real unemployment rate of 12%. The true picture of the American economy is that in 2007 there were 146 million Americans employed, or 63% of the working age population.
Today, there are 139.9 million Americans employed, or 58.5% of the working age population. Over this time frame, an additional 7.1 million Americans entered the working age population. In 2007 there were 26.3 million Americans on food stamps, or 8.6% of the US population. Today there are 44.2 million Americans on food stamps, or 14.3% of the US population. To call the current economic disaster a recovery is to practice the art of the Big Lie.
Aside on Labor Utilization: From the March 17, 2011 IAS 107 Lecture, by Brad DeLong: The current seasonally adjusted unemployment rate in the United States is 8.9%. However, not 8.9% but 9.5% of those interviewed by the Bureau of Labor Statistics in the second week of February who were either at work or actively looking for work said that they were looking for work and had no job. But the Bureau of Labor Statistics calculates that for the March unemployment release, unemployment is 0.6 percentage points higher than in an average month because February is a slack month.... ... ...
The fact that the unemployment rate kissed 10% at the end of 2009 and since then has declined back down to 8.9% seems like good news. ... But the unemployment rate has not fallen because the share of American adults with jobs has increased. The share of American adults with jobs today at 58.4% is actually less than the 58.5% of Americans who had jobs when the unemployment rate kissed 10%.
What is happening? If no greater fraction of people are working, why is it that the unemployment rate has been going down? Unemployment rate has been going down because people have been dropping out of the labor force. ...
This does not mean that they are doing nothing at all: they are, for the most part, not spending all day watching reality TV auction shows or playing World of Warcraft 24/7.
Most of them are occupied, but occupied doing things that they value less than having a job and earning the money. If you think, as I do, that the employment population ratio is probably a better guide to the health of the labor market and to the extent at which the American economy is working up to its economic potential, we have not seen any improvement in the labor market over the past 15 odd months. The labor market is still as bad as it was back then.
Min:Mark Thoma: "No matter the cause, we've dropped the ball on the unemployment problem (and have yet to pick it up)."kievite
It's over there, under that pile of Republicans.It might make sense to view "that pile of Republicans" as just a new USSR-style nomenklatura. They can't be dislodged and do not have any viable solutions to the structural problems; they just want to kick the can down the road decimating middle class and putting lower class in abject poverty ("Wall Mart people" already are close to abject poverty).
This all reminds me structural problems that the USSR faced before its dissolution with the same politically powerful military industrial complex and complete grip of nomenklatura on political life, stagnant demand and slow demographic growth.
Oil above $100 just icing on the cake
Co-opting of tea party by "nomenklatura" makes political landscape pretty flat.
So kicking the can down the road and decimating middle class via stagnant or declining wages looks the most plausible scenario. That requires persistent high unemployment and in turn support it making it permanent. Protests will be suppressed.
Actually high stagnant unemployment is not a new feature: it existed before in certain (for example "under outsourcing") sectors for a decade or so but was hidden by growth of construction, finance and "Mac jobs" sectors.
Why doesn't Washington care about the unemployed?:
March 18, 2011
The Forgotten Millions, by Paul Krugman, Commentary, NY Times: More than three years after we entered the worst economic slump since the 1930s, a strange and disturbing thing has happened to our political discourse: Washington has lost interest in the unemployed. ...
So one-sixth of America's workers - all those who can't find any job or are stuck with part-time work when they want a full-time job - have, in effect, been abandoned..., we're well on the way to creating a permanent underclass of the jobless.
Why doesn't Washington care? ... At this point,... polls indicate that voters still care much more about jobs than they do about the budget deficit. So it's quite remarkable that inside the Beltway, it's just the opposite.
What makes this even more remarkable is the fact that the economic arguments used to justify the D.C. deficit obsession have been repeatedly refuted by experience.
On one side, we've been warned, over and over again, that "bond vigilantes" will turn on the U.S. government unless we slash spending immediately. Yet interest rates remain low by historical standards...
On the other side, we've been assured that spending cuts would do wonders for business confidence. But that hasn't happened in any of the countries currently pursuing harsh austerity programs. ... Yet the obsession with spending cuts flourishes all the same - unchallenged, it must be said, by the White House.
I still don't know why the Obama administration was so quick to accept defeat in the war of ideas, but the fact is that it surrendered very early in the game. In early 2009, John Boehner ... was widely and rightly mocked for declaring that since families were suffering, the government should tighten its own belt. That's Herbert Hoover economics, and it's as wrong now as it was in the 1930s. But, in the 2010 State of the Union address, President Obama adopted exactly the same metaphor and began using it incessantly.
And earlier this week, the White House budget director declared: "There is an agreement that we should be reducing spending"... No wonder, then, that according to a new Pew Research Center poll, a majority of Americans see "not much difference" between Mr. Obama's approach to the deficit and that of Republicans.
So who pays the price for this unfortunate bipartisanship? The increasingly hopeless unemployed, of course. And the worst hit will be young workers -... young Americans who graduated during the severe recession of the early 1980s suffered permanent damage to their earnings. ...
So the next time you hear some Republican declaring that he's concerned about deficits because he cares about his children - or, for that matter, the next time you hear Mr. Obama talk about winning the future - you should remember that the clear and present danger to the prospects of young Americans isn't the deficit. It's the absence of jobs.
But, as I said, these days Washington doesn't seem to care about any of that. And you have to wonder what it will take to get politicians caring again about America's forgotten millions.
Mish's Global Economic Trend Analysis
There are no real jobs because no one is producing real goods anymore. Everyone is engaged in various kinds of speculations, or "investments"...money chasing money, piggy-backed on other money chasing money.
Banks don't need money because they aren't lending. Businesses don't need money except for silly games like LBOs and mergers. No one is expnding capacity: there's no reason to do so.
Think about our "investments": all they are is short-term money speculating on price rises or money collecting a tiny income stream which is itself an "investment" ~ a bet! ~ on some other stock or bond. Many of our investment returns are dependent on someone, somewhere, paying back borrowed money. Take a bond fund, for example: our returns are all derived from some other income stream which depends on some guy (a homeowner, perhaps, or a taxpayer or a company?) paying back on time. Even NetFlix or Amazon, etc., stock dividends are dependent not on production, but on consumption: how many people buy their junk. Other stocks are just bets on price... No actual goods being produced anywhere down the chain...
Nothing is being expanded. Not even the unproductive and useless retail-service sectors are building capacity. Where is the increased wealth to come from?
They say this is a "financial crisis". Some say this is an "economic crisis". Others think there is "not enough money". Print, print. Lower taxes. Spend more. Keynesians only want to increase demand, as if that alone would produce wealth. But I don't see anyone actively sourcing raw materials, building something, mining or farming or fishing something...
Deep down, this crisis is one of PRODUCTIVITY, or lack of it...or more likely it is a crisis of resource scarcity. No wonder that, even if "jobs" can be created, REAL PERSONAL WEALTH will continue to decline.
"There are no real jobs because no one is producing real goods anymore."
TaxHaven, you are right. I was reading a story about Toyota plants in the United States that may have to shut down temporarily because of the parts shortages from the earthquake. I was shocked to hear that Toyota employs 25,000 people in the USA!! That is a lot of jobs.
I though to myself "Who were the g*d damn idiots who think we don't need a vibrant manufacturing base in this country?"
There's plenty of production taking place. Are people starving? No. Are they having to bicycle instead of driving a car? No. Its proof that the problem we are facing is NOT production.
From a capitalist perspective it is a problem with production because for capitalism to work it has to produce more and more and MORE! Capitalism isn't working. Production, however is not falling short in all but the most primitive economies. Slowly declining maybe by virtue of there being too little purchasing power to maintain the 2007 or so levels.
An economy hums along nicely when there is sufficient purchasing power extant in the economy. When there is a lack of it the economy sputters and even stops. Its the closest thing to a universal solvent as there is in economics. Its all about purchasing power and macro-economically balancing the economy. Think citizen's dividend and compensated retail discount. You can still have free enterprise, private property and profit with those. Oh sure you'll need to severely curb speculation (but not all speculation), but wouldn't you rather speculate on productive things rather than have to roll the dice on CDS, the yen, the dollar and the Euro? Wouldn't you like to enable the individual to be in control of who stays in business with their sufficient extortion free purchasing power vote (i.e. who they want to purchase from) instead of having the TBTF Banks, too big producers and too big government making those decisions? Of course you would. So lets craft a system which makes that possibility a reality.
March 20, 2011 | naked capitalism
Very good post. Thank you.
Over the past three decades, large parts of our culture here in the US have internalized the lessons of the new Social Darwinism, with a significant body of literature to explain and justify it. Many of us have internalized, without even realizing it, the ideas of "dog eat dog", "every man for himself", "society should be structured like the animal kingdom, where the weak and sick simply die because they cannot compete, and this is healthy", and "everything that happens to you is your own fault. There is no such thing as circumstance that cannot be overcome, and certainly no birth lottery."
The levers pulled by politicians and the Fed put these things into practice, but even if we managed get different (better) politicians or Fed chairmen, ones who weren't steeped in this culture and ideology, we'd still be left with the culture in the population at large, and things like the "unemployed stigma" are likely to die very, very hard. Acceptance of the "just-world phenomenon" here in the US runs deep.
"Religion is just as vulnerable to corporate capture as is the government or the academy."
This is rather rhetorical statement, and wrong one. One need to discern spiritual aspect of religion from the religion as a tool.
Religion, as is structured, is complicit: in impoverishment, obedience, people's preconditioning, and legislative enabler in the institutions such as Supreme – and non-supreme – Court(s). It is a form of PR of the ruling class for the governing class.
Religion, just like human nature, is not that easy to put in a box.
For every example you can cite where religion "is complicit: in empoverishment, obedience, people's preconditioning, and legislative enabler in the institution," I can point to an example of where religion engendered a liberating, emancipatory and revolutionary spirit.
•Early Christianity •Nominalism •Early Protestantism •Gandhi •Martin Luther King
Now granted, there don't seem to be any recent examples of this of any note, unless we consider Chris Hedges a religionist, which I'm not sure we can do. Would it be appropriate to consider Hedges a religionist?
Yes, that maybe, just maybe be the case in early stages of forming new religion(s). In case of Christianity old rulers from Rome were trying to save own head/throne and the S.P.Q.R. imperia by adopting new religion.
You use examples of Gandhi and MLK which is highly questionable both were fighters for independence and the second, civil rights. In a word: not members of establishment just as I said there were (probably) seeing the religion as spiritual force not tool of enslavement.
This link may provide some context:
In particular, there seems to be an extremely popular variant of the above where the starting proposition "God makes moral people rich" is improperly converted to "Rich people are more moral" which is then readily negated to "Poor people are immoral" and then expanded to "Poor people are immoral, thus they DESERVE to suffer for it". It's essentially the theological equivalent of dividing by zero…
Poll after poll after poll has shown that a majority of Americans, and a rather significant majority, reject the values, attitudes, beliefs and opinions proselytized by the stealth religion we call "neoclassical economics."
That said, the ranks of the neoclassicists are not small. They constitute what Jonathan Schell calls a "mass minority." I suspect the neoclassicists have about the same level of popular support that the Nazis did at the time of their takeover of Germany in 1932, or the Bolsheviks had in Russia at the time of their takeover in 1917, which is about 20 or 25% of the total population.
The ranks of the neoclassicists are made to appear far greater than they really are because they have all but exclusive access to the nation's megaphone. The Tea Party can muster a handful of people to disrupt a town hall meeting and it gets coast to coast, primetime coverage. But let a million people protest against bank bailouts, and it is ignored. Thus, by manipulation of the media, the mass minority is made to appear to be much larger than it really is.
The politicians love this, because as they carry water for their pet corporations, they can point to the Tea Partiers and say: "See what a huge upwelling of popular support I am responding to."
Well, if that's true, then the unemployed are employable but the mass mediated mentality would like them to believe they are literally and inherently unemployable so that they underestimate and under-sell themselves.
This is as much to the benefit of those who would like to pick up "damaged goods" on the cheap as those who promote the unemployment problem as one that inheres in prospective employees rather than one that is a byproduct of a bad job market lest someone be tempted to think we should address it politically.
That's where I see this blame the unemployed finger pointing really getting traction these days.
I apologize for the fact that I only read the first few paragraphs of this before quitting in disgust.
I just can no longer abide the notion that "labor" can ever be seen by human beings as a "cost" at all. We really need to refuse to even tolerate that way of phrasing things. Workers create all wealth. Parasites have no right to exist. These are facts, and we should refuse to let argument range beyond them.
The only purpose of civilization is to provide a better way of living and for all people. This includes the right and full opportunity to work and manage for oneself and/or as a cooperative group. If civilization doesn't do that, we're better off without it.
I am one of those long term unemployed.
I suppose my biggest employment claim would be as some sort of IT techie, with numerous supply chain systems and component design, development, implementation, interfaces with other systems and ongoing support. CCNP certification and a history of techiedom going back to WEYCOS.
I have a patent (6,209,954) in my name and 12+ years of beating my head against the wall in an industry that buys compliance with the "there is no problem here, move on now" approach.
Hell, I was a junior woodchuck program administrator back in the early 70's working for the Office of the Governor of the state of Washington on CETA PSE or Public Service Employment. The office of the Governor ran the PSE program for 32 of the 39 counties in the state that were not big enough to run their own. I helped organize the project approval process in all those counties to hire folk at ( if memory serves me max of $833/mo.) to fix and expand parks and provide social and other government services as defined projects with end dates. If we didn't have the anti-public congress and other government leadership we have this could be a current component in a rational labor policy…but I digress.
I have experience in the construction trades mostly as carpenter but some electrical, plumbing, HVAC, etc. also.
So, of course there is some sort of character flaw that is keeping me and all those others from employment…..right. I may have more of an excuse than others, have paid into SS for 45 years but still would work if it was available…..taking work away from other who may need it more….why set up a society where we have to compete as such for mere existence???????
One more face to this rant. We need government by the people and for the people which we do not have now. Good, public focused, not corporate focused government is bigger than any entities that exist under its jurisdiction and is kept updated by required public participation in elections and potentially other things like military, peace corps, etc. in exchange for advanced education. I say this as someone who has worked at various levels in both the public and private sectors…there are ignorant and misguided folks everywhere. At least with ongoing active participation there is a chance that government would, once constructed, be able to evolve as needed within public focus….IMO.
Some people would say I have been unemployed for 10 years. In 2000 after losing the last of my four CFO gigs for public companies I found it necessary to start consulting. This has lead to two of my three biggest winning years. I am usually consulting on cutting edge area of my profession and many times have large staffs reporting to me that I bring on board to get jobs done. For several years I subcontacted to a large international consulting firm to clean up projects which went wrong. Let me give some insight here.
First, most good positions have gate keepers who are professional recruiters. It is near impossible to get by them and if you are unemployed they will hardly talk to you. One time talking to a recruiter at Korn Fery I was interviewing for a job I have done several times in an industry I have worked in several times. She made a statement that I had never worked at a well known company. I just about fell out of my chair laughing. At one time I was a senior level executive for the largest consulting firm in the world and lived on three continents and worked with companies on six. In addition, I had held senior positions for 2 fortune 500 firms and was the CFO for a company with $4.5 billion in revenue. I am well known at several PE firms and the founder of one of the largest mentioned in a meeting that one of his great mistakes was not investing in a very successful LBO (return of in excess of 20 multiple to investors in 18 months) I was the CFO for. In a word most recruiters are incompetent.
Second, most CEO's any more are just insecure politicians. One time during an interview I had a CEO asked me to talk about some accomplishments. I was not paying to much attention as I rattled off accomplishments and the CEO went nuclear and started yelling at me that he did not know where I thought I was going with this job but the only position above the CFO job was his and he was not going anywhere. I assured him I was only interested in the CFO position and not his, but I knew the job was over. Twice feed back that I got from recruiters which they took at criticism was the "client said I seemed very assured of myself."
Third, government, banking, business and the top MBA schools are based upon lying to move forward. I remember a top human resource executive telling me right before Enron, MCI and Sarbanes Oxley that I needed to learn to be more flexible. My response was that flexibility would get me an orange jump suit. Don't get me wrong, I have a wide grey zone, but it use to be in business the looked for people who could identify problems early and resolve them. Now days I see far more of a demand for people who can come up with PR spins to hide them. An attorney/treasurer consultant who partnered with me on a number of consulting jobs told me some one called me "not very charming." He said he asked what that meant, and the person who said that said, "Ish walks into a meeting and within 10 minutes he is asking about the 10,000 pound guerilla sitting in the room that no one wants to talk about." CEO do not want any challenges in their organization.
