Labor Pains Coming Fast and Furious

It’s easy to blame long-term economic consequences on short-term events. The impact of an impending (maybe not depending on “the vote”?) attack on Syria and possible regional responses is playing hob with the price of oil. The Federal Reserve’s approaching willingness to pull back on its quantative easing policies of cheap money. The debt-ceiling debate that could simply bring our federal government to a devastating slowdown. Relatively small increases in mortgage rates are pulling the residential housing market down faster than predicted. Smaller but still significant economies, places with tout boom-potential like Brazil and India, are watching as investors are pulling out of their less-than-stable markets, dropping those currencies like a stone.

The U.S. unemployment rates look like some semblance of a “recovery.” Consumer confidence has just reached its highest point in five years. That’s what it looks like on the surface. But there are long-term, fundamental changes in the way we work. Manufacturing, which seems to have left the building, is trickling back, primarily in the automotive industry. Bankruptcy allowed GM and Chrysler to shed burdensome collective bargaining agreements and unsustainable pension burdens, some of which benefits bled into Ford, which avoided formal reorganization. Innovation allowed a new company, Tesla, to make electric vehicles made in the United States to be sexy and incredibly well-built. Everywhere, quality was soaring.

Then there is Detroit, bankrupt, dangerous and looking like a set for so many post-Apocalyptic films, the poster child for unionized manufacturing. But the rest of America is facing Detroit-like local and state government pension-underfunding to the tune of an estimated $2.7 trillion. What’s more, a closer look at the kinds of news opportunities in the U.S. economy also reveals some “inconvenient truths.”

As we move forward in what were once legions of incredibly well-paying jobs in a sophisticated manufacturing chain, we are watching robotics, 3D printing and computer-controlled automation snatch the cream of that value chain and pass the “earning power” of manufacturing gold not to skilled workers but to the mega-rich who now own the machines that replaced them. This only increases the growing wealth gap that seems to define the new American plutocracy that seems to have replaced old-world democracy. Sure there are a few great jobs in designing, building, operating and maintaining those complex systems but nowhere near the number of employment opportunities they replaced. The economy as a whole grows… but not for most of us.

Increasingly, companies are using more part-time labor, side-stepping the Affordable Care coverage mandates and relaying on short-term contractors to solve immediate problems without putting massive additional workers on the corporate payroll… where they are much harder to get rid of when times get tough. Wary of committing to office space, retirement plans, medical benefits, creeping seniority-driven bureaucracies and associated management requirements, companies are heavily focused on keeping the number of permanent employees in check. Unions have strong representation in the public sector, where their collective votes still matter, but are all-but-gone from most of the private sector: including public workers, only 11.3% of the US workforce is unionized, the lowest rate since 1916. And without the Affordable Care Act, with its pooling healthcare exchanges offering universal coverage at affordable rates, all of those who have not been able to find full-time jobs on regular company rosters would never otherwise have a chance to get healthcare insurance.

The underlying realities on American employment are not attractive. Ignoring those who have given up looking, particularly an issue with older workers who fell out of jobs during the crash, younger workers never given a chance, and those who have had to settle for part-time only employment, the number of jobs that pay really solid salaries or wages have plummeted. “Because of a major decline in jobs during the recession, the number of nonfarm workers is up just 5% over the past 10 years [well below the aggregate population growth]. While the past decade’s painful recession and the slow job growth that has followed have negatively affected most Americans, certain occupations have experienced job losses that were especially severe…

“This is clearly the case in the construction industry where, according to a 2011 [U.S. Bureau of Labor Statistics/BLS] study, 1.5 million jobs were lost from December 2007 to June 2009. This nearly 20% drop in construction-related jobs was the largest of any other major sector. Three of the five occupations with the largest decline in employment are in the construction sector, where job totals are still well below pre-recession levels.

