LikeTheDew.com

The employment web site CareerBuilder.com is out with a study that, based on a statistically valid survey of 4400 Americans, contains disturbing news. This news is not something all of us did not already know but it is still a little daunting to see it spelled out in black and white.

The study indicated that over six of every ten workers in the United States are living from paycheck to paycheck. Further more than a quarter of workers are dipping into retirement accounts, paying the tax penalty and using that to make ends meet.

The ratio of workers living paycheck to paycheck is up over 49% from this time last year.

CNBC reported this morning that, when chronic underemployment is combined with the national unemployment rate of 9.7 percent, real unemployment is around 17 percent.

When this unemployment/underemployment data and personal income data is considered along with the new, CareerBuilder data, there is ample evidence personal income of salaried workers is dropping. At the same time there is evidence that overall personal income of the entire population is growing. This means that while most of us are suffering through unemployment, underemployment, shrinking incomes and/or stagnant incomes, there are many whose incomes are growing. These happy few are experiencing enough growth in personal income to offset the lost incomes of the far greater number of salaried workers. That workers are being forced to take pay cuts, through job sharing or through outright reductions, while others are raking it in speaks, no screams, to the notion that the economy is in a fundamental transition.

If you listen to the President and many other leading Democrats, they will tell you that the economy has been bushwhacked by the financial industry. Further, to bring back jobs they will tell you we have to make a transition from our oil based economy to a clean energy economy while, at the same time, we rebuild the nation’s physical infrastructure.

I do not doubt that the Wall Streeters and the commercial bankers are benefiting from the massive transfer of wealth from the dwindling middle class to the very, very wealthy. I am still not certain why the same mechanism that got us through the previous S&L crisis could not have done the same with the Wall Street investment bankers and the commercial bankers this time as well. I do not understand why we had to give these people, the very people most at fault, all those hundreds of billions, if not trillions of dollars.

That aside, I am encouraged that, for the first time since Kennedy’s space initiative, there are those in the national government who seem intent on creating an import replacement/export generation program that may help bring back a blue collar middle class. If the nation does develop a new class of design and manufacturing that results in marketable products relating to oil and hydrocarbon replacement, then perhaps this clean energy initiative will bear fruit.

Unfortunately, even if it does, that is not the full solution. China, India and many third world nations have shown us they can take our production technology and move it off shore. It would be the very last straw should the nation pour billions into developing new clean energy technology only to have it transferred to some other country for the manufacturing stage. We could not afford to have the government give these new industries away like they have with everything else.

But, much of our employment problem is not strictly due to the idiotic national policy of export replacement we have slavishly followed for the past forty to fifty years. While this policy madness is a damn near criminal act against the citizenry of the nation, it is not the whole story.

In industrial category after industrial category, in profession after profession, whole classes of skill sets have become obsolete. The rapidity with which this obsolescence has occurred has caught the nation rather flat footed. The nation has to develop a method of rapidly retraining older workers in a basic skill set. Currently, all government sponsored retraining efforts are aimed at training workers for specific jobs. This is a limited, if not dumb, approach given the rapid evolution of products, production methods, jobs’ content and professional procedure. This approach is akin to “investors” who develop schemes to “time” the market. It may work some of the time but not very often. Production methodology and even the products themselves change so quickly, predicting what job demand will be six months from now is not so easy or adequately accurate.

Not so long ago I attended a party for a young couple about to be married. Most of the people in attendance were my children’s age. However, also in attendance was a lady who had taught most of the younger people at the party in five-year- old kindergarten. Now, two decades later, those she taught were living in a dramatically different work place and holding jobs that did not exist when she was teaching them. Like all her colleagues, then and now, she had to teach them for a future no one could see with any clarity.

If anything, the cycle of job metamorphosis is shrinking. The skill sets a given job requires change as production methods change. Production methodologies are in constant flux. The jobs themselves are being rendered obsolete on a much faster cycle than at any other time in history. In such an environment, training for a specific job based on a specific production methodology is foolish.

The answer to the retraining conundrum lies in a core skill set. Just as colleges were built around the idea of a “liberal arts” curriculum designed to impart the ability to think critically, to communicate through the written and spoken word and to understand basic science and math, there needs to be a basic, technology curriculum developed. This curriculum would be designed to teach a student how to use the new technology tools for research, decision support, communication and production.

Just as a worker brings the ability to read and write to his/her job, the worker should be taught to bring a basic ability to use the powerful web based tools for communication, research, continuing education and decision-making, as well as production. If the government fails to do this, it is making more than half the current work force obsolete decades before their useful working life is over. Such a failure is a prescription for impoverishing the nation. It is the prescription for the loss of civil society.