Fourth, three above has lead to the hiring of very young and inexperienced people at senior levels. These people are insecure and do not want more senior and experienced people above them and than has resulted in people older than 45 not finding positions.
Fifth, people are considered expendable and are fired for the lamest reasons anymore. A partner at one of the larger and more prestigious recruiting firms one time told me, "If you have a good consulting business, just stick with it. Our average placement does not last 18 months any more." Another well known recruiter in S. Cal. one time commented to me, "Your average consulting gig runs longer than our average placement."
With all of that said, I have a hard time understanding such statements as "@attempter "Workers create all wealth. Parasites have no right to exist." What does that mean? Every worker creates wealth. There is no difference in people. Sounds like communism to me. I make a good living and my net worth has grown working for myself. I have never had a consulting gig terminated by the client but I have terminated several. Usually, I am brought in to fix what several other people have failed at. I deliver basically intellectual properties to companies. Does that mean I am not a worker. I do not usually lift anything heavy or move equipment but I tell people what and where to do it so does that make me a parasite.
Those people who think everyone is equal and everyone deserves equal pay are fools or lazy. My rate is high, but what usually starts as short term projects usually run 6 months or more because companies find I can do so much more than what most of their staff can do and I am not a threat.
I would again like to have a senior challenging role at a decent size company but due to the reasons above will probably never get one. However, you can never tell. I am currently consulting for a midsize very profitable company (grew 400% last year) where I am twice the age of most people there, but everyone speaks to me with respect so you can never tell.
Ishmael, you're quite right. When I showed my Italian husband's resume to try and "network" in the US, my IT friends assumed he was lying about his skills and work history.
Contemporaneously, in Italy it is impossible to get a job because of incentives to hire "youth". Age discrimination is not illegal, so it's quite common to see ads that ask for a programmer under 30 with 5 years of experience in COBOL (the purple squirrel).
Some good points about the foolishness of recruiters, but a great deal of that foolishness is forced by the clients themselves. I used to be a recruiter myself, including at Korn Ferry in Southern California. I described the recruiting industry as "yet more proof that God hates poor people" because my job was to ignore resumes from people seeking jobs and instead "source" aka "poach" people who already had good jobs by dangling a higher salary in front of them. I didn't do it because I disparaged the unemployed, or because I could not do the basic analysis to show that a candidate had analogous or transferrable skills to the opening.
I did it because the client, as Yves said, wanted people who were literally in the same job description already. My theory is that the client wanted to have their ass covered in case the hire didn't work out, by being able to say that they looked perfect "on paper." The lesson I learned for myself and my friends looking for jobs was simple, if morally dubious. Basically, that if prospective employers are going to judge you based on a single piece of paper take full advantage of the fact that you get to write that piece of paper yourself.
Hosswire - I agree with your comment. There are poor recruiters like the one I sited but in general it is the clients fault. Fear of failure. All hires have at least a 50% chance of going sideways on you. Most companies do not even have the ability to look at a resume nor to interview. I did not mean to same nasty things about recruiters, and I even do it sometimes but mine.
I look at failure in a different light than most companies. You need to be continually experimenting and changing to survive as a company and there will be some failures. The goal is to control the cost of failures while looking for the big pay off on a winner.
As a former recruiter and HR "professional" (I use that term very loosely for obvious reasons), I can honestly say that you nailed it. Most big companies looking for mid to high level white collar "talent" will almost always take the perceived safest route by hiring those who look the best ON PAPER and in a suit and lack any real interviewing skills to find the real stars. What's almost comical is that companies almost always want to see the most linear resume possible because they want to see "job stability" (e.g. a CYA document in case the person fails in that job) when in many cases nobody cares about the long range view of the company anyway. My question was why should the candidate or employee care about the long range view if the employer clearly doesn't?
Manwhich another on point comment. Sometimes either interviewing for a job or consulting with a CEO it starts getting to the absurd. I see all the time the requirement for stability in a persons background. Hello, where have they been the last 15 years. In addition, the higher up you go the more likely you will be terminated sometime and that is especially true if you are hired from outside the orgnanization. Companies want loyalty from an employee but offer none in return.
The average tenure for a CFO anymore is something around 18 months. I have been a first party participant (more than once) where I went through an endless recruiting process for a company (lasting more than 6 months) they final hire some one and that person is with the company for 3 months and then resigns (of course we all know it is through mutual agreement).
The real problem has become and maybe this is what you are referring to is the "Crony Capitalism." We have lost control of our financial situation. Basically, PE is not the gods of the universe that everyone thinks they are. However, every bankers secret wet dream is to become a private equity guy. Accordingly, bankers make ridiculous loans to PE because if you say no to them then you can not play in their sand box any more. Since the govt will not let the banks go bankrupt like they should then this charade continues inslaving everyone.
This country as well as many others has a large percentage of its assets tied up in over priced deals that the bankers/governments will not let collapse while the blood sucking vampires suck the life out of the assets.
On the other hand, govt is not the answer. Govt is too large and accomplishes too little.
kevin de bruxelles:
The harsh reality is that, at least in the first few rounds, companies kick to the curb their weakest links and perceived slackers. Therefore when it comes time to hire again, they are loath to go sloppy seconds on what they perceive to be some other company's rejects. They would much rather hire someone who survived the layoffs working in a similar position in a similar company. Of course the hiring company is going to have to pay for this privilege. Although not totally reliable, the fact that someone survived the layoffs provides a form social proof for their workplace abilities.
On the macro level, labor has been under attack for thirty years by off shoring and third world immigration. It is no surprise that since the working classes have been severely undermined that the middle classes would start to feel some pressure. By mass immigration and off-shoring are strongly supported by both parties. Only when the pain gets strong enough will enough people rebel and these two policies will be overturned. We still have a few years to go before this happens.
Let's say I run a factory. I produce cars and it requires very skilled work. Skilled welding, skilled machinists. Now I introduce some robotic welders and an assembly line system. The plants productivity improves and the jobs actually get easier. They require less skill, in fact I've simplified each task to something any idiot can do. Would wages go up or down? Are the workers really contributing to that increase in productivity or is it the machines and methods I created?
Lets say you think laying off or cutting the wages of my existing workers is wrong. What happens when a new entrant into the business employs a smaller workforce and lower wages, which they can do using the same technology? The new workers don't feel like they were cut down in any way, they are just happy to have a job. Before they couldn't get a job at the old plant because they lacked the skill, but now they can work in the new plant because the work is genuinely easier. Won't I go out of business?
I am 54 and have a ton of peers who are former white collar workers and professionals (project managers, architects, lighting designers, wholesalers and sales reps for industrial and construction materials and equipment) now out of work going on three years.
Now I say out of work, I mean out of our trained and experienced fields. We now work two or three gigs (waiting tables, mowing lawns, doing free lance, working in tourism, truck driving, moving company and fedex ups workers) and work HARD, for much much less than we did, and we are seeing the few jobs that are coming back on line going to younger workers.
It is just the reality. And for most of us the descent has not been graceful, so our credit is a wreck, which also breeds a whole other level of issues as now it is common for the credit record to be a deal breaker for employment, housing, etc.
Strangely I don't sense a lot of anger or bitterness as much as humility. And gratitude for ANY work that comes our way.
Health insurance? Retirement accounts? not so much.
Yves and I have disagreed on how extensive the postwar "pact" between management and labor was in this country. But if you drew a line from say, Trenton-Patterson, NJ to Cincinatti, OH to Minneapolis, MN, north and east of it where blue collar manufacturing in steel, rubber, auto, machinery, etc., predominated, this "pact" may have existed but ONLY because physical plant and production were concentrated there and workers could STOP production. Outside of these heavy industrial pockets, unions were not always viewed favorably. As one moved into the rural hinterlands surrounding them there was jealously and/or outright hostility. Elsewhere, especially in the South "unions" were the exception not the rule. The differences between NE Ohio before 1975 – line from Youngstown to Toledo – and the rest of the state exemplified this pattern. Even today, the NE counties of Ohio are traditional Democratic strongholds with the rest of the state largely Republican. And I suspect this pattern existed elsewhere. But it is changing too…
In any case, the demonization of the unemployed is just one notch above the vicious demonization of the poor that has always existed in this country. It's a constant reminder for those still working that you could be next – cast out into the darkness – because you "failed" or worse yet, SINNED. This internalization of the "inner cop" reinforces the dominant ideology in two ways. First, it makes any resistance by individuals still employed less likely. Second, it pits those still working against those who aren't, both of which work against the formation of any significant class consciousness amongst working people. The "oppressed" very often internalize the value system of the oppressor.
As a nation of immigrants ETHNICITY may have more explanatory power than CLASS. For increasingly, it would appear that the dominant ethnic group – suburban, white, European Americans – have thrown their lot in with corporate America. Scared of the prospect of downward social mobility and constantly reminded of URBAN America – the other America – this group is trapped with nowhere to else to go.
It's the divide and conquer strategy employed by ruling elites in this country since its founding [Federalist #10] with the Know Nothings, blaming the Irish [NINA - no Irish need apply] and playing off each successive wave of immigrants against the next. Only when the forces of production became concentrated in the urban industrial enclaves of the North was this strategy less effective. And even then internal immigration by Blacks to the North in search of employment blunted the formation of class consciousness among white ethnic industrial workers.
Wherever the postwar "pact of domination" between unions and management held sway, once physical plant was relocated elsewhere [SOUTH] and eventually offshored, unemployment began to trend upwards. First it was the "rustbelt" now it's a nationwide phenomenon. Needless to say, the "pact" between labor and management has been consigned to the dustbin of history.
White, suburban America has hitched its wagon to that of the corporate horse. Demonization of the unemployed coupled with demonization of the poor only serve to terrorize this ethnic group into acquiescence. And as the workplace becomes a multicultural matrix this ethnic group is constantly reminded of its perilous state. Until this increasingly atomized ethnic group breaks with corporate America once and for all, it's unlikely that the most debilitating scourge of all working people – UNEMPLOYMENT – will be addressed.
Make no mistake about it, involuntary UNEMPLOYMENT/UNDEREMPLYEMT is a form of terrorism and its demonization is terrorism in action. This "quiet violence" is psychological and the intimidation wrought by unemployment and/or the threat of it is intended to dehumanize individuals subjected to it. Much like spousal abuse, the emotional and psychological effects are experienced way before any physical violence. It's the inner cop that makes overt repression unnecessary. We terrorize ourselves into submission without even knowing it because we accept it or come to tolerate it. So long as we accept "unemployment" as an inevitable consequence of progress, as something unfortunate but inevitable, we will continue to travel down the road to serfdom where ARBEIT MACHT FREI!
FULL and GAINFUL EMPLOYMENT are the ultimate labor power.
It's delicate since direct age discrimination is illegal, but when circumstances permit separating older workers they have a very tough time getting back into the workforce in an era of high health care inflation. Older folks consume more health care and if you are hiring from a huge surplus of available workers it isn't hard to steer around the more experienced. And nobody gets younger, so when you don't get job A and go for job B 2 weeks later you, you're older still!
Yves said- "This overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people with the right skills"
In the IT job markets such postings are often called purple squirrels. The HR departments require the applicant to be expert in a dozen programming languages. This is an excuse to hire a foreigner on a temp h1-b or other visa.
Most people aren't aware that this model dominates the sciences. Politicians scream we have a shortage of scientists, yet it seems we only have a shortage of cheap easily exploitable labor. The economist recently pointed out the glut of scientists that currently exists in the USA.
This understates the problem. The majority of PhD recipients wander through years of postdocs only to end up eventually changing fields. My observation is that the top ten schools in biochem/chemistry/physics/ biology produce enough scientists to satisfy the national demand.
The exemption from h1-b visa caps for academic institutions exacerbates the problem, providing academics with almost unlimited access to labor.
The pharmaceutical sector has been decimated over the last ten years with tens of thousands of scientists/ factory workers looking for re-training in a dwindling pool of jobs(most of which will deem you overqualified.)
I wonder how the demonization of the unemployed can be so strong even in the face of close to 10% unemployment/20% underemployment. It's easy and tempting to demonize an abstract young buck or Cadillac-driving welfare queen, but when a family member or a close friend loses a job, or your kids are stuck at your place because they can't find one, shouldn't that alter your perceptions? Of course the tendency will be to blame it all on the government, but there has to be a limit to that in hard-hit places like Ohio, Colorado, or Arizona. And yet, the dynamics aren't changing or even getting worse. Maybe Wisconsin marks a turning point, I certainly hope it does
It's more than just stupid recruiting, this stigma. Having got out when the getting was good, years ago, I know that any corporate functionary would be insane to hire me now. Socialization wears off, the deformation process reverses, and the ritual and shibboleths become a joke. Even before I bailed I became a huge pain in the ass as economic exigency receded, every bosses nightmare. I suffered fools less gladly and did the right thing out of sheer anarchic malice.
You really can't maintain corporate culture without existential fear – not just, "Uh oh, I'm gonna get fired," fear, but a visceral feeling that you do not exist without a job. In properly indoctrinated workers that feeling is divorced from economic necessity. So anyone who's survived outside a while is bound to be suspect. That's a sign of economic security, and security of any sort undermines social control.
You hit the proverbial nail with that reply. (Although, sorry, doing the right thing should not be done out of malice) The real fit has to be in the corporate yes-man culture (malleable ass kisser) to be suited for any executive position and beyond that it is the willingness to be manipulated and drained to be able to keep a job in lower echelon.
This is the new age of evolution in the work place. The class wars will make it more of an eventual revolution, but it is coming. The unemployment rate (the actual one, not the Government one) globalization and off shore hiring are not sustainable for much longer.
Something has to give, but it is more likely to snap then to come easily. People who are made to be repressed and down and out eventually find the courage to fight back and by then, it is usually not with words.
down and out in Slicon Valley:
This is the response I got from a recruiter:
"I'm going to be overly honest with you. My firm doesn't allow me to submit any candidate who hasn't worked in 6-12 months or more. Recruiting brokers are probably all similar in that way…. You are going to have to go through a connection/relationship you have with a colleague, co-worker, past manager or friend to get your next job….that's my advice for you. Best of luck "
I'm 56 years old with MSEE. Gained 20+ years of experience at the best of the best (TRW, Nortel, Microsoft), have been issued a patent.
Where do I sign up to gain skills required to find a job now?
Litton Graft :
"Best of the Best?" I know you're down now, but looking back at these Gov'mint contractors you've enjoyed the best socialism money can by.
Nortel/TRW bills/(ed) the Guvmint at 2x, 3x your salary, you can ride this for decades. At the same time the Inc is attached to the Guvmint ATM localities/counties are giving them a red carpet of total freedom from taxation. Double subsidies.
I've worked many years at the big boy bandits, and there is no delusion in my mind that almost anyone, can do what I do and get paid 100K+. I've never understood the mindset of some folks who work in the Wermacht Inc: "Well, someone has to do this work" or worse "What we do, no one else can do" The reason no one else "can do it" is that they are not allowed to. So, we steal from the poor to build fighter jets, write code or network an agency.
I used to work as a recruiter and can tell you that I only parroted the things my clients told me. I wanted to get you hired, because I was lazy and didn't want to have to talk to someone else next.
So what do you do? To place you that recruiter needs to see on a piece of paper that you are currently working? Maybe get an email or phone call from someone who will vouch for your employment history.
That should not be that hard to make happen.
Francois T :
The "bizarre way that companies now spec jobs" is essentially a coded way for mediocre managers to say without saying so explicitly that "we can afford to be extremely picky, and by God, we shall do so no matter what, because we can!"
Of course, when comes the time to hire back because, oh disaster! business is picking up again, (I'm barely caricaturing here; some managers become despondent when they realize that workers regain a bit of the higher ground; loss of power does that to lesser beings) the same idiots who designed those "overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people with the right skills" are thrown into a tailspin of despair and misery. Instead of figuring out something as simple as "if demand is better, so will our business", they can't see anything else than the (eeeek!) cost of hiring workers. Unable to break their mental corset of penny-pincher, they fail to realize that lack of qualified workers will prevent them to execute well to begin with.
And guess what: qualified workers cost money, qualified workers urgently needed cost much more.
This managerial attitude must be another factor that explain why entrepreneurship and the formation of small businesses is on the decline in the US (contrary to the confabulations of the US officialdumb and the chattering class) while rising in Europe and India/China.
