While this month’s employment report again showed more jobs being created and a falling unemployment rate, wages dropped. According to past trends, wages should go up as labor becomes scarcer and companies want to retain productive employees. Former Labor Secretary Robert Reich analyzes this situation in a recent blog post. Reich points to factors that can hold wages down even as unemployment shrinks. Two main culprits are the global economy and automation. Companies can offshore cheaper labor, and they can find new ways to let technology replace humans. Reich scoffs at those who call these factors “efficiency.” Reich concludes by blaming both large corporations and Wall Street for holding down wages. I’d agree with him and add one more culprit: spineless politicians who serve Wall Street and large corporations. Nothing will change until our politicians and laws provide some protection for American workers. Or, to put it another way, nothing will change until American voters elected politicians who represent the interests of working people.
Buzzfeed reports on an interview between Goldman Sachs CEO Lloyd Blankfein and Andrew Ross Sorkin of the New York Times. The good news is that Blankfein recognizes the problem of inequality. The bad news is that he implies that it will get worse. He talks about a new economy that will employ labor in “new ways.” From capital’s perspective, that means the best return for investors, which has traditionally result in process improvements, automation, and offshoring. I’m not condemning Blankfein. As a leading investment banker, he is saying what he should. Working people and unions need to walk up to this reality, or the current good news on the job market will be temporary. We need a real workers’ bill of rights that provides realistic security for labor as well as capital.
Daily Kos is reporting on candidates for governor in Massachusetts and Georgia who have been responsible for outsourcing jobs from the U.S. to countries with lower wages. To be fair, some corporate leaders who are Democrats have also outsourced jobs. When we go to the polls, we as working people need to ask what politicians are doing to help us. Outsourcing has been very good to the investor class. We need politicians who will do what is best for working people.
I voted early last week. Whatever your political beliefs, I urge you to vote on Tuesday.
Last week The Chicago Tribune reported that several large companies are bringing their call centers back to the U.S. While more Americans will be employed because of this shift, the news isn't all good. Many call centers pay low wages and offer little in the way of benefits or career path. Call center workers need to be smart and articulate. They have to solve problems while an angry customer often lashes out at them. How much are they paid for this service. According to the Tribune article, the average pay is $22,000 to $45,000 per year ($11 to $22 per hour). America needs these jobs. It also needs a raise.
I love baseball, and this weekend I attended minor league games in Indianapolis, Nashville, and Louisville. While in Louisville, I took a tour of the Louisville Slugger Museum, which features a working factory that makes bats for big leaguers and recreational players. During the tour, we learned that from the 1880s to the 1970s, bats were made by hand. They were the work of craftsmen who used their hands and eyes. A good bat maker could carve a bat in 20-30 minutes. By the late 1970s an automated process was devised with a new lathe that could carve a bat in 30 seconds. Great for the company, not so good for the men who worked the lathes.
This story underscores the impact of automation on work. One of the lathes at Louisville Slugger could cut more in an hour than a man could do in a day. No sane business would continue to work in an inefficient manner. Layoffs were necessary. Similar advances have led to millions of layoffs in manufacturing, assembly, and supply chain. Better technology means fewer jobs. No company can stick with people when machines can do as good or better a job at a much lower cost. We all love innovation, but we have to look realistically at its aftereffects. Faster, cheaper, and more efficient usually means people will lose their jobs. The challenge is to generate new jobs in a world where machines, software, and automation are improving all the time. What will we do if a time comes when we have more people than jobs?
Last week, I was very busy helping customers, which makes me happy and grateful. What makes me unhappy is bad telemarketing calls that interrupt me while I’m trying to understand what a customer needs. Don’t get me wrong. I’ve dealt with many professional telemarketers. They understand when you’re with a customer and quickly offer to call you back. Bad telemarketers and prerecorded calls don’t care. They keep talking until irate customer like me hang up.
They also cost American jobs. Many telemarketing and customer service jobs have been off-shored to countries where workers are paid 19th century wages. Over the weekend, I was dealing with a very pleasant off-shored customer service representative. However, he could not understand what I was saying. I had to spell my name and give my address twice in order to receive a refund. Similarly, recorded telemarketing calls make prospective customers listen to the end of the message to press a “off the list.” key. It’s a waste of time.
What if local workers were managing the phones? I believe the customer would get a better experience, and the company trying to market its products or service its customers would be more like to keep customers happy. So why do companies offshore and automate? Bigger profits. The old methods were profitable, but the low salary worker and the machine bring home even more margin. What do they lose? Customers. What is their biggest cost? American jobs.
Ruth Mantell of Marketwatch.com writes about a truly frightening trend: the disappearing middle class job. She cites an expert who says that companies are targeting workers making $40,000-$80,000 per year. Another expert points technology as the reason white collar jobs can be shipped overseas. On a positive note, the article also lists ten occupations that have increased in salary over the last ten years. The problem is that when it comes to salary, the good news doesn’t seem to outweigh the bad. Beyond the problem of unemployment, Americans who have jobs are making less money. That spells big trouble for those individuals and for the country.
Huffington Post reports on Jeffrey Immelt, the CEO of General Electric and the man President Obama has picked to bring jobs back to America. Immelt and his business have been very successful. They are holding more cash than any major corporation in the world. How did GE achieve this distinction? By chasing cheap labor in other countries. Immelt’s biggest concerns are tax policy and deregulation. If that were the key to increasing jobs in America, we’d still be living in the glow of Bush’s Economic Miracle (which, of course, did not happen). The article also describes how GE managed to cut its tax payments while increasing its profits. Nice work – for the corporation and its executives.
Once again, President Obama has disappointed the left and labor, ignoring people like Robert Reich and Dean Baker in favor of someone beloved by Wall Street. I don’t see this move will help American workers. It will help the investor class, Bush’s base, which Obama seems to want to recruit. When a politician of either party talks about jobs, look for the politics – because that’s all they can give us.
Postscript: Robert Reich has issued his take on the President's new direction. He analyzes what will really bring jobs to America and warns us against buying smoke.
Yahoo Education lists jobs that “aren’t going away”: police officers, accountants, nurses (see the link for the rest of the list). This claim is undeniable. However, as jobs become more scarce in other professions and industries, more and more people are moving toward the kind of service industry jobs that can’t be offshored.
Don’t assume that any profession is “recession-proof.” Over the last year, thousands of teachers have been laid off across the U.S. My clients who are nurses are still finding jobs, but the opportunities are fewer. Two clients I have worked with in the last six months are software developers who are creating software that will automate accounting functions, which means fewer jobs in that industry.
If America does not rebuild some kind of industrial base, we will have an unemployment problem for a long time. Our leaders – Democrats and Republicans – have to address this serious issue with something other than words.
The Chicago Sun-Times technology writer Brad Spirrison discusses the IT job market by comparing jobs connected with social media to those in programming. The once hot programming jobs are now offshored to countries that pay cheaper wages, jobs in social media are the current growth industry. Spirrison describes a program in which inner city students are trained in writing and technical skills required for social media.
This program sounds interesting. However, as we saw in Walgreen’s recent outsourcing of 150 accountants, anytime a business can get cheaper labor (or automate work processes), it will do so. The trend across industries is to chase the bottom. This philosophy might be good for company and shareholder bottom lines, but it will eventually destroy the American middle class. Cheap labor has a cost.
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