“The number of workers in other occupations has been greatly reduced because of technological improvements. Jobs in several manufacturing occupations have been made expendable because of advances in automation. For drilling and boring machine operators working with metals and plastics, as well as for textile workers, automation has helped contribute to a more than 50% decrease in jobs between 2002 and 2012. Work in several fields, including prepress technicians and computer operators, has also been cut by improved software and automation of processes that specialists once had to do by hand.” 247WallSt.com, August 28^th.

Additionally, too many well-paying white collar jobs are vaporizing. Big law firms are shedding so many partners and associates that law school applications have dropped a whopping 18% from recent highs. And for all those folks majoring in business and marketing out there, the news is even grimmer: “24/7 Wall St. compared employment figures published by the … BLS… for hundreds of occupations from May of 2002 and May 2012. In that time, the estimated number of advertising and promotions managers fell by nearly two-thirds. Because of the housing crisis, many occupations in the construction sector were disproportionately hurt, while many manufacturingtrades lost jobs due to structural changes in the economy. These are America’s disappearing jobs.” 247WallSt.com.

It used to be that the younger segments of the workforce took the majority of lower-paying part-time jobs, but a recent report from the Federal Reserve Bank of San Francisco sees that less-than-ideal circumstance increasingly becoming the plight of older workers who have been displaced by the recent financial turmoil. It’s the younger workers moving faster to full-time work: “[P]articipation by younger workers as part-timers has decreased over time. The percentage has dropped from 23 percent in the late 1970s to just a little more than 12 percent now, according to [Rob] Valletta [author of the Federal Reserve Report].” CNBC.com, September 2^nd. For the young, it is the beginning of life in the work force… for the older workers, it seems that’s how society is phasing them out.

The trend lines for earning power are going in the wrong direction for most Americans at every level. “While the unemployment and underemployment numbers have been sliding, the number of households living at or below thepoverty line has been growing. Since 2007, it has increased by 20 percent. Currently, in fact, 15 percent of Americans are at or below the poverty threshold, and almost one in five fall below 125 percent of the poverty line…

“From 2000 to 2007, wages for the average worker increased by just 2.6 percent (adjusted for inflation), despite the fact that the average worker’s productivity went up by 16 percent… Then, in 2007, the Great Recession ripped the bottom out of the job market; in the ensuing years, when laid-off Americans returned to the work force, they often did so for significantly less pay, although they were still tasked with producing on the same level they'd achieved before. The upshot is that, today, the bottom 60 percent of workers -- basically, any households making under $65,000 -- are working for less than they made in 2000.” DailyFinance.com, September 1^st. What’s worse, the building blocks for higher wages and better jobs are still being eroded big time.

While state and local governments continue to slice and dice expenditures for education, from primary and secondary schools all the way to universities with sophisticated graduate schools, foreign competitors are benefitting from expanding local educational investments. We can get better educated workers elsewhere these days. The U.S. went from first in math scores to 32^nd. We don’t seem to care that we are destroying our long-term prospects, accelerating society-killing income/wealth polarization and ignoring upgrades in our infrastructure needed to increase or even maintain workflow efficiencies and combat the rather obvious negative consequences of climate change. Our research efforts get slammed from stupid legislation like “the Sequester,” stopping potential problem-solving, job-creating benefits dead in their tracks.

We have a cadre of gerrymandered representatives in Congress, hands outstretched to special interests ready to buy favors - for a never-ending campaign for an election every two years - that do not have the slightest intention to find a way to compromise and make government work. Redistricting has painted them into a corner where compromise and acting in the best interests of the nation as a whole is a recipe to lose the next election. There is not a whiff of concern for our futures, our competitiveness, only palliatives about a “free market” economy that they helped to rig so that it is anything but a free and level playing field. Will the next economic downturn motivate them, or is the America we face for the long-term? When are we going remake America that land of opportunity it once was?

I’m Peter Dekom, and getting so many people to cripple their own futures with toxic voting beliefs is sheer brilliance, even if the reality takes the entire nation down with it.