If you are 55-60, worked as a professional (ie, engineering say) and are now unemployed you are dead meat. Sorry to be blunt but thats the way it is in the US today. Let me repeat that : Dead Meat.
I was terminated at age 59, found absolutely NOTHING even though my qualifications were outstanding. Fortunately, my company had an old style pension plan which I was able to qualify for (at age 62 without reduced benefits). So for the next 2+ years my wife and I survived on unemployment insurance, severance, accumulated vacation pay and odd jobs. Not nice – actually, a living hell.
At age 62, I applied for my pension, early social security, sold our old house (at a good profit) just before the RE crash, moved back to our home state. Then my wife qualified for social security also. Our total income is now well above the US median.
Today, someone looking at us would think we were the typical corporate retiree. We surely don't let on any differently but the experience (to get to this point) almost killed us.
I sympathize very strongly with the millions caught in this unemployment death spiral. I wish I had an answer but I just don't. We were very lucky to survive intact.
Thank you Yves for your excellent post, and for bringing to light this crucial issue.
Thank you to all the bloggers, who add to the richness of the this discussion.
I wonder if you could comment on this Yves, and correct me if I am wrong…I believe that the power of labor was sapped by the massive available supply of global labor. The favorable economic policies enacted by China (both official and unofficial), and trade negotiations between the US government and the Chinese government were critical to creating the massive supply of labor.
Thank you. No rush of course.
There are some odd comments and notions here that are used to support dogma and positions of prejudice. The world can be viewed in a number of ways. Firstly from a highly individualised and personal perspective – that is what has happened to me and here are my experiences. Or alternatively the world can be viewed from a broader societal perspective.
In the context of labour there has always been an unequal confrontation between those that control capital and those that offer their labour, contrary to some of the views exposed here – Marx was a first and foremost a political economist. The political economist seeks to understand the interplay of production, supply, the state and institutions like the media. Modern day economics branched off from political economy and has little value in explaining the real world as the complexity of the world has been reduced to a simplistic rationalistic model of human behaviour underpinned by other equally simplistic notions of 'supply and demand', which are in turn represented by mathematical models, which in themselves are complex but merely represent what is a simplistic view of the way the world operates. This dogmatic thinking has avoided the need to create an underpinning epistemology. This in turn underpins the notion of free choice and individualism which in itself is an illusion as it ignores the operation of the modern state and the exercise of power and influence within society.
It was stated in one of the comments that the use of capital (machines, robotics, CAD design, etc.) de-skills. This is hardly the case as skills rise for those that remain and support highly automated/continuous production factories. This is symptomatic of the owners of capital wanting to extract the maximum value for labor and this is done via the substitution of labor for capital making the labor that remains to run factories highly productive thus eliminating low skill jobs that have been picked up via services (people move into non productive low skilled occupations warehousing and retail distribution, fast food outlets, etc). Of course the worker does not realize the additional value of his or her labor as this is expropriated for the shareholders (including management as shareholders).
The issue of the US is that since the end of WW2 it is not the industrialists that have called the shots and made investments it is the financial calculus of the investment banker (Finance Capital). Other comments have tried to ignore the existence of the elites in society – I would suggest that you read C.W.Mills – The Power Elites as an analysis of how power is exercised in the US – it is not through the will of the people.
For Finance capital investments are not made on the basis of value add, or contribution through product innovation and the exchange of goods but on basis of the lowest cost inputs. Consequently, the 'elites' that make investment decisions, as they control all forms of capital seek to gain access to the cheapest cost inputs. The reality is that the US worker (a pool of 150m) is now part of a global labor pool of a couple of billion that now includes India and China. This means that the elites, US transnational corporations for instance, can access both cheaper labor pools, relocate capital and avoid worker protection (health and safety is not a concern). The strategies of moving factories via off-shoring (over 40,000 US factories closed or relocated) and out-sourcing/in-sourcing labor is also a representations of this.
The consequence for the US is that the need for domestic labor has diminished and been substituted by cheap labor to extract the arbitrage between US labor rates and those of Chinese and Indians. Ironically, in this context capital has become too successful as the mode of consumption in the US shifted from workers that were notionally the people that created the goods, earned wages and then purchased the goods they created to a new model where the worker was substituted by the consumer underpinned by cheap debt and low cost imports – it is illustrative to note that real wages have not increased in the US since the early 1970's while at the same time debt has steadily increased to underpin the illusion of wealth – the 'borrow today and pay tomorrow' mode of capitalist operation. This model of operation is now broken. The labor force is now being demonized as there is a now surplus of labor and a need to drive down labor rates through changes in legislation and austerity programs to meet those of the emerging Chinese and Indian middle class so workers rights need to be broken. Once this is done a process of in-source may take place as US labor costs will be on par with overseas labor pools.
It is ironic that during the Regan administration a number of strategic thinkers saw the threat from emerging economies and the danger of Finance Capital and created 'Project Socrates' that would have sought to re-orientate the US economy from one that was based on the rationale of Finance Capital to one that focused in productive innovation which entailed an alignment of capital investment, research and training to product innovative goods. Of course this was ignored and the rest is history. The race to the lowest input cost is ultimately self defeating as it is clear that the economy de-industrializes through labor and capital changes and living standards collapse. The elites – bankers, US transnational corporations, media, industrial military complex and the politicians don't care as they make money either way and this way you get other people overseas to work cheap for you.
Neoliberal orthodoxy treats unemployment as well as wage suppression as a necessary means to fight "inflation." If there was too much power in the hands of organized labor, inflationary pressures would spiral out of control as supply of goods cannot keep up with demand.
It also treats the printing press as a necessary means to fight "deflation."
So our present scenario: widespread unemployment along with QE to infinity, food stamps for all, is exactly what you'd expect.
The problem with this orthodoxy is that it assumes unlimited growth on a planet with finite resources, particularly oil and energy. Growth is not going to solve unemployment or wages, because we are bumping up against limits to growth.
There are only two solutions.
- One is tax the rich and capital gains, slow growth, and reinvest the surplus into jobs/skills programs, mostly to maintain existing infrastructure or build new energy infrastructure. Even liberals like Krugman skirt around this, because they aren't willing to accept that we have the reached the end of growth and we need radical redistribution measures.
- The other solution is genuine classical liberalism / libertarianism, along the lines of Austrian thought. Return to sound money, and let the deflation naturally take care of the imbalances. Yes, it would be wrenching, but it would likely be wrenching for everybody, making it fair in a universal sense.
Neither of these options is palatable to the elite classes, the financiers of Wall Street, or the leeches and bureaucrats of D.C. So this whole experiment called America will fail.
Jobs jobs jobs is meaningless. It's wages wages wages. .
As CR has said before, everything hinges on jobs.
If they don't get this thing moving, there's going to be big trouble ahead, especially if there's another downturn.
Which is appearing increasingly likely.
"If the economy is adding 125,000 jobs per month" that are crappier than the 125,000 jobs that were lost there's no point counting it as 125,000 jobs. All that matters is total wages paid. Job counts are pointless (except as an exercise in economic history perhaps).
Watch the median salary plummet as each good job is replaced with 1.2 bad jobs with fewer benefits.
I disagree. First I think total wages paid can be misleading if it mostly goes to a few. So I'd measure wages by real wage growth for each income group. Since 1980, only the top income group has done well - that has to change.
Second, I think a job is important. It is really depressing to be unemployed - although I understand it is also painful to be underemployed, but not as bad.
.. Unemployed is just flat out devastating.
"Unemployed is just flat out devastating."
Agreed. I've been there several times
This whole thing is a goddamned tragedy. Peoples' lives are being destroyed.
And it is all, by and large, avoidable.
It was, by and large, avoidable. Something about putting the foxes in charge of the chicken coop comes to mind.
By the time they're finished, there won't even be any eggs left.
[and that doesn't even include population growth]
Lots of F-500 COs have a definite demographic skew towards OLD. There are and will continue to be massive retirements as the boomers leave the workforce. There will be plenty of opportunity.
On that whole income inequality thing, a prelude to wealth inequality as it were, this is worth repeating:
Wealthiest Americans Dramatically Increase Income
Conjure Colostomy Bag wrote:
is it just a question of visibility?
It is an awareness of the middle class dropping out of the middle class, by the former middle class. No one cared when they were getting raises and cheap credit. No one cared when they could buy 2 big SUVs, a McMansion, put in a pool and act like they were semi-wealthy. The middle class is now trying to hang on by their finger nails to being middle class, they know they can not achive upper class life styles. The carrot was dangled, a bit of the taste of the good life was had - now that is gone and gone for good. People notice.
I've watched this develop for forty years and it is death by a thousand cuts.
If the damage occurred over a shorter period of time, there would be more political fallout, but there isn't.
The United States is dying.
There, I said it.
Let's be clear about something: if the system had worked, Reagan would have been remembered only as an actor in B-grade movies.
Reagan and his backers were all about "goosing" the system, just as Rubin and his ilk were about "goosing" the system.
That's what you do when growth is slowing and you have no fundamental way of generating real growth.
You "goose" it. You pile on the steroids, the tax cuts.
The United States is dying.
I choose to see it as "The United States is maturing." My parents always had a thing for buying (or building) new houses to live in and then selling in five or seven years--about the time that it was necessary to repaint. My impression is that a lot of Americans have looked at this country that way. Race to the latest underdeveloped area and build a cheap Potemkin Village Pointe and enjoy the brief economic buzz and then abandon it and run off to the next underdeveloped area to do the same thing all over. And now, it's becoming less feasible to do that. We have to actually do some maintenance: on the economy, on the infrastructure, on the governmental institutions and on the social fabric.
Our banking and financial system has become extractive not additive. Handing trillions to banksters, speculators and asset strippers will not create jobs.
New deal 2.0 = Bigger Wall St. bonuses. What a sham(e). We're rewarding the sociopaths that created this mess and wondering why we have no jobs. Unbelievable.
Bernanke is an agent of financial thieves.
Jobs are for the Chinese. We Americans get free cheese and housing.
mp: You and I agree. The onliest thing floating this state is big ag.
"Businesses require more policy certainty, a more friendly business environment, and lower tax burdens."
Now THAT'S a load of crap. MNCs crying big crocodile tears, while scraping up the last dollars of the middle class.2:00 pm flaminia wrote:Paradigm Lost
That guy is SO far beyond his "sell-by" date.
He's also outflanked by several others on any position he might espouse today. They've gotten a lot rightier."1. Void GATT and NAFTA 2. Re-institute a progress tax regime (ala 1960s) 3. Tariffs on those countries that do enforce the same health, labor, environmental standards as ours. 4. Possible capital controls."Jonathan
1.Shut down the tax havens.So one question is, how does the USA replace the abundant natural resources that we've used?Mr Slippery
Could be sell nuclear electricity to Canada and Mexico? Natural gas?
How does the country as a whole bring its income up, and likely fix many of these problems?Dryfly:
I see Oman now has some rioting. It is the only Middle East country I spent any time in (circa 1993), and the population seemed docile and relatively happy. But the winds of change are in the air. If Oman ignites, it would no longer surprise me to see problems in Saudi Arabia.
2:06 pm (in reply to...)sportsfan
CalculatedRisk wrote: "Unemployed is just flat out devastating." Agreed. I've been there several times.
Not me. I'm self-employed we never become unemployed. Just unpaid.smp wrote:mp
US corporations are exploiting that surplus to their advantage.
Well, that's what corporations do. You can't blame a predator for being a predator. It just comes naturally.
The way to limit predators is to keep them from having unfettered access to their prey.
Razor wire around the chicken coop may smell like regulation, but it does tend to keep the foxes at bay (most of the time).The United States has the most well-trained consumer class in the world.
The solution to these problems is to tell the S&P 500--and everyone else--that, if they want to sell their shit here they have to make it here, or pay to play.
Just like China does. Just like Germany does. Just like France does. And so forth.
Rob Dawg12th Percentile:So, exactly how many jobs were created over the past ten years with historically low tax rates on businesses and the wealthy?
Don't you mean created or saved?Why shouldn't the United States do it?mp
well, with 750 military bases around the world in other countries, we are busy protecting other things. No one can do everything and we have decided to spend all of our money on the military. How many military bases does China have in other countries? Germany? France? Japan?12th Percentile wrote:houston
well, with 750 military bases around the world in other countries, we are busy protecting other things. No one can do everything and we have decided to spend all of our money on the military. How many military bases does China have in other countries? Germany? France? Japan?
I'm talking about MARKET access. The S&P 500 are no longer NATIONAL players, they're GLOBAL players.
You tell them: if you guys want to sell your shit here, you're going to have to make it here.
Otherwise, feel free to move your corporate headquarters to Bangladesh and forfeit the American market and American jurisprudence.I agree. I, too, spent time in Oman in the 90s. It was a very peaceful, progressive place and a lot more so than Saudi Arabia, Their populous is also more educated. I am surprised it is happening there, but, would not be surprised if it happens in Saudi.Rob Dawg:We could use some E-prizes, T-prizes and G-prizes for successful demonstrations in energy transportation and governance.Paradigm Lost"You tell them: if you guys want to sell your shit here, you're going to have to make it here.Tommy Vu
Otherwise, feel free to move your corporate headquarters to Bangladesh and forfeit the American market and American jurisprudence."
And forfeit using our infrastructure. And pay your damn taxes like the rest of us."...economy is adding 125,000 jobs per month (average over two months), it would take over 5 years to add back the 7.7 million lost payroll jobs - and that doesn't even include population growth..."12th Percentile
That's 5 years of zero net new jobs when you add population growth.mpcitygirl
I agree with you 100% on the access to american markets. America tax payers are subsidizing global corporations who are screwing the american workers while sucking them dry of their tax dollars and moving all that wealth to other countries where people still are a long way from having unions and fair wages that the big corporations are trying to destroy in america just so none of these upstart economies get any ideas about labor having value or POWER.
I'm just saying it is easier for the countries to protect their workers because they don't spend the majority of their tax dollars on the military and they probably haven't given their corporations free rein to buy politicians..This seems on topic: I'm currently reading Wealth and Democracy: A Political History of the American Rich by Kevin Phillips. I haven't ever noticed it being mentioned on here but I think everyone here should read it.Comrade Kristina
Seems like this is an ongoing battle that was only briefly OK for the American worker for a few decades after WWII.
I don't see things getting better for workers in the US any time soon but I hope I am wrong.I wonder if any of the Koch Bros websites are experiencing technical difficulty?bearly
Here is some heresy - GATT, NAFTA, free trade agreements in general - didn't make a damned bit of difference. If we 'walked away' from them tomorrow - we'd be in the the same boat [bailing out of different cans but still bailing]. If we never passed them we'd be in the same boat.
There was no way on earth you were going to have a full third of the population [south & southeast Asia] attempt to join the 'club' [read that as the global producing economy] without there being some very serious disruptions. Only difference was how it was going to happen and who benefited the most and who took the biggest hit when.
What was or should have been clear to everyone - rich & poor, conservative & liberal, young & old ALIKE - was that incomes of workers in the west were going to take a big real' [inflation adjusted] hit some way or another. Either it was going to be high unemployment or rapid income adjustment down [convergence to a world mean] or some blend of both. Likewise in the developing world they would be mirroring it from the other side - either high unemployment with a few incomes matching western expectations or much less unemployments but sweat shop wages pretty much everywhere. And the more the parties resist via currency readjustment the harder & longer it was going to take.
I've seen it with my own eyes. The actual trade agreements just codified what was already happening anyway - the politicians & negotiators followed the parade they didn't lead it.
I can understand the angst over GATT, NAFTA & all - but really people they changed noting that wasn't already in the works, already happening.The Lorax wrote:lost-confused
How about taxing the wealthiest to pay down the runaway debt
Who do you think pays taxes now ? The poor, or the middle class ? They already pay next to nothing.MP, also forgo America's military protection! -Freedom of the Seas- We should require that all vessels wanting protection under a Foreign Flag, pay, pay, pay...for the privilege...Rob DawgOtherwise, feel free to move your corporate headquarters to Bangladesh and forfeit the American market and American jurisprudence.mp
We can start with these crap fictions of regulatory and tax haven shopping. We also need to address this damn exploitation called market pricing. Yes you big pharma and you Microsoft.dryfly wrote:mp
I've seen it with my own eyes. The actual trade agreements just codified what was already happening anyway - the politicians & negotiators followed the parade they didn't lead it.