1. Brenden says:

   September 22, 2009 at 1:24 pm

   Please allow me to inject thoughtful counterpoints as this is a welcome departure from a certain well-trodden divisive theory about the nature of political opposition. This well-constructed article highlights many of the economic troubles we now face: unemployment, growing income inequality, financial markets, free trade, energy regulation and education. What a remarkable scope for a short piece.

   Free trade causes job dislocation but as a compensating benefit allows for production to occur where it most economically efficient. The most labor-intensive, low-skill parts assembly work occurs in places like Asia who have low standards of living and poor worker protection. Yet these jobs allow them to raise their standards of living, and hopefully demand higher labor protections as they grow more wealthy and sophisticated. In turn, we benefit by having low-cost imported tools like computers which we can employ in more sophisticated, high-value/profit endeavors. If we ceased trading with low-cost labor countries or demanded all labor be conducted domestically, we both would be worse off. Low-cost labor Asians would face subsistence agricultural jobs or unemployment. They would also no longer be viable trading partners of U.S.-made, high-value products. We would face high-price computers and other necessary technology that would constrict its supply within our marketplace, making our labor markets less efficient and decreasing national wealth. Not that the author is wrong but he did not fully articulate the full scope of the trade-off involved. It benefits the U.S. greatly AND causes great disruption. But it is not “a criminal act.”

   The author aptly points out the necessary implication of higher educational standards in the U.S. I agree that we must greatly reduce the time spent reading Chaucer and Shakespeare and greatly increase the amount of time studying alegbra, geometry, statistics and calculus along with science and programming. Along with teaching students real civics based upon understanding of legal processes and constitutional law. So I certainly agree with the author on these points. That is, if our goal is to reap the full value of beneficial international trade. I also fear that opportunity and success are not always the main of objective of public education expenditure.

   I disagree with sentiments expressed about energy policy. I would urge the reader to reject the notion that clean energy jobs will somehow supplant the current power generation and distribution system. I speak with some authority in this matter, though I will not offer my bona fides as talk of credentials evokes offense. Readers should understand that the energy generation and distribution systems in developed nations are built around principles of reliability. That when you flip your light switch, lights indeed come on. The principles of reliability relate to laws of electromagnetism that the system must balance supply with demand and allocate capacity accordingly. The distribution system requires a certain megawatt capacity and this capacity can only be served by fuels that come in discrete quantities. Alas, wind and sunshine do not come in such discrete, reliable quantities. That you cannot replace a coal plant with a wind farm because sometimes the wind does not blow. And if you attempt to keep the lights on with a wind farm, two things will happen: 1) you won’t always be able to rely on lights coming on and 2) this irreliability will cause wild swings in energy prices that most consumers would find intolerable. Alas, “hydrocarbon replacement” is not a viable option at the moment.

   I really must quibble with the author’s statement relating to financial markets: “I do not doubt that the Wall Streeters and the commercial bankers are benefiting from the massive transfer of wealth from the dwindling middle class to the very, very wealthy…. I do not understand why we had to give these people, the very people most at fault, all those hundreds of billions, if not trillions of dollars.” There are many, many problems implied by this statement. First, you must understand that U.S. financial markets have unleashed the greatest prosperity, innovation and opportunity ever presented to residents of planet Earth. But it is unwise to denigrate them as political red meat because if they disappear so will all the wealth and properity that we in this great country take for granted. The other problem with that statement is implies that Wall Streeters made their money by looting and plunder when in fact it was mostly uncoerced voluntary exchange of value for value.

   What the author does not mention is the role that gov’t played in roiling financial markets. Our current financial troubles were indeed caused by a gov’t that sought to create liquid financial markets for U.S. mortgages, hold and secure those mortgages and eliminate requirements for lenders to conduct rigorous background checks for borrowers. Given the sheer size of the U.S. housing market, given its recent unsustainable asset price increases, and given the spread of underwater U.S. mortgages throughout the global financial system — the inevitable defaults brought down the entire credit system, several major investment banks and the financial credibility of the U.S. gov’t. I don’t suggest Wall Street did not benefit all along the way, but the gov’t injected so much moral hazard that investors would have been foolish not hedge against those very predictable risks. And the gov’t-wrought failures were so huge that the rewards for sensible risk management were great indeed.

   Last, research about income inequality reveals that it occurs mostly in nations with corrupt gov’ts. The defining charactistic of a corrupt gov’t is one that transfers wealth from one group to another on false premises and for narrow advantage accuring to an elite political class. That such inequality is increasing in the U.S. tells you all you need to know about the quality of our governance. And for those of you comfortable in hope and change: I’m here to tell you that governance is not getting any better because the gov’t you support insists upon transfering wealth under false pretenses. I guess that’s enough for now.

   Reply