Where have all the jobs gone? It’s like this.


The Flight of jobs is not the result of any one presidency. Hell, it probably isn’t all of ‘em combined. Short of starting or ending a major war, Presidents don’t make jobs, economies do. Our current plight is the result of a combination of several factors culminating over many years. The Future of employment in America is still rolling along in some unknown ultimate direction because it, like the economy, is fluid and evolving. However, it is logical to opine on where we are headed in the short term. The picture, I fear, is not pretty. I expect we will lose jobs steadily producing an angrier and more helpless population incapable of understanding why they have fewer opportunities until some cataclysmic event such as a major war or an Islamic bomb brings dramatic change. It’s hard to see such change being very good.

Way back during the big war W.W.II thousands upon thousands of little companies sprang up doing things like stamping metal cans out or stitching insignia on things or putting boiled peeled potatoes in those stamped cans or making buttons, gimlets for boots or stamping out metal eating utensils – etc., ect., on and on etc. You get the picture. Those little ma and pa firms are all gone now, swallowed up in the first of a long series of consolidations and mergers. Of late, the consolidations have included the tech industry. NASDAQ is largely just the recent high tech survivors. Before that there was Marco Polo and spice trading and the English Navy with its seagoing merchant clientele etc.. It’s been like that just about forever. Companies grow up around a market or technology. Then the larger ones eat up the smaller ones or drive them out by consuming the market. Of course, sometimes the market just goes away. Not a lot of call for hand hammered iron body armor or phrenology maps these days.

WHEN MANUFACTURING CONSOLIDATES ONE RESULT IS THAT FEWER WORKERS ARE NEEDED TO MAKE THE SAME AMOUNT OF PRODUCT

The great consolidations began just after W.W.II. After the war there arose hundreds of companies that named themselves with words like “Consolidated this” “Consolidated that” or “Amalgamated” or “Universal.” Those were the great beginnings of a movement that has only lately seems to have slowed. It slowed only because the big companies have gobbled up just about all the little companies. Of course, the Technology changes of the 1970’s and 1980’s fueled an new spate of small corporate development and attendant consolidations but that’s chicken feed compared to the years prior. However, the ugly fact remains that when manufacturing is consolidated actual man hour requirements is reduced. Often it’s the workers from the facilities being bought that go out in the cold. The effect of this is substantially greater than merely assuming that a wagon wheel maker (cartwright) can make more wheels if all the wheels are made in one shop because he only needs one set of tools. When companies consolidate the resource (money) that make manufacturing possible is also consolidated. When the physical process of producing a product is streamlined by making it more robust, efficient, and sophisticated it takes fewer actual man hours to get product out the door.

So first, examine the thesis that: When manufacturing consolidates one result is that fewer workers are needed to make the same amount of product. Big Companies employ fewer people than all the little companies they ate up.

TECHNOLOGY ADVANCES HAVE DECIMATED THE JOB MARKET

Then the technology boom was astounding in its effect. In the 1950’s – 1960’s a telephone or calculating machine was made up of hundreds and even thousands of metal parts all of which had to be designed, engineered, drilled, spot-faced, machined, bent, stamped and otherwise worked on by skilled and semi skilled tradesmen. The machines those tradesmen used were similarly produced. The drills, end mills, files and other appurtenances were also manufactured by countless skilled tradesmen all comprising a fabulously huge web of production manufacturing industrial companies employing countless millions of people.

Now the modern versions of those items and millions more are produced in “lights out” fabrication facilities and made up of embedded technology with almost no machined or worked up parts. Those facilities are built and run in the cheapest places possible making the plastic housings and the populating the circuit boards then sending the parts for assembly in the cheapest places possible. This transformation is a mere couple of decades old. That means all the engineers and trades persons who once had full employment are living among us today with no jobs. The lucky ones are retired. A precious few have retrained to do something else that can keep up with the trends. Going back to school and learning a whole new field is a very difficult thing. One must simply turn one’s back on one’s past and say “I am starting all over as though I were a 19 year old in a 45 year old body.” It’s tough. Often it’s the only option.

So examine the thesis that technology alone has decimated the job market by simply eliminating whole trades and industries rendering them useless and obsolete. The countless millions who have been eliminated from the job market is staggering. In short the great majority of worthy jobs haven’t gone to India or China. They were out-sourced to history, No one does them any longer because the way things are done has changed so radically.

THE HIGH SCHOOL GUIDANCE DISASTER

The next damming factor was the “High School Guidance Disaster that dragged on through the 1960’s into the 1970’s. This massive act of malfeasance and misfeasance was largely the result of several elements combining in a result. One element was the excellent research underwritten by the Congress, which produced the resultant thesis that there would not be adequate technically educated people in the USA to see the nation through the 21st century. At the time, and given the then extant state of the economy, our technology, and the predicted foreseeable advances in technology this was exactly correct. The problem was that no one seemed to contemplate that technology can advance at alarming rates under certain circumstances. We were experiencing a set of circumstances that could have reasonable - and did – cause technology advances to snowball. We were changing technology from hammers, cutting tools and iron to electronics and manipulation of unique forms of high yield energy. All in all, Congress did a good job. Then, with said research results in hand, Congress reacted with exceptional responsibility and courage. Using taxpayer money Congress built the Crown Jewel of technical education on the planet. The American Education system became the best place to go to get the world’s best technical education. High school guidance counselors, never short of ignorant arrogance, dutifully guided every young male who could count his fingers without help into engineering and sciences. Young females were steered into nursing and education. Later with the success of the woman’s movement those same guidance counselors steered the young women into sciences such as biology and medicine. Sadly and due in large part to population, job flight, immigrant students, and technological developments those fields were to become hopelessly over-populated with job seekers in a shrinking job market that is flooded with applicants bearing Ph.Ds. Another element was the baby boom. So many children were born during the 1950s and 1960s that they alone could have flooded the market. Almost all of those young people were steered into fields that were to undergo devastating and unforeseeable changes. It didn’t help that just about every family from every underdeveloped nation in the world worked themselves to death to get one or more of their children in a school in the USA. Our universities became crowded and then job market flooded with candidates from other poorer nations who were willing to work hard for less. Many never went home. Those that did became the backbone of a growing trend of highly educated technical people in poorer nations where American businesses wanted to place factories.