Dryfly,I by and large agree but, in order to restore a balance, we've got to unload GATT.
The time for new rules is long overdue.Rob Dawg wrote:12th Percentile
We can start with these crap fictions of regulatory and tax haven shopping. We also need to address this damn exploitation called market pricing. Yes you big pharma and you Microsoft.
Absolutely.We should require that all vessels wanting protection under a Foreign Flag, pay, pay, pay...for the privilege.smp :
Here is the problem. The US government is owned by Multi National Corporations. They don't care about countries. They care about profits. Figure out a way to get the US government owned by people who care about the people who live in the US (i believe this is called patriotism) and you might get this to happen. Until then, good luck.
Just like China does. Just like Germany does. Just like France does. And so forth.
China does it via currency manipulation. The only way you can be competitive in China is make in China - the yuan doesn't have sufficient purchasing power.
Germany & France are where we were a decade or two ago and are hollowing out now. They are able to maintain only because they have such strong currencies they can afford the deficits. The strong dollar policies of Clinton [Rubin] are part of what set us up for the mess we are in now. The euro is there now.
And while Germany isn't running a deficit per se - the Euro Zone is and it is growing. One could have said the same thing about the US a few years ago - with Wall Street & FIRE making up for the 'losses' in places like rustbelt until they couldn't anymore.
This was going to happen one way or the other - the key to avoiding severe unrest is making sure no one starves while freezing in the dark. The idea we were going to have a return to low unemployment & increasing wages ANY TIME soon is well - unrealistic.
lost-confusedWhat is about the American ethos that we have to be/play fair, when the entire world is trying to screw us? What's that saying, Americans bring a knife to a fight and everyone else brings a gun...mp12th Percentile wrote:mp
Here is the problem. The US government is owned by Multi National Corporations. They don't care about countries. They care about profits. Figure out a way to get the US government owned by people who care about the people who live in the US (i believe this is called patriotism) and you might get this to happen. Until then, good luck.
Get political.dryfly wrote:
This was going to happen one way or the other - the key to avoiding severe unrest is making sure no one starves while freezing in the dark. The idea we were going to have a return to low unemployment & increasing wages ANY TIME soon is well - unrealistic.
Well, we either start working on the problem, or please turn out the lights when you leave.
Bad Dawg BobbyAngry Saver, " New deal 2.0 = Bigger Wall St. bonuses. What a sham(e). We're rewarding the sociopaths that created this mess and wondering why we have no jobs. Unbelievable. Bernanke is an agent of financial thieves. "Paradigm Lost
Agreed and it seems the people are moving on and loosing sight of that. The sociopaths will get a free ride after crapping on J6P and the Middle Class, destroying our economy while growing richer in the proccess. Amazing, Evil Genius !!!Ahhh, Comrade Kristina:Comrade Kristina
This is for you. I posted it earlier but I don't know if you saw it. Ties in nicely to what we're discussing.
Protests aimed at tax dodgers sweep UK: An essay Johann Hari
"The UK Uncut message was simple: if you want to sell in our country, you pay our taxes. They are the membership fee for a civilized society."
How to Build a Progressive Tea Party | The Nation2:37 pm I saw something about that over on IRC earlier today. Something about flashmobs doing protests. I've been running errands and helping hubby work on the pool so I did miss your earlier post. Thanks.steelhead2:37 pm Mr Slippery wrote:12th Percentile
I see Oman now has some rioting. It is the only Middle East country I spent any time in (circa 1993), and the population seemed docile and relatively happy. But the winds of change are in the air. If Oman ignites, it would no longer surprise me to see problems in Saudi Arabia.
There are problems in Saudi Arabia, didn't the King just attempt to buy off the poor with food and cash subsidies?Get political.Rob Dawg
Agreed. I'm probably running for office next election cycle. I've been political for a while. The only way to change things is if people like the people on this website decide they have had enough and take their intelligence, relatively limited resources (compared to the corporations) and their anger and take over some local politics, then move up the ladder. And then hope that once you get to somewhere you make a difference your plane doesn't run out of fuel like that guy Wellstone. How often do planes run out of fuel in the US?
People in Libya are getting gunned down in the streets just to have what the average person in Detroit has. Americans need to start taking this shit seriously and do something do fight these corporations. Hacking websites is cool but it isn't going to change things.Dryfly, Don't like my idea of sponsoring tech prizes?mpAs a sidebar to all of this, some dumbass was on Fox proposing that the US and the states sell their infrastructure--like the ROADS-- and privatize it in order to reduce the "deficit."
You know, this country went that way. Once. About 150 years ago.
People were paying tolls every 5 miles to use the damned roads. It was absolutely GREAT for commerce.
Then, like thinking people, we decided that it was better for government to handle the damned roads.
Who do you think pays taxes now ?
Buffet's been pretty clear on that - he pays a lot less in percentage than his secretary. The rich pay a lot because they have SO MUCH more - more than Midas dreamed of.
There are plenty of ways to penalize rentiers and cash cow herders & yet still reward growth pursuit. GOPers & Dems alike don't want any of that - they are the parties of the rentiers & cash cow herders regardless of the rhetoric.
I talk w/ guys trying to grow business every day - the proposals of neither party helps them. But it sure helps those who already got.12th Percentile wrote:Comrade Kristina
Americans need to start taking this shit seriously and do something do fight these corporations.
YES!2:40 pm If the information that comes from those hacked sites is enough to get people angry and out in the streets, then it does help change things. Remember when the original Wiki Leaks stuff started coming out and it was thought it might ruffle some feathers abroad? Turns out it really ruffled those feathers. Now imagine we start seeing leaks from the internals of huge banks and corporations...All while the American public is being asked to accept austerity...mp2:41 pm dryfly wrote:azurite
I talk w/ guys trying to grow business every day - the proposals of neither party helps them. But it sure helps those who already got.
Yup, and that's what the Tea Party crowd, for instance, does not understand.Paradigm Lost wrote:fraizr
Otherwise, feel free to move your corporate headquarters to Bangladesh and forfeit the American market and American jurisprudence."
And forfeit using our infrastructure.
That would mean closing many of the military bases--that's the "infrastructure" the US HAS been spending money on. Because that extends US protection to all corporate operations out of the US.Whether the jobs number states 30,000 or 300,000; Mr. Market will respond in a positive manner. "Rob Dawg
***4 Sure. Think about it, if the report disappoints that means the FED will give away more FREE MONEY!!!!!There are problems in Saudi Arabia, didn't the King just attempt to buy off the poor with food and cash subsidies?Paradigm Lost
Google translate still having trouble parsing "transfer payments" I see.yes, dryfly, our share of the pie is shrinking...will continue to shrink. So the prices of everything -- cars, homes, cable and mobile phone packages, all the garbage fees, etc. -- will have to shrink too.mp
Problem is: we're the generations who will have to come through the adjustment. Lower wages that can no longer afford $250M houses and $45,000 trucks.sazurite wrote:citygirl
That would mean closing many of the military bases--that's the "infrastructure" the US HAS been spending money on. Because that extends US protection to all corporate operations out of the US.
Well, concerning job losses, Boehner said, "So be it."
Concerning the closing of military bases, I say, "So be it."Seriously, it looks to me as though this country has been run by and for the rich for most of its history. It was only from 1940 -1980 that it was not that way. And it looks to me as though we probably WILL go back to where we were in the 1890s before anything gets any better.
Dryfly,I by and large agree but, in order to restore a balance, we've got to unload GATT. The time for new rules is long overdue.
Its a red herring - there is nothing in GATT that stops us from doing the right things [meaning increasing domestic investment incentives, penalizing excessive consumption while making sure the safety net is sufficiently strong so that people don't starve]. Our overlords want non of that and GATT is the scape goat.2:46 pm dryfly wrote:fraizr
Our overlords want non of that and GATT is the scape goat.
Are we in agreement here?2:47 pm flaminia wrote:12th Percentile :
I choose to see it as "The United States is maturing."
Not unlike the last Modern Empire...the U.K. The U.K. still exists, just in a different less influential form.CKmp
I love what Anonymous is doing. And it helps. But do you think it is enough? For real change to happen, people like you and your husband need to run for office. People like me need to run for office. Conjure Bag needs to run for Senate. We need to get involved on that level. If we don't, we can sit around and watch people in places like Libya fight like Americans were 200 or so years ago while we comment on blogs but if things don't go the way we want them to we really will have no one but ourselves to blame. If not now, when? Citizens United was a turning point, IMO. Either run to the hills or get involved and take over your local political structure which i can assure you is full of brain dead lazy people who know nothing about fighting for anything.@dryflyfraizr
If you think offshoring is a fait accompli, I don't agree. That, given the right political environment, can be reversed.2:48 pm SixOunces wrote:fraizr
And degrees in Sociology don't count as human capital.
Hey! I have an MA in sociology...and am a very productive unemployed blogger!2:50 pm gabyjan wrote:1 currency now -yogi
Washington trims Pell Grants: How will students pay fall tuition? - CSMonitor.com
GASP, goodness forbid they have to deliver Pizza or take out a student loan...CR wrote:bearly
Grim is an understatement.
To avoid further job loss, the scumbag Governor of Wisconsin is trying to stuff lower wages (benefits) and less bargaining power down the throats of senior workers. This will allow him to fire the higher-paid, more experienced employees.
Same number of jobs; same work performed; more bonus for the owners.2:50 pm mp wrote:azurite
If you think offshoring is a fait accompli, I don't agree. That, given the right political environment, can be reversed
Like with anything else, tax it and you'll get less of it. If you still get too much, tax it more.2:50 pm mp wrote:1 currency now -yogi
Concerning the closing of military bases, I say, "So be it."
Fine with me.
It could be the global re-balancing will happen no matter what, as dryfly says, but there are choices that can be made to plan for lower standards of living, not just regulate/fail to regulate so exploitation, income inequality, loss of needed skills and skimming are maximized.2:51 pm 6 oz. is a banker...you know, the smartest guy in the room.Paradigm Lost"Hacking websites is cool but it isn't going to change things. "Comrade Kristina
Anonymous needs to focus. I'm wondering how long it'll be before someone hacks the Caymans and makes all that lovely electronic money go poof.2:51 pm I agree. First we need to expose the scum and sludge for what they are. So long as they own the airwaves and the meme, people like us can't ever be elected. It won't be pretty but it is necessary. I think we're at a tipping point. People know in their hearts there is something terribly wrong with our country and our political system but they are fed so much misinformation and outright lies via the television that they simply tune out.bearly
PS I think Americansforprosperity site is having technical issues now...strange.2:52 pm fraizr wrote:mp
I have an MA in sociology
My condolences. Hope you didn't go into debt to achieve that feat.2:52 pm 1 currency now -yogi wrote:bearly
6 oz. is a banker...you know, the smartest guy in the room.
6 ounces is a reactionary.Is there some way to tax the living shit out of public employees' unions ?12th Percentile
2:54 pm mp wrote:
Well, we either start working on the problem, or please turn out the lights when you leave.
We work on it as individuals everyday - we all do.
The things that make us 'whole' will be dollar readjustment - that will do what six ounces said above - reduce the cost of 'labor' to the point we all work again - for a lot less.
The taxes & stuff [port fees, VATs, increased income taxes] will redistribute what is left but until the real cost of goods made here are in line with what is made 'over there' [both approaching a middle ground]... until that happens - we aren't there and no changing of GATT will fix that.
BTW - been quoting parts overseas aggressively lately - in two out of three cases the US parts are AS CHEAP OR CHEAPER. Its the assembly ops & office overhead costs here [read that white collar mgmt] where the wage adjustment needs to occur. That's where we aren't as competitive. Should be fun.bearlyParadigm Lost
we don't tax the sale of cocaine in my city. And we would like less of it. Would you support taxing it? Because I sure as hell would.
I know you would prefer it just didn't happen but since it has been going on for a few hundred years here I don't think that will work.
So, are you with me? Legalize and tax the hell out of drugs?Sit-ins, strikes, boycotts, protests. Chain yourself to the railing with a sign "The rent is too damn high." Name and shame the evil doers. The "Cairo" effect has worked well.Basel Too
I believe this is just beginning 'cause peeps around the world are very angry.the disheartening thing about the wealth distribution is that we're not even using Baby Steps (e.g. equalizing tax rates for capital gains and labor); seemingly, almost all policies, even those that ostensibly claim to save jobs, further exacerbate the disparity.12th Percentilepeople like us can't ever be elected.NOTaREALmerican
Not true. You can't get elected senate right off the bat but you can get elected. Read up on how Bernie Sanders got his start. You say you are a Socialist. So is Bernie. He started at the lowest rung.2:56 pm citygirl wrote:mp
And it looks to me as though we probably WILL go back to where we were in the 1890s before anything gets any better.
The 1890's with antibiotics, hot water, and iPods will be better than the 1890's without. The peasants aren't clamoring for loot from the rich and won't unless they are hungry. We're a long why from hungry peasants.2:57 pm dryfly wrote:Comrade Kristina
Its the assembly ops & office overhead costs here [read that white collar mgmt] where the wage adjustment needs to occur. That's where we aren't as competitive. Should be fun.
Global labor arbitrage and death. Two great levelers.2:57 pm Did I do what?bearly
2:57 pm Rob Dawg wrote:
Don't like my idea of sponsoring tech prizes?
Doesn't matter Dawg - it still all about marginal cost. If you can't make the parts here its still just 'platforming'.
People don't like to hear it but we will actually have to 'work' to stay prosperous. Remember - the Europeans invented the automobile [Daimler & Peugeot]... we captured the industry for almost a century because we mastered the process of making them.2:57 pm 12th Percentile wrote:Comrade Kristina
So, are you with me? Legalize and tax the hell out of drugs?
I have mixed feelings. It is definitely tempting.
I would prefer to seal off the borders first, and give that a try. There's no question that the ongoing strategy is a failure.2:58 pm Bernie was a dogcatcher?MSM
2:58 pm mp wrote:
As a sidebar to all of this, some dumbass was on Fox proposing that the US and the states sell their infrastructure--like the ROADS-- and privatize it in order to reduce the "deficit."
That's okay - we can then just appropriate it later, Chavez style, when the flavor of politics changes.Job and hiring anecdote.NOTaREALmerican
I have a small startup (high-tech widgets), and we have posted an ad to fill a roughly half-time position office manager, hoping to get someone at a fairly experienced, professional level who can grow with us and help run things as manufacturing takes hold late summer or so. But it is a modest position to start with.
The ad has been up for a couple of days, and I bet we easily hit over a hundred or so by the time I sort resumes this week.
In the meanwhile, skimming the applicants has been sobering. Modal age looks to be in the forties; I infer from histories and the nature of our area that most have families. To see a resume that's been tailored, covered letter polished, and sent at three in the morning from a forty-year-old mom with a college degree, broad experience, and a clean writing style, speaks to me of the stress out there. The gender split is roughly fifty-fifty.
(Another striking dimension comes from the quarter or so of the applicants that are woefully unprepared, having education ranging from high school through college, often with 'business' training. We have failed these people: Their applications are filled with ridiculous business babble-speak. I don't know if they can understand how badly they have been misdirected. Heartbreaking.)
Maybe one out of five resumes has been touched by FIRE.
Grim out there on many dimensions. It needs to be fixed, and shame on us for not having done so already.2:59 pm Comrade Kristina wrote:mp wrote:
First we need to expose the scum and sludge for what they are.
You socialists FIRST need a good story. The fascists have one. You guys still don't have one. It's because most of you socialists are actually (secretly) wishing the Blue Team will (somehow) magically turn socialist. Until YOU GUYS figure that out, YOU GUYS won't be exposing anything.
This is all YOU GUYZ fault.Paradigm Lost
Yup, and that's what the Tea Party crowd, for instance, does not understand.
They understand it REAL WELL - they are the rentiers. Know any? I do."That would mean closing many of the military bases-..."12th Percentile
That's right. And if you want us to be the cop to the world, pay us for it. No more freebies.Bernie was a dogcatcher?mp
In 1981 Sanders ran for mayor of BurlingtonNOTaREALmerican wrote:bearly
We're a long why from hungry peasants.
Not as far away as you seem to think. Look at the SNAP statistics, for example.3:01 pm 12th Percentile wrote:1 currency now -yogi
You say you are a Socialist
Socialist is just another term for lazy. Might as well call socialism the laziness movement.
We're headed that way without calling it socialism.3:01 pm dryfly wrote:Comrade Kristina
That's okay - we can then just appropriate it later, Chavez style, when the flavor of politics changes.
NYC had commercial rent control. Supreme Court said, "Yes, we could." Who owns the factories in China? (Tomorrow?)3:01 pm No, liz. Not me. I'm lucky I manage to get my browser window open most of the time. I'm good at research, writing and spreading information, though.Comrade Kristina
3:01 pm mp wrote:
Are we in agreement here?
Probably - I don't worry a lot about NAFTA & GATT - with or without them we were going to face these issues. Labor arbitrage knows no borders.3:03 pm This isn't about red or blue team NARM. This is about corrupt vs. not corrupt. The system is rotten. It needs to be exposed to sunlight. All of it.NOTaREALmerican3:03 pm bearly wrote:lost-confused
Socialist is just another term for lazy. Might as well call socialism the laziness movement.
And what is crony-capitalism? Why are you MORE pissed at lazy peasants than lazy banksters and other Big-Gov corporate welfare queens?.3:04 pm 12th, you want to know why local organizations are co-opted by businesses, first it's a business deduction and 2nd it allows business inside of an organization (generally a corporation)...Some may laff, however an individual holding a corp position has tremendous power, control and knowledge...Its easier/cheaper to manipulate/buy off a board than it is to convince the stock holders/members that your deal with him/his company's business dealings will not take advantage of you...NOTaREALmerican
Look at any local govt. office holders....We are looking at business owners, real estate, banking/finance etc. who will directly benefit through their positions...The typical stiff (j6pack) has a regular job and his involvement in local community activities and it in addition to his regular job...3:04 pm Comrade Kristina wrote:TJ and The Bear
It needs to be exposed to sunlight. All of it.
This IS about the Red and Blue Team. If YOU socialist don't have a team that represents your story how do you expect to educate the dumbasses? (small d dumbasses).U.S. Economy Trades High-Paying Jobs For Low-Paying Positions, Report FindsMattFea
Lower-wage industries constituted 23 percent of job loss, but fully 49 percent of recent growth •Mid-wage industries constituted 36 percent of job loss, and 37 percent of recent growth •Higher-wage industries constituted 40 percent of job loss, but only 14 percent of recent growthParadigm Lost wrote:bearly
3:06 pm mp wrote:
If you think offshoring is a fait accompli, I don't agree. That, given the right political environment, can be reversed.
Only with currency and 'income' readjustment. We are only about 25% of the world market now - not 50% like in the 50s. If you set up de facto or actual tariffs - you price your products out of the rest of the world market. Then the domestic producers themselves become rentiers too. The UK tried that in the 60s & 70s - didn't work for them & won't for us.
The issue is how do we readjust in such away we don't starve large sectors of the population [while others go about as if nothing happened]. That's a recipe for 'Cairo'.3:06 pm NOTaREALmerican wrote:NOTaREALmerican
Why are you more pissed about that than taxing the shit out of rich banksters
If I were running things most of them would be in jail right now and all the big banks would be shutdown. The overhead, graft, cronyism fraud, abuse... everything about the financial sector is to a great extent why america is in decline.3:10 pm bearly wrote:
everything about the financial sector is to a great extent why america is in decline.
Ok, then why do you begrudge the public employee unions from being in on the SAME scams. (I agree with you, btw, the public unions ARE scams). But, we've had 50+ years of corporations running scams and you never hear the Red Team or the Tea Party people bouncing off the wall about THEIR Big-Gov scam. How about the Red Team get's rid of Big-Ag and Big-MIC and Big-FIRE and THEN takes on Big-Public Union?
OpWisconsin3:11 pm mp wrote:lost-confused
Global labor arbitrage and death. Two great levelers.
I'm not saying it isn't going to be ugly - it is - just that we have two choices  accept it and manage it or  pretend it isn't happening and let shit fly. BTW both liberals & conservatives have adopted different sub-categories of case ... be the same end point, different paths.3:12 pm Sorry Dryfly, I disagree... Why is it that we must lower our standards to developing countries that lack the infrastructure and the protections we offer in the US...If we allow foreign goods in from such countries, isn't the US tax payer, in essence subsidizing those companies/countries that sell in our market?bearly
Look it, back in the 1960s, free trade was sold to Americans as something that would boast American growth and wages...So I guess we were lied to...
3:14 pm 1 currency now -yogi wrote:
Who owns the factories in China? (Tomorrow?)
Hu knows.3:20 pm NOTaREALmerican wrote:Paradigm Lost
How about the Red Team get's rid of Big-Ag and Big-MIC and Big-FIRE and THEN takes on Big-Public Union?
AG & MIC both contribute to our export base, MIC withi value products. I have nothing against either of them. Problem is we are actually shooting ourselves with the subsidies to AG and importing (perhaps more) than we export. That industry needs some scrutiny. It's all about producing and exporting more or the same as we import.
Big mistake with the entirely failed AARA that NatGas wasn't inserted into the energy consumption infrastructure. Heaven forbid the government actually use money wisely and invest in the furure in a way that improves america's independence. Instead it went to transfer payments and unions. Pathetic, and proof that the government can't be trusted to use money wisely."Its the assembly ops & office overhead costs here [read that white collar mgmt] where the wage adjustment needs to occur."NOTaREALmerican
And it will. Going up the food chain. The adjustment will be very painful...for all of us.
Our salaries don't match our expenses for health care, McMansions, etc.3:20 pm lost-confused wrote:lama
So I guess we were lied to...
The insidious thing about free loot (the myth of socialism) is EVERYBODY believes it. The US was destroyed when both Teams were able to provide infinite debt and fund both sides socialists fantasies (Big-Mic, Big-Ed, Big-Ag, Big-Guilt. There was no limit on the fantasies). Now the Red Team is busy cutting the Blue Team's socialist scams and the Blue Team - being hopeless believers in NICE Big-Gov - are left begging the Red Team to not cut this or not cut that. The Blue Team is so in love with Big Gov they can't even BLUFF a cut to the Red Team's socialists scams. It's pathetic.3:21 pm bearly wrote:NOTaREALmerican
If I were running things most of them would be in jail right now and all the big banks would be shutdown.
The reason they're not behind bars now has much to do with mundane things such as lack of evidence. These guys communicate through minions. Even then, it's usually in person. I got read the riot act for confirming understandings in email in the past. Of course if they did go to jail, someone else would have to manage the bank. The new people would want to clean out the books and the general public probably wouldn't like what they see.....so, maybe there are some conspiracies in there somewhere.3:21 pm bearly wrote:lost-confused
AG & MIC both contribute to our export base, MIC withi value products.
Everybody loves THEIR socialism.3:22 pm "Labor arbitrage knows no borders."robj
Well, I guess there is only one answer to the problem- Stop it!!! One way or another, peacefully and in a civilized manner or otherwise...3:22 pm Sebastian wrote:Paradigm Lost
Except how do we do that? If the top income group is made up of professionals with high-value skills how (and why) would the market reduce their pay and raise the pay of other people with lower-value skills? Or look at the problem from the same way only further down the ladder: How and why would the market reduce the pay of people making median salaries and raise the wages of people who have extremely low-value skills?
I don't think that it would, but we solve (or attempt to solve) that social problem with taxes and re-distribution of wealth. I don't see how the invisible hand would do it.
Well, let's see: reverse the Wisconsin gov. meme,re-empower unions in service, and reverse the Bush tax cuts for the "top income" group with "high-value skills" like investment banking for example. No better example of high-value skill than that, I think, or a group that deserves their slot at the top of the social ladder (lobbying gets you your "just deserts" after you've blown up the national and world economy, is the conclusion I draw about "high value skills" and why the top income so richly deserve reaping all the gains from the American economy over the last 20 years while the "low-value" skills in the bottom 95% have gone backwards). "Deserve's got nothing to do with it," is what I believe Eastwood's William Munney tells Little Bill at the end of Unforgiven. I'm not holding my breath on the finance class getting their "deserve's" but 'tis a consummation devoutly to be wished. And my how those "deserve's" would have decimated wages for the top 5%, if finance had got what's coming to them after 2007 and 2008. Didn't happen.
I'll point out what many have already point out, that the skewing of wealth distribution in both the 20's and 2000's didn't do the macro economy any good, in fact set up the crash. But, hey, CEO's in US clearly deserve the 500x wages they "earn" since they have so clearly outperformed their world competitors. No?
.If we allow foreign goods in from such countries, isn't the US tax payer, in essence subsidizing those companies/countries that sell in our market?
I work with a lot of large corporations - OEMs - most of them now have more sales from offshore than here. Some of them the ratio is 3:1 or higher. The sales offshore are growing at astounding rates - domestic is flat or shrinking.
And it isn't just 'regulations & taxes' [conservative excuse] or 'environmental & labor practices' [liberal excuse]. Its just plain income differentials - they work for a lot less [both labor and management] than we do. We can either take less in nominal terms millions of us at a time individually or we can let the FOREX do it for us.
Either way it results in the same outcome - a decline in our standard of living. Embrace and manage or deny, ignore and let 'events' manage it.
Our choice."...the disheartening thing about the wealth distribution is that we're not even using Baby Steps..."NOTaREALmerican
First, we have to show the politicians we're mad. Lots of people protesting WILL make them listen. You tell 'em...you wanna keep your job? Your place on the gravy train? Well, then...
We are in the sweet spot right now (the social media) before they shut us down. We should use it while we can.3:24 pm dryfly wrote:memmel
Not really. A "choice to manage" implies a functional government and society. We have neither.As far as America and Jobs go I'd argue around the world with protests rising everyone is going to be focusing on jobs for their citizens.Paradigm Lost
And on top of this food and oil. Every country is going to be keen to ensure that shortages in oil and food don't develop. And as I said working to create jobs even if its make work government jobs. The chances of the US being able to expand its job market under such conditions is remote. On the world scale our cost of living and wages are way too high.
I argue for the US to actually expand jobs we now have no choice but to either shift most of the burden of workers to the state ala Germany style socialism with extreme taxes which reduces companies cost to the point they are technically profitable or reduce wages to match China. I don't think half measures can work we need to extensively rebase our economy. Its a black and white situation either its competitive or its not. Either we go high tech/socialist or we go second world.
Of course who these second world economies are going to make products for as and open question. If the US goes second world then there is a massive overcapacity of unneeded manufacturing and workers. Aka a real classic depression.
I find the European route unlikely as it is funded by socialist programs. Its the best approach for the US but I don't see it. I don't think you can do the European thing and keep the military industrial complex going for example. If we tried it without high taxes esp for the rich well it will fail fast.
And all this has to happen in the context of every other economy on the planet doing the best it can to ensure the status quo for its people as regards to food, oil, and jobs. I'd argue this means the US will have to grow employment against a backdrop of rising food and energy prices. If we go Chinese then in addition we would have falling wages. Where do you think US consumer consumption is going to go ? Historically rising food and energy prices forces the US into recessions. A massive expansion of deficit spending that makes the current QE's look paltry will do what ?"That's okay - we can then just appropriate it later, Chavez style, when the flavor of politics changes. "volker the viking
Geez, Dryfly, I was thinkin' the same damn thing. Just rip up that contract or lose it like the mortgage papers.Local Anti-Foreclosure Attorney Arrested After Threat - San Diego News Story - KGTV San DiegoExternalized Costs
"I'm going to precipitate an armed confrontation … Want me to say it again? I'm going to force an armed confrontation," Pines saidArrests Starting in Wisconsin " naked capitalismlost-confused
3:34 pm Paradigm Lost wrote:
Geez, Dryfly, I was thinkin' the same damn thing. Just rip up that contract or lose it like the mortgage papers.
Politically inevitable.3:35 pm I agree, its our choice...and that choice is to shut down access to the US to rebuild our nation so that its again the envy of the world...I do not buy into the inevitable argument that we as a nation will degenerate without access to the rest of the world...If the US was inconsequential on the world's consumer markets, the global/international corporations would have moved out of the US by now....We need to use our leverage as a consumer market to force others who want to play here...merchants of fear
Do not give up on America's ingenuity...3:37 pm You forgot to mention or ask who's going to run this show now that the contagion bubble 'unexpectedly' burst. The same Enterprise? Or Enterprises?.volker the viking3:37 pm lost-confused wrote:TJ and The Bear
If the US was inconsequential on the world's consumer markets, the global/international corporations would have moved out of the US by now
I'm not disagreeing with you, just observing they already have moved out.3:37 pm memmel wrote:robj
I find the European route unlikely as it is funded by socialist programs. Its the best approach for the US but I don't see it.
I don't see it either, since IMHO Europe's model isn't remotely sustainable either.3:39 pm memmel wrote:memmel
I argue for the US to actually expand jobs we now have no choice but to either shift most of the burden of workers to the state ala Germany style socialism with extreme taxes which reduces companies cost to the point they are technically profitable or reduce wages to match China. I don't think half measures can work we need to extensively rebase our economy. Its a black and white situation either its competitive or its not. Either we go high tech/socialist or we go second world.
During the so-called "hey-day" of American Capitalism before Reagan we had top income tax levels of more than 80%. I don't support going that high, but it's a misnomer to call that socialism, unless we were "socialist" while we were climbing up the peak. It is of course true that we were the last economy standing after WWII and we had to pay off war debt (and FDR's stimulus). So what was our excuse in the 2000s while we were fighting wars, funding a construction bubble, pouring gasoline on the deficit and.3:39 pm dryfly wrote:lost-confused
I work with a lot of large corporations - OEMs - most of them now have more sales from offshore than here. Some of them the ratio is 3:1 or higher. The sales offshore are growing at astounding rates - domestic is flat or shrinking.
Now dryfly finish the cycle. Why are these offshore sales growing ? Well many of these countries run a trade surplus with the US which means wealth is building up offshore. Trickle down theory ain't that great but decades of trade imbalances eventually do translate into wealth reaching the masses.
I'd argue that rising consumption overseas with continued massive trade imbalances with the US is natural at least for our warped system. The idea was eventually these countries will get wealthy enough to buy American and imbalances will steadily fall esp as wage arbitrage declined with wages and consumption approaching US levels. Our debt based consumption was supposed to create more American level consumers. Problem is the trade imbalances have not closed.
I'm not denying that these countries are not starting to have expanded internal consumption simply they are meeting this via internal production plus the structural trade imbalances. Clearly this is not stable. Just because its happening does not mean it going to continue forever.3:40 pm Well then if that's true, good riddance...It just means that they have decided that there is nothing left here to steal...Paradigm LostNaRM: Yes, we need a narrative. I believe in KISS.volker the viking
"...when the Conservatives came to power, David Hartnett, head of the British equivalent of the Internal Revenue Service, apologized to rich people for being "too black and white about the law." Soon after, Vodafone's bill was reported to be largely canceled, with just over £1 billion paid in the end. Days later George Osborne, the finance minister, was urging people to invest in Vodafone by taking representatives of the company with him on a taxpayer-funded trip to India-a country where that company is also being pursued for unpaid taxes. Vodafone and Hartnett deny this account, claiming it was simply a longstanding "dispute" over fees that ended with the company paying the correct amount. The government has been forced under pressure to order the independent National Audit Office to investigate the affair and to pore over every detail of the corporation's tax deal.
"It was clear to us that if this one company had been made to pay its taxes, almost all these people could have been kept from being forced out of their homes," says Sam Greene, another of the protesters. "We keep being told there's no alternative to cutting services. This just showed it was rubbish. So we decided we had to do something."
They resolved to set up an initial protest that would prick people's attention. They called themselves UK Uncut and asked several liberal-left journalists, on Twitter (full disclosure: I was one of them), to announce a time and place where people could meet "to take direct action protest against the cuts and show there's an alternative." People were urged to gather at 9:30 am on a Wednesday morning outside the Ritz hotel in central London and look for an orange umbrella. More than sixty people arrived, and they went to one of the busiest Vodafone stores-on Oxford Street, the city's biggest shopping area-and sat down in front of it so nobody could get in.".3:43 pm lost-confused wrote:Hoopajoops LTD
It just means that they have decided that there is nothing left here to steal...
Once again, not disagreeing with you, rather observing there is plenty left to 'steal' (as you put it).
The first objective of the market is to separate you (the royal you) from your money. They're not done, not by a long shot.OK Uncut sounds to me like an anti-circumcision organization.TJ and The Bear3:43 pm robj wrote:lost-confused wrote:
During the so-called "hey-day" of American Capitalism before Reagan we had top income tax levels of more than 80%
We also had a zillion more deductions. It's not exactly an apples-to-apples comparison.Paradigm Lost
and that choice is to shut down access to the US to rebuild our nation
It would destroy us a different way - similar to the UK in the 60s & 70s. Not exactly the same but similar.