So we have consolidation of manufacturing creating reduced labor demands, technology changing manufacturing reducing the number of hands on laborers, and now too many children directed into fields that have become overcrowded and largely obsolete; combined with immigrants flowing into the same job market. One more ingredient is needed to complete the disaster. That is, for corporate entities to have the money and political power to take their manufacturing and marketing anywhere they want: Globalization.


GLOBALIZATION OF THE ECONOMY BY LARGE COROPATIONS MEANT THAT JOBS WOULD LEAVE THE USA FOR UNDERDEVELOPED NATIONS

Then take the concept of Consolidation and technology advances and apply those thesis to the concept of GLOBALIZATION. NAFTA was a drop in the bucket. With the fall of the Soviet empire and the slow but sure opening of China, American corporate entities found themselves on the cusp of a whole new era. With no restrains based on national security or warring nations they could go anywhere and produce products at staggeringly cheap rates while still charging high prices for them. Currently the globe is divided into “Trading Zones.” Therefore, a company can make a product in Malaysia or India or China where it is cheap. The low cost of production allows the company to sell the product using different pricing structures depending on where it is sold. The same toaster of pair of sneakers that sells in USA for $30 sells in zone 9 (possibly Afghanistan?) for $3. The company making the items makes money no matter where it sells its product.

Production facilities are built wherever it’s cheapest. When the local economy picks up and new cheaper technology evolves to produce product cheaper companies abandon facilities moving into other poorer areas to produce products in new facilities at cheaper rates. I call it “riding the poverty train” around the globe.

So now examine the thesis I call the “poverty train,” which is the flight of jobs to where it’s cheaper. There are more millions of jobs lost to foreign cheap labor than one can imagine. Even where a poorer nation sees an initial benefit that benefit is often lost as soon as that nation’s economy begins to get rolling. This is because the corporations simply leave to find cheaper labor. Interestingly the jobs in question aren’t all that great. They are menial, tedious and unlikely to lead to higher pay ever. The great high skilled production trades are as dead as the dodo. The few holdouts are found for the most part in custom manufacturing such as hand made vehicles, custom components, and vanity products. Some corporations have learned that the poverty train is a staggered system. BMW makes cars in the USA because German workers are too expensive, slow, and the Chinese and Indians are too incompetent. Americans apparently remain good workers at a rate the luxury class can afford. A very few industries are almost immune to these trends such as parachute manufacturing where product is sold to the military and civilians alike on a quality over cost bases.

TAX SCHEMES TO ENCOURAGE USA FIRMS TO EMPLOY AMERICAN WORKERS CANNOT WORK BECAUSE THEY CANNOT COMPETE

The Democrats have proposed “tax incentives” to encourage American companies to keep jobs here.
WERE THAT NOT SO SAD AND CRUEL IT WOULD BE FUNNY.
Politicians can propose and pass such legislation giving American employers tax breaks and shelters for hiring American workers but the legislation won’t have any meaningful effect outside those small firms that couldn’t go global in the first place. This is because no program or tax scheme can offer a better deal than that which is available by going global following the poverty train. Politicians are either hopelessly out of touch with reality or they are just plain cruel heartless bastards eager to garner votes by proffering “feel good” legislation that is doomed to failure.

What tax scheme could possibly compete with a Ph.D. level Indian Engineer earning $100.00 a month in an India based facility overseeing workers earning less than $40.00 a month producing fabulous amounts of product.

The American engineer wants somewhere between $60 to $120 thousand a year and the workers want $50 to $60 thousand. Then, they want benefits, federal and state government mandate working conditions, and buildings must be built and maintained to codes. In India and China there are no rules, no insurance, no benefits. There are no building codes or labor laws. Employees are happy to labor under any conditions and for miserable wages. No tax scheme can make up that difference. Tax schemes can’t help. However, they make for good political fodder.

Many economists will tout the wonders of the above factors. They will talk about new horizons and new possibilities. Yet they fail to address the fact that there remain countless of Americans who daily become marginalized because the thing they have trained all their lived to do is fast evaporating and they can’t flex enough to find a new niche. I hear about increases in productivity. However, only the corporation benefits when five Indians or Chinese can produce five thousand telephones in a single day compared to 30 years ago it used to take hundreds of Americans to produce a thousand telephones a day. The consumers think they benefit but their joy lasts only as long as the cell phone manufacturing company remains in their town.

Really, I have no clue how to solve this mess. We can’t simply isolate ourselves as we were in the 1800’s. We can’t wipe out the Constitution and criminalize making or buying stuff that is made in or sold to anywhere but here. It’s a BIG problem and the angry people who are hurt by these changes want a quick fix to happen within their lifetimes and that’s not going to happen. It is way too big for that. Politicians capitalizing on those wounded people are vile and mean because they can’t help them.

Some economists think outsourcing is a good thing. Apparently all of Congress thinks so irrespective of political persuasion. Clinton was a NAFTA fan, Bush has signed a NAFTA look alike treaty with the Islands like Trinidad and Haiti. It’s hard to say where things will end up. However, our politicians (all of ‘em) are not at all interested in down-sizing Globalization. They can’t figure out how because the global economy is bigger than any one nation. Instead they survive. Life is a juggernaut sink or swim but do it on your own steam.