We might be able to orchestrate it so that we receive the same pay - in dollars - except the dollars wouldn't buy much. Or we can save the dollar - and see our collective wages decline [except for a very of few us with income derived from international assets].
You can't build a Fortress America around the model we've all seen over the last 30 years - huge deficits & a strong dollar - it won't work.""What really struck me is that when we explained our reasons, ordinary people walking down Oxford Street were incredibly supportive," says Alex Miller, a 31-year-old nurse. "People would stop and tell us how they were terrified of losing their homes and their jobs-and when they heard that virtually none of it had to happen if only these massive companies paid their taxes, they were furious. Several people stopped what they were doing, sat down and joined us. I guess it's at that point that I realized this was going to really take off."lost-confused
That first protest grabbed a little media attention-and then the next day, in a different city, three other Vodafone stores were shut down in the northern city of Leeds, by unconnected protests. UK Uncut realized this could be replicated across the country. So the group set up a Twitter account and a website, where members announced there would be a national day of protest the following Saturday. They urged anybody who wanted to organize a protest to e-mail them so it could be added to a Google map. Britain's most prominent tweeters, such as actor Stephen Fry, joined in.
That Saturday Vodafone's stores were shut down across the country by peaceful sit-ins. "
That's how it works.3:44 pm I say if they want to play, then they will have to pay dearly...or else we shut them out...merchants of fear
3:45 pm TJ and The Bear wrote:
I don't see it either, since IMHO Europe's model isn't remotely sustainable either.
The strong euro is hollowing them out now - it just takes time.3:45 pm How is the Organization called America set up? What is the chain-of-command? Who is calling the shots? Central banking? Congress? The American people? Is there a national economic structure in place? Or are we part of an 'international economy' with a hierarchy of financial power in place? Can our grammar school or high school civics book help us now?MaryAnnWe love kumquats so much that our Leadership gave all our inventions of the last 100 years to kumquat growers, thats what happens when the is just kumquat juice. It's gonna take generations to recover from what has been taken from us if we ever recover. Our government has ocd going from you must feed the world, you must be over educated to you must love the bankers that rape our country.robjmemmel wrote:volker the viking
I'd argue that rising consumption overseas with continued massive trade imbalances with the US is natural at least for our warped system. The idea was eventually these countries will get wealthy enough to buy American and imbalances will steadily fall esp as wage arbitrage declined with wages and consumption approaching US levels. Our debt based consumption was supposed to create more American level consumers. Problem is the trade imbalances have not closed.
Or one could apply Ford's theory that for the average American to buy a car, he (or now she) has to be paid a decent wage. And where is wage inequity the highest--U.S, where we now have reached the levels of inequity in El Salvador in the 70's and 80's. Bully for us. And why is it, exactly, that consumption in the U.S. has declined steadily in the 80's-2010s while wage inequality has increased? Hm.
It just doesn't compute because we know the societies with the highest inquity just have to be the most capitalist, since FIRE is pulling down their correct share of wages. Doesn't compute, doesn't computer, doesn't compute. Now why is it those socialist Scandinavians are kicking our butt, despite their socialism? High education, high taxes, high social support, non-imperialist, control of banks (bond holders get stiffed), hmmm. Well, they're socialist and in favor of abortion and national health and we're capitalist, pro-FIRE, flat tax, and anti-abortion and health. Doesn't computer, doesn't compute, doesn't compute.
I've got it--all our jobs are going to the damn Norwegians. Invade!dryfly wrote:Mike_PNW
The strong euro is hollowing them out now
genau, Frau Merkel knows it too, after Ireland's election results. Start the clock, time is running out.3:49 pm lost-confused wrote:burnside
I say if they want to play, then they will have to pay dearly...or else we shut them out...
good plan..protectionism worked so well back in the 30's.3:49 pm lost-confused wrote:lost-confused
rebuild our nation so that its again the envy of the world...I do not buy into the inevitable argument that we as a nation will degenerate without access to the rest of the world...If the US was inconsequential on the world's consumer markets, the global/international corporations would have moved out of the US by now....We need to use our leverage as a consumer market to force others who want to play here...
I hardly know where to begin. I don't want anyone's envy, much less to force them into that state.
3:50 pm memmel wrote:
Now dryfly finish the cycle. Why are these offshore sales growing ? Well many of these countries run a trade surplus with the US which means wealth is building up offshore. Trickle down theory ain't that great but decades of trade imbalances eventually do translate into wealth reaching the masses. I'd argue that rising consumption overseas with continued massive trade imbalances with the US is natural at least for our warped system. The idea was eventually these countries will get wealthy enough to buy American and imbalances will steadily fall esp as wage arbitrage declined with wages and consumption approaching US levels. Our debt based consumption was supposed to create more American level consumers. Problem is the trade imbalances have not closed. I'm not denying that these countries are not starting to have expanded internal consumption simply they are meeting this via internal production plus the structural trade imbalances. Clearly this is not stable. Just because its happening does not mean it going to continue forever.
They are getting wealthier - but the other side of that in terms of our ability to 'consume' means we are poorer. That is my whole point - we are NOT going to be able to consume resources like we have - they are going to make a claim on a chunk of that and it is going to all be more expensive in real terms [in terms of labor hours expended to capture it]. The difference is they are going to be increasing their take per capita while we are going to see ours decline.
There is no way 2-3 billion new consumers enter the picture [like what has happened over the last two decades] and not have that happen.
Its only a matter of HOW it happens.3:50 pm DryFly, do not mean to be disagreeable, however, are we not being destroyed now with no hope of maintaining any semblance of a decent standard of living...I was in Vietnam in the 1960s,,,I saw what life was like in a 3rd world economy....We can not maintain the current path...our destruction lies in following it...something, almost anything has to change...merchants of fear3:53 pm Don't skip the effects of the whole Enterprise RICO & FCPA Derivatives meltdown...lost-confused3:53 pm My dog has no say!robj3:53 pm dryfly wrote:volker the viking
There is no way 2-3 billion new consumers enter the picture [like what has happened over the last two decades] and not have that happen.
Its only a matter of HOW it happens.
Good point, dryfly. My point was not that US consumption will continue to consume the same % of resources as in the 50s-60's. Just that low job creation (or negative and deflation) is assured by wage inequity and policies that reinforce FIRE's share on economy.3:55 pm robj wrote:burnside
Just that low job creation (or negative and deflation) is assured by wage inequity and policies that reinforce FIRE's share on economy.
until it doesn't
take your time, the outcome will be the same3:55 pm That suggests an outcome in which our wealthiest residents don't need to employ us. I suppose it's possible.lawyerliz3:55 pm No.TJ and The Bear
What we have in an oligarchy in the guise of a Republic. Anybody watch the History Channel on the President's cocoon?
We don't have a president, we have an elected Emperor.3:56 pm dryfly wrote:MaryAnn
Its only a matter of HOW it happens.
What makes it REALLY interesting is that the resource pie is shrinking. It's like musical chairs where you're both subtracting chairs and adding people.My daughter's hub gave her the rent off rental to pay her way thru medical school but with it came the responsibility of also keeping the property up. Well she is getting her comeuppance, people who can't pay their rent can't keep their power or water on so she calls me to rant and I laugh. This is the real life and it's gonna get worse and may never get better so with age comes wisdom so you will just have to do with less money. Its a circle of learning to do with less.volker the viking3:58 pm lawyerliz wrote:merchants of fear
We don't have a president, we have an elected Emperor.
okay, but the ones who are truly interested will dig a bit and discover we are in reality a corporation
look it up.3:58 pm How about having finance, investment, and banking laws enforced?TJ and The Bear3:59 pm MaryAnn wrote:km4
My daughter's hub gave her the rent off rental to pay her way thru medical school but with it came the responsibility of also keeping the property up.
Brilliant!.Grim is an understatementadornosghost
•something like 2/3 of US jobs created since 2008 are part-time, $20K/yr jobs.
•continuation of exported jobs ( Looks Like Ross Perot Was Right About The "Giant Sucking Sound" ) esp for professional & technical jobs and the employment picture for Merica gets even uglier
•the participation rate will rise over next decade ( esp for people 55+ ) as social programs and pensions are cut which will put even more pressure on people below for good paying jobs.4:01 pm volker the viking wrote:Externalized Costs
we are in reality a corporation
And the people running both are seamlessly is both arenas. BushCo was run as poor as General Motors, but gave up and just raped and looted the treasury, and gave what spoils that was worth anything to fellow thugs. Obummer has the same psychopaths making the rules.4:02 pm energyecon wrote:memmel
When asked whether those who refused would be arrested, Tubbs repeated that authorities want people to leave voluntarily.
The solidarity between the police, firefighters and teachers unions has been a bright spot in this struggle. Glad no arrests have happened but the protesters seem pretty adamant to stay. Can the police refuse a lawful order to clear the statehouse without putting their own jobs in jeopardy? Tough corner to be painted into for the police.4:03 pm TJ and The Bear wrote:merchants of fear
I don't see it either, since IMHO Europe's model isn't remotely sustainable either.
I did not say it was sustainable Just I argue that it would allow the US to kick the can down the road for a lot longer than going Chinese. We could even add oil/food subsidies on top for example. Put America to work where the government gives grants that can be written down from losses to pay salaries etc. All kinds of groovy socialist stuff. Then when the economy runs out of steam you can dismantle all of these as wasteful excess and cut programs to boost competitiveness and finally go Chinese.
I argue that such and approach would have put the final day of reckoning off by a decade. The world would have looked the other way as American consumption remained high. Heck to do it US style we could do it as corporate loans the only catch is hire American. If you do it like I suggest and allow the loan value to be written down if the company makes a loss in the program well fantastic. In fact with modern accounting we could allow all the expenses associated with the make America work program to be taken out before the final profit statement so companies are allowed huge profits while writing down their loans when balancing expenses.
Run this gig for a bit and only then do we have to finally move to second world economics. I suspect that Republicans and Democrats will do and about face and try this game probably after the next elections esp if the money is funneled to companies not directly to workers. In fact to bring in another aspect. If I'm right about housing then I think that once its clear to the Republicans that housing is going to crash and its not stabilized they will act. I'd argue right now everyone believes we are stable only once its clear that we are not will we see a move towards Corporate Socialism. Of course if your familiar with history then you will know that this was the trick used by Fascist regimes. This round was purely banking however the next round will include many businesses. And Americans will finally get what they deserve.4:03 pm Including the banking Enterprises and their 'bankruptcy remote' investors doing with 'less'?.Skittles the UnicornFor those looking for the first step to achieving some of the lofty goals herein espoused, I'd suggest finding a way to get apathetic Americans off their fat asses and get to the polls and vote - at every level of politics.
I think the biggest chunk of dependable voters is ancient folk like me. You want seniors like me choosing your future? Heck, I don't even want that.
It all starts at the polls. IMHO,of course.
Mark, the choice in forecasting is simple. Either don't do it, or do as well as possible.
Most here do not need reminding, but for those who might, check the Bill McBride chart at Calculated Risk:
So, just from an eyeball forecast, and the from the clear lack of political will to take care of the suffering unemployed, here is my "forecast." I will be delighted to abandon it if data warrents.
We are out in 2017, 2018, maybe later before employment recovers.
All economic models forecast to an extent. That is the whole point. Predict which actions will deliver the best results going forward.
The past decade of US economic policy has be totally frustrating. Politicians have given up on what works to bring down unemployment. FIscal stimulus with focus on domestic job creation has always worked. Since 2001, we have stopped trying to do this.
Instead, we have followed the predictions of hallowed but flawed economic models that reinforce the beliefs and prejudices of the wealthy elites. These models are flawed because they are not proven to work. In fact, they have proven time and again to underperform. Another major flaws is the lack of a transmission mechanism where by tax cuts or QE can translate into short term job creation. In fact, the models merely "assume" full employment, they don't address it.
Is it a prediction to note that the Bush-Obama fiscal policy is not doing the things it needs to do to create domestic jobs. Therefore, we should expect labor to recover only very slowly?
This is immoral, cruel, unconscionable, and above all totally unnecessary and economically destructive.
Robert Reich has a forecast of his own :
"...Corporate profits cannot continue to rise on the basis of foreign sales (which are slowing as Europe adopts austerity and China raises interest rates), the purchases of the richest 10 percent of Americans (which are dependent on a rising stock market), and cost-cutting measures at home (which are necessarily limited).
Without a strong and broadly-based middle-class recovery, America's big money economy will fall in on itself. A major stock market "correction" is a certainty."
January 30, 2011 | naked capitalism
"If Apple moved its assembly line to the United States and created domestic jobs but didn't raise the cost of the iPhone, the company would still turn a 50 percent profit on every one it sold."
The Great Moderation (along with automation) led to a decrease in business cycle volatility. This had the unintended negative consequences of leading to a decrease in job creation. V-spikes in job growth no longer accompany economic recoveries in the US. The jobs were and are being "disappeared" to automation and foreign companies
Exporting jobs overseas was sold to Americans as the path to cheaper goods and disinflationary trends in the US economy. Unfortunately, research has shown that the savings accrued to consumers from the cost of goods sold from overseas are negligible. Outsourcing jobs and companies overseas benefits corporate America, but the benefits have not passed through to Main Street. Main Street, once again is William Graham Sumner's Forgotten Man. To cite a case in point over the past decade:
A recent paper by researchers at the Asian Development Bank Institute concluded that the iPhone, one of the United States' top innovations of the past decade, actually contributes nearly $2 billion to our trade deficit because it is almost entirely produced and assembled in Asia. The paper also raises a conundrum for lawmakers and business leaders alike: If Apple moved its assembly line to the United States and created domestic jobs but didn't raise the cost of the iPhone, the company would still turn a 50 percent profit on every one it sold.
Substantial changes in free trade agreements and the tax codes since the 1980s have incentivized companies to export jobs overseas. And the outsourcing trend is still alive and well. Howard Rosen, a labor economist at the Peterson Institute observed "US companies are investing in plants and equipment, just not in our borders…They are privatizing the gains of globalization." US companies are "returning the spoils of globalization and technology" to new projects overseas. Another more recent case in point:
Recently, [mid 2009] ATI [an Indiana company} made $30 million worth of investments to buy, convert, and modernize a shuttered factory in economically ravaged Michigan so the company could provide more [wind-turbine] parts to GE as the green economy expands with federal stimulus funding. But a Chinese firm underbid ATI, and the factory faced having to lay off 302 union workers and shutter the plant. In an aggressive bid to keep the factory open, ATI offered to match the price of the Chinese producers. GE once again said they would prefer to buy from China. The ATI plant is now closed, the jobs gone.
GE's Jeffery Immelt was sitting on Obama's Economic Recovery Advisory Board led by Paul Volcker at the time. This course of action alone appears at face value to contradict the purpose of the Economic Recovery Advisory Board had set out to accomplish in 2009. Immelt's GE received $16 billion in bailout funds from US taxpayers, like those 302 workers at the ATI plant whose jobs Immelt had just outsourced to China. The Economic Recovery Advisory Board should have enacted policies and legislation that would have not only prevented that from happening, but also made it illegal. At the least, the gov't should have blocked GE from accepting a bid from China when a competitive bid in the USA was on the table.
On another level, though, just why would GE be so badly motivated to outsource those jobs to China when ATI had matched the China bid in the first place? At face value, GE's management should have taken the lowest bidder for this job. That would have been ATI in Indiana. But Immelt is a "nut on China." His decision to outsource to China was entirely reflexive of his on policies. Quoting Immelt from Dec 6 2002:
When I am talking to GE managers, I talk China, China, China, China, China. [Five Chinas] You need to be there. You need to change the way people talk about it and how they get there. I am a nut on China. Outsourcing from China is going to grow to 5 billion. We are building a tech center in China. Every discussion today has to center on China.
Is GE's Jeffery Immelt's partnering with and pandering to China's interests all that? Or is it that there are such powerful tax incentives for outsourcing that Immelt would proclaim himself to be "a nut on China?" Would reforming free trade agreements and corporate tax structures disincentivize outsourcing and help repatriate jobs back home? I don't know the answers, but the task to do just that fell to Jeffery Immelt after Obama appointed Immelt to head up Obama's new Council on Jobs and Competitiveness earlier this month. One of Immelt's first proclamations as Obama's new "Jobs Czar" was:
A sound and competitive tax system and a partnership between business and government on education and innovation in areas where America can lead, such as clean energy, are essential to sustainable growth….As one of America's largest exporters, GE remains committed to producing more products in the United States, which is our home and largest market.
Blah, blah, blah. What a bunch of crap and half-truths. It will be intriguing to see what Immelt proposes and disposes as he takes on his new role as Obama's "Jobs Czar" after shipping out those "competitive and innovative" clean energy wind-turbine jobs to China in 2009. Marcy Wheeler is not far off the mark when she says Immelt's actions "make him the poster child for everything wrong with the US economy right now."
Recent trends in outsourcing are expected to persist no matter what Immelt and Obama propose and dispose. According to The Hackett Group: "On top of 2.8 million jobs lost from 2000 to 2010 in finance, IT, HR and procurement, The Hackett Group projects that another 1.0 million will disappear by 2014 in North America and Europe. By 2014 nearly half of the back office jobs that existed in 2000 will have disappeared or moved overseas. According to the Hackett report and IMF data, the job loss rate due to offshore outsourcing has accelerated since troughing in 2004. Hackett said:
"Our experience in the trenches of strategic transformation in finance, IT, HR and procurement is entirely consistent with the picture of a jobless recovery painted in this research…. There's no end in sight for the jobless recovery in business functions, such as IT and corporate finance, in large part due to the accelerated movement of work to India and other offshore locations… Realistically, we have to discover ways to create jobs in other industries and in other ways," said Michel Janssen, chief research officer at Hackett.
The forward-looking realities of the US jobs market are not as encouraging as the CBO, BLS, and Obama administration would like us to believe. Some Democrats in Congress are showing some recognition of the structural unemployment problems in the US job market. But so far, they haven't got beyond writing letters to the US Treasury Secretary.
In a March 2010 letter sent to Treasury Secretary Timothy Geithner, Sens. Chuck Schumer (D-NY), Sherrod Brown (D-OH), Bob Casey (D-PA) and John Tester (D-MT) said that taxpayer dollars designed to boost the struggling American economy should not be used to create jobs overseas.
"Companies located in New York, Pennsylvania, and elsewhere across the United States are fully capable of manufacturing the range of clean-energy components, and U.S. wind farms and other clean-energy projects financed with stimulus money should be buying American-built parts," the letter reads.
The report estimates stimulus funding for wind projects have created roughly 6,000 manufacturing jobs overseas and just hundreds in America. At a press conference, the Senators pointed to a specific wind farm project in West Texas that is seeking an award of $450 million in stimulus funds for a $1.5 billion project. According to Schumer, the Texas project would create around 3,000 Chinese jobs and just 300 American jobs…. The goal of the stimulus is to strengthen the American Economy, and that means creating jobs here in the U.S. not in China," he said.
The letter comes on the heels of a report by the Investigative Reporting Workshop and ABC News, which found that $8 out of every $10 spent on wind energy projects through the stimulus package went to a foreign company. Total recovery funds spent on wind energy projects total nearly $2 billion.
So, to our new jobs czar Jeffery Immelt: Jeff, I wish you the very best in your efforts to create 2.5 million jobs for the next 5 yrs. My advice is that you keep your day job, because when Obama fails to create those 5 million jobs by the November 2012 election, Obama and his new Council on Jobs and Competitiveness will be toast.
And Jeff, if you should find that your role as Obama's "Job Czar" conflicts with GE's existing practices, trends in automation, and outsourcing US jobs to China, may I further suggest you either resign from GE or that you resign from Obama's new Council on Jobs and Competitiveness.
Obama's new Council on Jobs and Competitiveness should be framing policy around the question: If not for the American worker, then who?
American policies must take steps to stop the bleeding of jobs overseas, Obama's new Council on Jobs and Competitiveness should be enacting policies and proposing legislation that repatriates US jobs and disincentivizes further outsourcing of US jobs. These policies would of course be hugely unpopular with Corporate America, but that is the crossroads where we now stand.
Here's what it will take to dissuade the Immelts of the world from their China obsession – A firm statement by the DOJ that "Yes, you are free to source whatever you want from China to take advantage of lower costs, but the moment harm is done to an American consumer from melamine in baby formula, lead paint on toys, cadmium tainted jewelry, etc., we will come after your firm not just with civil charges, but with criminal charges, with the singular intent of putting your firm out of business. We will then pursue the maximum allowable criminal charges against all of the officers of your firm, and will seek prison sentences."
January 7, 2011
By now, you saw the headline data: Unemployment fell by 0.4% to 9.4%; NFP increased by 103,000 in December.
Let's take a closer look at what the data suggests:
• Unemployed persons decreased by 556,000 to 14.5 million in December
• Long-term unemployed (jobless for 27+ weeks) was unchanged at 6.4 million (44.3% of Unemployed)
• Average workweek was unchanged at 34.3 hours
• Temporary help trended up in December (+16,000); Note this sector is +495,000 since September 2009.
• Average hourly earnings increased 3 cents (0.1%) to $22.78.
• These 3 aspects of NFP - hours worked, temp help and wages - are the leading indicators with in NFP, which overall tends to be a lagging indicator. They were at best modestly positive.
• Revisions continue to be positive: October revised from +172,000 to +210,000, November revised from +39,000 to +71,000.
• Labor force participation rate slid to 64.3, accounting for some of the U3 rate change to 9.4%; U6 fell 0.3% to 16.7%
• Biggest sector gainers were leisure and hospitality (+47,000), health care (+36,000) and professional services (+16,000)
• Labor force participation rate slid to 64.3, accounting for some of the U3 rate change to 9.4%
The Labor market still faces several major headwinds:
1. Post credit-crisis recoveries tend to be weak ion terms of both GDP and job creation. This recovery is no different;
2. States and municipalities face growing budget gaps; they are freezing hiring and cutting headcount.
3. The Residential Housing market remains somewhat over-priced, with bloated inventory and a disinterested pool of buyers.
4. Consumers continue to deleverage and add to savings. The Paradox of Thrift has put a cap on the slowly improving retail environment
All told, this was a mixed employment report, but within normal parameters for this recovery.
The silver lining is the Fed has no cause to take their foot of the QE accelerator . . .
The two American economies - the Big Money economy and the Average Working Family economy - will continue to diverge. Corporate profits will continue to rise, as will the stock market. But typical wages will go nowhere, joblessness will remain high, the ranks of the long-term unemployed will continue to rise, the housing recovery will remain stalled, and consumer confidence will sag.
The big disconnect between corporate profits and jobs is likely to continue because America's big businesses are depending less and less on U.S. sales and U.S. workers. Their big profits are coming from two sources: (1) growing sales in China, India, and other fast-growing countries, and (2) slimmed-down US payrolls.
In a typical recovery, profits lead to more hiring. That's because in a typical recovery, American consumers head back to the malls - and their buying justifies more hires. Not this time. All the hype about Christmas sales over the last few weeks masked the fact that American consumers demanded bargain-basement prices. And the price-cutting dramatically reduced sellers' margins. In short, profits aren't coming from American consumers - and profits won't be coming from American consumers in 2011.
Most Americans don't have the dough. They're still deep in debt, can't borrow against their homes, and have to start saving for retirement.
The Dow Jones Industrial Average is rising because of foreign sales. General Motors is now making more cars in China than in the US, and two-thirds of its total sales are coming from abroad. When it went public last month it boasted that soon almost half its cars will be made around the world where labor is less than $15 an hour.
Wal-Mart isn't doing especially well in America but Wal-Mart International is booming. And Wal-Mart is hiring like mad outside the US.
General Electric is keeping its payrolls down in the US but plans to invest half a billion dollars in Brazil and hire 1,000 Brazilians, and invest $2 billion in China.
Corporate America is in a V-shaped recovery. That's great news for investors and everyone whose savings are mainly in stocks and bonds. It's also great news for executives and Wall Street traders, whose pay is linked to stock prices. All can expect a banner 2011.
But most American workers are trapped in an L-shaped recovery. That's bad news for the Main Streets and small businesses in 2011. It's also a bad omen for home prices and sales, and everyone whose savings are mainly in their homes.
Home prices in major metropolitan areas sank last month, the third straight month-to-month drop. I expect home price declines to continue next year. We're in a double-dip housing market, largely because unemployment remains so bad that millions of Americans can't pay their mortgages.
None of this bodes well for US employment next year. I expect the official unemployment rate to remain around 9 percent.
In other words, whether 2011 is a great year economically depends which economy you're in – the one that's rising with the profits of big business and Wall Street, or the one that will continue to struggle with few jobs and lousy wages.
Sadly, the next Congress is unlikely to do much to reverse any of this. Most Republicans and too many Democrats are dependent on corporate America and Wall Street. Their version of tax reform is to cut taxes on the wealthy and on big corporations, and either raise them on everyone else (sale and property taxes are already on the rise) or cut spending on programs working families depend on.
At some point, perhaps, the disconnect between America's two economies will become so big and so obvious it can no longer be ignored. Progressives, enlightened Tea Partiers, Independents, organized labor, minorities, and the young form a new progressive movement designed to reconnect America.
One can always hope.
This is something I've been worried about:Career Shift Often Means Drop in Living Standards, by Catherine Rampell, NYTimes: ...A new study of American workers displaced by the recession sheds light on the sacrifices a large number have made to find work. Many, it turns out, had to switch careers and significantly reduce their living standards. ...
The study, conducted ... at Rutgers, was based on a survey of Americans around the country who were unemployed as of August 2009... As of November 2010, only about one-third had found replacement jobs, either as full-time workers (26 percent) or as part-time workers not wanting a full-time job (8 percent).
And of those who successfully found work, 41 percent had switched into a new career or field. ... Nearly 7 in 10 of the survey's respondents who took jobs in new fields say they had to take a cut in pay, compared with just 45 percent of workers who successfully found work in their original field.
Of all the newly re-employed..., 29 percent took a reduction in fringe benefits in their new job. Again, those switching careers had to sacrifice more...
From June:Where Will the Good Jobs Come From?: I have emphasized short-run job creation quite a bit recently, and I have noted, implicitly at least, that we shouldn't be too picky about the quality of the jobs that are created. Most jobs will do.
But in the long-run the quality of jobs matters a lot, and when the private sector finally begins reabsorbing the unemployed, the underemployed, and the discouraged, we want people to be able to find jobs with decent wages and benefits -- jobs that are as good or better than the jobs they had before.
But where, exactly, will those jobs come from? I wish I had the answer.
Education is part of it, better education means better jobs on average, and it's easy to imagine a substantial fraction of the population benefiting from an educational advantage. So I won't back off prior calls to improve education at all levels.
But even if we substantially improve education, it won't fully solve the problem. There will still be a need for quality jobs that are not all that dependent upon knowledge based skills. However, it's harder to imagine an emerging set of industries that will provide the large number of quality jobs that we need to replace those lost from industries in decline.
If these jobs fail to be created in the next years and decades, the result will be an ever widening gap in the distribution of income with, as now, a group at the top doing relatively well, and everyone else treading water at best.
CHEAP LABOR- It's what the wealthy special interests want and our politicians deliver.
At the risk of being repetitive, UNDERemployment will likely be with us for a generation of more, probably until the last boomer dies from exhaustion.cm:
What does better education mean in contemporary America? Better teachers? Better teachers' pay to attract better teachers? Better leadership in the educators' profession? Less political patronage employment in the school systems?
If all of those things were accomplished, would adequate progress be made without better motivated students? The inner city classrooms depicted in "The Wire" exaggerate the hopelessness of the students somewhat and the frustrations of the teachers a little. But those scenes merely exaggerate real attitudes and the real attitudes out there can not be changed without much better business, political, and professional leadership than we have now. Fifty percent of babies born in the US in 2011 will be born to minority mothers. Most of them will be headed for crappy schools in a few years and many or most will bring along unconstructive attitudes toward education. The safest thing for political and professional leaders to do is to deny that there is an attitude problem so as to escape blame for failing to address it. Improved funding will continue to fail until we get improved leadership. I was hopeful that Pres. Obama would provide that leadership, but so far it hasn't appeared.
Show me one generation of kids, in a developed society, that ever entered school eagerly, even in "majority" neighborhoods. Kids of any economically underprivileged social group, regardless of whether they are an ethnic minority, will be disadvantaged in school, in the help they can get at home as well as motivationally. This can be observed in countries that are (or have been in the past) ethnically more homogeneous. The problem is not with the kids or the ethnic minority, it's with their marginalization and geographical segregation in a dysfunctional society that shuts them out and focuses the resources on the "prime" areas.
Actually basic infrastructure jobs have been upskilled drastically since the 1930's. As an example no railroad lays track by driving spikes into ties the old way, its laid in 90 foot pre-assembled sections. In general a lot of construction has been mechanized and more will be. If we take the lessons on home building some of which were used 100 years ago (pre-cutting the structure and perhaps go to pre-built wall sections) the labor in house construction can be drastically reduced. The days of a construction worker job being mostly manual labor are ending, machines do more and more of the manual work. (The machines don't get their back thrown out etc.). The problem is that the post asks for jobs that will no longer exist, good jobs that don't take knowledge based skills are fading away, since machines can be made to do them. We may have to go the roman route and provide bread and video games (updated from circuses) for folks that don't get knowledge based skills.
As an engineer working in manufacturing/construction in the US for the last thirty years, I disagree.
Machines are replacing SKILLED labor typically with less skilled operators (that's why we automate, duh.) But that still leaves some very skilled guys required to get the work done: high steel workers, electricians, crane operators, machinists, mechanics, technicians, you name it. (Think - the guys who design, build and maintain the machines for starters.)
But you know what - in the thirties, you took the job and LEARNED THE TRADE. And as you grew in your job, further training allowed for increased job skills. The same basics required to LEARN THE JOB, exist today.
Right now companies are lowballing skilled workers to try and dump some unemployed, highly jobs. This is what CAUSED THE SLUMP we're now in - a lack of good job creation. What we need is somebody creating good paying jobs which also creates skilled workers.
Germany is a good example of how to do this right.
I suspect it's not just a matter of a "credential race". Back then not only where college+ level degrees lees ubiquitous, there were also more jobs to be staffed, in proportion to the working population (women not fully integrated into the workforce?), that are now automated or offshored.
Also now more jobs truthfully require more exposure/penetration of some subject matter (raised state of the art, as well as "commodity" jobs being automated or offshored).
Although within the Bachelor/Master/Doctorate spectrum, there is probably a purer zero sum game aspect, in the sense that the "quality" of the degree is largely used to restrict the candidate pool and not to select for "skills". But then it's always a mix of this and that when there are too many candidates out there.
To 'Low-Ball' or Not To 'Low-Ball' or Not … It seems a growing number of employers are offering lower-than-expected salaries to job candidates who are re-entering the workforce as the recession ebbs.
Why? Because they can.
"Companies will pay you less because they know you have no choice but to take it," Holly Erickson, 38, a resident of St. Clair, Mo., tells the St. Louis Post-Dispatch. According to the story, many unemployed job seekers are sacrificing about $10,000 in pay for every year they are out of work, although researchers have yet to pinpoint just how many workers have taken hits to their careers and wages because of the recession. A survey in September by job-search site CareerBuilder found 54 percent of 925 unemployed respondents reported fielding compensation offers that were more than 25 percent lower than the paycheck they received at their last job.
~sigh~ so many words, so little wit.
You start with a false assumption.
"2) The introduction of progressive unemployment through comprehensive mechanization of every field of activity. Only by unemployment does it become possible for the individual to achieve certainty as to the truth of life and finally become accustomed to experience." Tristan Tzara , Richard Huelsenbeck, 1921 or so.
"U.S. Corporations moved into Puerto Rico and destroyed the local economy. Now the unemployment rate is 50%. The problem is they only did half the job." John Cage, 1959
"Every economic system ever invented was just a scheme to get men to work. The women have to work anyway." Robert Ashley, 1985ish.
"The problem is not that there are no jobs, the problem is you can't live properly without one. I don't want a job, I want a life." me, 2010.
See? The adoption of agriculture facilitated and rationalized slavery. The adoption of industrialism facilitated and rationalized wage slavery. We should be concentrating on ending the 10,000 year old practice and getting on with maximizing human potential.
From the foregoing it is difficult to escape the conclusion that our US residents with less than an Associate's degree can choose between a low paid job or no job. Already black and Hispanic young adult men have 34-44 percent U6 with high school or less. Yet our gov still refuses to stem low skilled immigration. If the Feds attacked border control with the same zeal and determination shown in their banksters' enrichment policy, the border fence would dwarf China's Great Wall.
December 20, 2010
One of the post-bubble era trends in Japan that has caused consternation within the island nation is the rise of an employed underclass. The old economic model was lifetime employment, even though that was a reality observed more at large companies than in the economy overall. Nevertheless, college graduates could expect to find a job without much difficulty and look forward to a stable career if they performed reasonably well.
In the new economic paradigm, wages are compressed among full-time salaried workers (meaning seniority/managerial based pay differentials, which were not all that great in Japan to begin with, have narrowed). And even worse from a societal standpoint is the rise of "freeters" or workers hired into temporary jobs. Some of them can work for the same company for a very long time, but they are not only paid less, but are also not in the hierarchy of permanent worker. Many become freeters right out of college, and are never able to get back on track with their peers, since companies in Japan, as in the US, prefer to hire new college or professional school graduates into their entry level positions.
The bigger implications for Japan are negative. Many freeters can't afford to live by themselves...
A recent article by Charles Hugh Smith depicts the rise of freeters as directly related to growing income disparity:
The gap between extremes of income at the top and bottom of society - measured by the Gini coefficient - has been growing in Japan for years. To the surprise of many outsiders, once-egalitarian Japan is becoming a nation of haves and have-nots…
More than one-third of the workforce is part-time as companies have shed the famed Japanese lifetime employment system, nudged along by government legislation that abolished restrictions on flexible hiring a few years ago. Temp agencies have expanded to fill the need for contract jobs as permanent job opportunities have dwindled.
Many fear that as the generation of salaried baby boomers dies out, the country's economic slide might accelerate. Japan's share of the global economy has fallen below 10% from a peak of 18% in 1994. Were this decline to continue, income disparities would widen and threaten to pull this once-stable society apart…
Freeters "who have no children, no dreams, hope or job skills could become a major burden on society, as they contribute to the decline in the birthrate and in social insurance contributions," Masahiro Yamada, a sociology professor wrote in a magazine essay titled, "Parasite Singles Feed on Family System."
In Japan, the rise of permatemps started from the bottom up, with new graduated who were relegated to short-term work. As the New York Times indicates tonight, the rise of temps in the US instead appears to be happening across a broad swathe of jobs, meaning everyone who loses a job is at risk of never finding a job again.
Of course, with job tenures shrinking, the distinction between having a full time job versus a temporary one may seem to be overblown. But traditional jobs also include real perks, such as benefits, and also usually terminated less casually than temporary positions (and this distinction has long been abused: for instance, a relative of mine was a "temporary" employee for eight years at GM in the 1990s, running an administrative unit).
From the New York Times:
This year, companies have hired temporary workers in significant numbers. In November, they accounted for 80 percent of the 50,000 jobs added by private sector employers, according to the Labor Department. Since the beginning of the year, employers have added a net 307,000 temporary workers, more than a quarter of the 1.17 million private sector jobs added in total…
To the more than 15 million people who are still out of work, those with temporary jobs are lucky. With concerns mounting that the long-term unemployed are becoming increasingly unemployable, those in temporary jobs are at least maintaining ties to the working world.
The competition for them can often be as fierce as for permanent openings, and there are still far too few of them to go around. Indeed, the relative strength in temporary hiring has done little to dent the stubbornly high unemployment rate, which rose to 9.8 percent in November.
"With business confidence, particularly in the small business sector, extremely low," said Ian Shepherdson, chief United States economist at the High Frequency Economics research firm, "it's not surprising that permanent hiring is lagging behind."
The failure of small businesses to add permanent jobs is particularly troubling, since small businesses have been far and away the biggest source of job growth in recent expansions. In the last upturn, large corporations shed employees. Back to the Times:
This year, 26.2 percent of all jobs added by private sector employers were temporary positions. In the comparable period after the recession of the early 1990s, only 10.9 percent of the private sector jobs added were temporary, and after the downturn earlier this decade, just 7.1 percent were temporary.
Temporary employees still make up a small fraction of total employees, but that segment has been rising steeply over the past year. "It hints at a structural change," said Allen L. Sinai, chief global economist at the consulting firm Decision Economics. Temp workers "are becoming an ever more important part of what is going on," he said.
As with Japan, the long term implications of this trend are not good: employers providing lower-quality employment;, workers attaining less in the way of skills, which puts them on a permanently weaker career path; the resulting lower income workers less able to build up economic reserves in an era of weakening safety nets. And this trend has gone very far in Japan, a country which reveres enterpreneurs not for making money, but for creating jobs. With far fewer social inhibitions against turning employees into temps, we can expect to see an even further hollowing out of the US economy.
Gemfinderat 1:56 am These generational wealth gaps may be the inevitable result of labor globalization. Why? Because the jobs of the youngest, least experienced workers e eest to ship abroad, and thus exposed to the greatest price competition. Japan has done a great deal of this, though the US has done more. Training is one solution, but only if there is sufficient labor market transparency to see where the opportunities are. College does not appear to be solving this problem at present, in either the US or Japan. Thus, at root, we have here another transparency problem. The young need to know where the opportunities are, in order to pursue them.psychohistorianat 2:56 am You assume that there is enough sustainable world consumption demand to employ all who would wish work. I believe that this assumption is wrong and that the public is being misled into believing that there are jobs for all out there. It just gives those in control more objects of hate to get the faith breather followers to focus on instead of the ultra rich….look over there, that country is taking jobs away!!!!! Globalism without effective social government is a recipe for disaster which we are seeing unfold. The ultra rich must think that they will survive the coming "adjustment" without much suffering on their part and I hope they are wrong.Externalityat 3:42 am Interesting article describing the problems of California's, and to a large extent, America's education system. http://www.newleftreview.org/?page=article&view=2868 Scroll to "Cheating the children" "The higher learning?"Diego Méndezat 2:14 am You may find interesting that over 1 out of 4 Spanish workers were freeters before the crisis. Since freeters are the first to get sacked, the ratio has gone down to 1 out of 5 workers in Spain. This doesn't account for some million freelancers who, in fact, work only for one company. The company forces them to get self-employed, so it has to pay fewer Social Security charges and can sack them immediatly if it so wants. It makes you wonder how some may call the Spanish labour market one of the most inflexible in the world.Sungamat 5:14 am It is amongst the most inflexible because the majority of employees, the 75 to 80% on permament contracts, are nearly impossible to dismiss or make redundant. Once you have hired a permanent worker he or she is indeed "permanent". Since the number of employees a company needs does indeed change over time that leaves "temporary" employees to take up all the flexibility needs. One thing I found "amusing" is the tone taken by the Economist about young people protesting about the rise of the pension age in France: "At the same time, 379 lycées were disrupted or closed on October 19th by protesting school pupils, who in France have their own unions. Although not directly touched by pension reform, many pupils seem to think that, if 60-year-olds work for two years longer, they will have to wait two more years before they can inherit their jobs." Not even bothering to explicitly pointing out that they believe that thought is ridiculous. However these Students have grown up in a stagnating enconomy with few new positions being created. Is it really that suprising that they believe dead men's shoes is the only way to get one of these posts. As a side note, I work in the UK and do have a "permanent" position. Like most permanent posts here I can be made redundant with one month's notice (by the same token I have to give my employer a month's notice should I want to leave them). In the US "permanent" is even less permanent. That kind of thing is fairly standard when people talk about a flexible labour market.Diego Méndezat 6:02 am Every Spanish worker can be fired at 15-day's notice, one of the shortest notice periods in the world. It just happens not to be for free: workers receive 33 days' wages per year of work, up to a maximum of 2 years' wages (if you have been working over 20 years for the same company). You must take into account that lifelong "permanent jobs" disappeared some 20 years ago in Spain, so that only very senior people get large indemnities when fired. Moreover, other redundancy laws (with even better terms for companies) apply when a company is in financial difficulty and mass lay-offs are needed. Can the Spanish labour market be made more flexible? Yes, it can. But it is in no way inflexible, especially when compared with other countries. Even one-day contracts are becoming standard in many industries, including public services; hard to believe that happens in an inflexible market.alexat 9:04 am Mere facts won't kill the convenient myth of inflexible labor markets causing unemployment.samat 3:41 amSteve T
"The Demographic Crisis" should not be resisted, because it's nothing more than the consequence of
1) people living longer and
2) the country's population not growing exponentially.
To wish for the "crisis" not to happen is either to wish for people to die younger, or to just stick your head in the sand and say that exponential population growth need never end. The latter is literally a pyramid scheme.at 4:04 amalex
The trend toward temporary jobs is really just part of the much more important trend to FEWER jobs of nearly all kinds, and therefore, less bargaining power for nearly all workers. Economists fail to realize the extent to which advancing technology and globalization are contributing to unemployment. Japan has been on the leading edge of automation and robotics and is seeing the impact first. Of course, Japan has a dramatically better social saftey net. All those freeters have access to affordable healthcare, and the Japanese unemployment rate is still only around 5%. The situation in the US is going to be much worse. It's also imporant to note that Japan is likewise on the leading edge of the baby boom, demographic crisis. So where's that shortage of workers everyone has been predicting? Shouldn't we see at least a hint of it already? The reality is that accelerating automation technology is destroying jobs at an ever-increasing rate - starting with the good, permanent jobs.
For a great overview of this, see this book: "The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future" http://www.amazon.com/gp/product/1448659817
A free PDF is also available here: http://www.thelightsinthetunnel.com Also see the author's blog at http://econfuture.wordpress.com . I think the issues raised in this book are among the most important that we will have to confront as a society. I encourage everyone to read it…at 9:24 am While that's a medium to long term concern (and has been since at least the start of the industrial revolution) it hardly explains the unemployment of the last few years.Jack Ripat 4:08 am It may be that the growth in temporary workers is directly connected to the need to increase in the income of those controlling the means of income. Viewing the economy as a fixed size blanket, the pulling of the blanket towards the head exposes the feet and eventually the rear end. Unless the income of the higher ups, e.g. CEOs, financial traders and higher management, is forced to pull back in realistic terms, temporary workers will be needed and abused but increasing part of the economy. In today's moral model, this is not going to happen without yet another severe depression. In the current political structure where the vast majority of congress people are "employees" of the rich, even a depression may not bring the needed change.paper macat 4:23 am One need not use the quotation marks around employees, methinks.alexat 9:08 am 'In the current political structure where the vast majority of congress people are "employees" of the rich, even a depression may not bring the needed change.' That's a shame. I prefer metaphorical torches and pitchforks. But if the need for the genuine article arises …YYat 6:11 am The legislative nudge was more than enough to change the system that wasn't all that great to begin with to take away worker protection. What appeared ti be token nods to free market philosophy has had socially detrimental effects, not made up for by any increase in efficiency as social bills come due anyway. There already was a tiered system that protected larger companies by sacrificing their suppliers and contractors. The nudge resulted in large companies becoming freer to not hire as many permanent employees. Now the government is talking about decrease in corporate tax (high now, yes but so what?) as if that would magically transform investment climate. I think they're smoking the result of their own fog machine. In the meantime how is it that demographic changes are detrimental, if the society can not provide enough jobs for the young people, even with their now very limited numbers?alexat 9:11 am "What appeared to be token nods to free market philosophy" Where "appeared" is the operative word. Socialism for the rich is not a free market.hermanasat 6:45 am If employment is required to participate in society, but not for the economy, does society respond by redesigning the ability to participate or destroy the jetsam non-participants?samat 7:22 am When profitable sheep farming in Scotland made Highland tenants redundant to the landowners' needs, they were simply pushed off the land, by soldiers if necessary, and forced to go wherever they could find to get work, even to the New World. What if it happens again, and there are no new worlds?Externalityat 8:42 am If it became a national priority, we could easily have colonies on the moon by 2030.frances snootat 8:02 amfrances snoot
"If corporations are "persons", they are persons with qualities and powers that no flesh-and-blood human could ever possess–immortality, the ability to be in many places at once, and (increasingly) the ability to avoid liability. They are also "persons" with no sense of moral responsibility, since their only legal mandate is to produce profits for their investors." Yes, but look to see that charismatic world leader appear on the scene of the global criminal cartel in future.
The progressives wax lyrical concerning the banks (not the multilateral banks of course) but deny people personhood by ignoring the moves made by the fascist capital in securing a 'global empire'. It's a deathly alliance.at 8:04 am http://www.nytimes.com/2010/12/16/education/16naming.html?_r=2&adxnnl=1&adxnnlx=1292850117-Z/orPhhMBxwO0GxsM6v1bwfrances snootat 8:11 amExternality
Harbinger of aggression: http://www.leap2020.eu/Which-languages-will-the-Europeans-speak-in-2025-Heavy-trends-in-the-EU-s-new-linguistic-equilibriums-in-one-generation_a1034.html "the great 'return' of german" HAHAHAHAHA!at 8:39 amJim the Skeptic
Thank for your stereotypical, enthnocentric comment. Are there any other ethnic groups that you want to make fun of?at 8:30 amjake chase
Japan's economy went downhill as the rest of south east Asia began to compete for the USA import market. There is no easy solution to their problems. Our economist's have assumed that Japan's problem was their financial industry and that the Japanese acted too slowly, too timidly, or just failed to do what was necessary. The USA's economy went downhill as more and more manufacturing jobs were moved overseas. We could force some of those jobs back to USA with high tariffs, but the corporations would resist and they own the Congress. So we are taking this path by choice, but the results are the same for us as it was for the Japanese.
There is no surprise there. And we are making this situation worse by allowing wealth to become concentrated. Employers have to deal with the world as it is and in this environment hiring temps makes perfect sense. This is an effect of our major problem and we should be dealing with the cause! Instead we are acting as if clearing the financial industry crisis will solve all our problems. And the assumption is that we are smarter, quicker to act, and less timid than the Japanese. Balderdash!at 8:36 amfrances snoot
In the post WWII euphoria, monopoly capitalism sold itself as an engine of job creation. But, the corporate model has always been, first, dumb down the work (Taylorism), second, automate the work, third, eliminate redundant staff.at 8:40 am http://www.marketwatch.com/story/japan-tax-cut-means-bigger-bill-for-some-report-2010-12-16frances snootat 8:54 amPaul Tioxon
"All our countries have to deal with a new diversity. The time of the homogenous nation-state is over…Alongside diversity–and diversity is certainly a strength of our society–we still need, in each of our societies, a sense of unity, of belonging together. This sense of unity can lie in shared values…" Von Rompuy: "A Curtain Went Up"/Berlin/November 9 2010
"We are fighting for the basic values that Europe has created in its thousands of years of history. Even more, we are fighting for the very source of these values, both in the past and for the future. The very roots of Europe are threatened."Joseph Goebbels,1943 http://www.calvin.edu/academic/cas/gpa/goeb43.htm Ring any bells?at 9:03 amRichFam
There will continue to be tension between two competing wings of the ruling class. Both sides understand that a distinct option for the citizenry is to revolt.
Under reported rioting in Europe, except in the case of Bonnie Prince Charlie getting jostled about, due to austerity reprisals, shows the tip of the spear. We are much more affluent and it does not require the elimination of food and shelter to get a violent reaction.
Cutting off college education or the internet for that matter is enough.
On the one side are the pragmatists, they are trying to inject a measure of social democracy in the form of universal health care, education, employment and housing crowned with a reasonably dignified retirement. Obama is an example of that trend, now that the capitalism model is played out.
On the other side are the National Security managers, flinty eyed, rough men with the stomach for war, rumors of war and all that Gitmo stands for. Dick Cheney and Halliburton, with private military corporations leads up that parade.
As money gets tight the pragmatists and NatSec factions will cause friction, and if the heat grows too hot, the unexpected may happen in the form of the populace not swallowing what they are being force fed. And the final variable, is that the global crucible has been formed with the fall of the Soviet system. There is no where to go where the market system of the US variety has been set up world wide. Here is a recent lecture by Immanuel Wallerstein, his analysis of the World System.
He spoke in March of this year in Riga. It is a fair description of the world today and how it got to be. I urge you to view it. How the middle class is being hollowed out here, in Europe now, Japan, and every where else will continue to be the driving force of politics, just as trying to create a middle class in China, India and Brazil and Venezuela is the driving force of former 3rd world countries.
http://www.iwallerstein.com/the-origins-and-outcomes-of-the-global-economic-crisis/at 9:36 am
So either capitalism is a poor system or capitalists are evil, or both? Maybe a capitalist system ultimately breaks down as a small group benefits at the expense of the majority? Give me a break.
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