Jobs and the Job Market

Top 85. Nov 3, 2005 4:34 PM

» Normxxx - Man Versus Machine

Man Versus Machine

By Charles Wheelan, Ph.D. | 2 November 2005

I'm not often moved by numbers, in part because of several tragic math experiences in high school, but also because statistics and equations can often obscure the more interesting big ideas. But I recently stumbled across a number that is the big idea when it comes to the 21st Century American economy.

Answer this: Between 1979 and 2002 (the latest year for which we have data), what happened to the median weekly earnings of American men without a high school degree? These are full-time workers, and the comparisons have been adjusted for inflation.

I'll give you some context. For college-educated men, the median weekly wage rose 20 percent in real purchasing power from 1979 to 2002. Women with college degrees did even better— up 34 percent.

Now, back to the guys who dropped out of high school. What's happened to their typical paycheck over the past two and a half decades? Pick an answer.

a) Up 10 percent— only half what the college grads enjoyed, but, as my dad would say, still better than a sharp stick in the eye.

b) Up one percent— or basically flat, meaning that the typical male low-skilled worker has not seen any improvement in his standard of living in two and half decades.

c) Down nine percent— a standard of living almost 10 percent worse than a generation ago.

d) Down 27 percent— meaning that over a 23-year period of relatively robust economic growth, low-skilled workers have seen more than a quarter of their purchasing power disappear and are now significantly worse off than they were in 1979.

The answer is d. Women who dropped out of high school did better, seeing their real wages fall only seven percent over the same period.

You Can Learn a Lot at the Movies

To understand the essence of what's going on, let me tell you about my night at the movies. I saw "Grizzly Man", a documentary by Werner Herzog about a guy who spends 13 summers in Alaska living among grizzly bears only to be eaten in the end by one of the animals he loved. That's not the relevant part of the evening, but it is an extraordinary film.

Here's the insight: As I parked my car in the garage, a mellifluous voice was saying repeatedly something along the lines of: "Please take your ticket with you. There is no attendant on duty. Pay for your parking at any of the kiosks inside."

I then bought my movie ticket at a different electronic kiosk (similar to the self check-in machines that most airlines are now using). Not only did the machine allow me to avoid waiting in line, but it also told me what percentage of the seats had been sold for every film at every time.

Both the automated parking and the automated ticket machine were new since the last time I'd been to that theater, no more than a few months ago. And that is why America's low-skilled workers are taking it on the chin. Forget the guy on the phone in Bangalore telling you how to use your new computer. He's a red herring. The job loss statistics tell the same story as they always have: Technology replaces far, far more low-skill jobs than foreign workers do. Think voice mail, ATM machines, automated customer service lines, self-serve gas, online bill paying, automated package tracking, and on and on.

Not one of those innovations is bad for the U.S. economy. Every one of them creates jobs— albeit for people with skills in business strategy, engineering, software, marketing, and sales. And every one displaces people, like the guy who takes your $10 and gives you a movie ticket and $.50.

Want to Protect Your Job? Develop Your Skills

The 21st Century economy is not about jobs; it's about skills. After all, highly-educated people lose their jobs, too. What do you think happens when JP Morgan Chase merges with Bank One? Bruce Springsteen doesn't sing about those people because they are adaptable enough to turn around and do something else. At the time this column was written, the unemployment rate for college-educated workers was 2.1 percent, compared to 4.9 percent for the nation as a whole and 7.6 percent for workers with less than a high school diploma.

So what do we do for the people Bruce Springsteen does sing about? I'll be the first to tell you that the research on everything from job training to systemic school reform is relatively discouraging. Then again, so were the early attempts to put a man on the moon. The most important first step is to create the political will for massively upgrading the skills of those at the shallow end of the labor pool. Thinkers across the political spectrum have some clever and original ideas, but they need help getting past the baggage of their respective parties.

The Republicans need to ditch the absurd notion that tax cuts alone will help those at the bottom. The numbers are pretty darn clear: After 25 years of significant tax cuts and a steadily growing economy, there's not a lot trickling down to low-skilled workers that wasn't excreted by birds. Hence the Ukrainian proverb: A rising tide is good for those in big boats and bad for those standing on the bottom in heavy shoes. (Okay, that's not really a Ukrainian proverb, but doesn't it sound like it should be?)

The Democrats need to stop confusing things that lessen the pain in the short run with real solutions for the long run. Raising the minimum wage, for example, doesn't make anyone more skilled. It just charges more for the same increasingly outdated skills, which can be counterproductive. How? Just imagine that you own a movie theater and the minimum wage goes to $9 an hour. Would you be more or less likely to invest in automated ticket kiosks?

And, of course, there is some profoundly irrational individual behavior going on. Dropping out of high school is financial suicide. We can argue over whether it is a personal failure, a social problem, or some combination of the two, but let's agree on the key point: It's bad. Even finishing high school and skipping college is looking increasingly foolish. The median weekly wage for men with high school diplomas but no college fell 13 percent between 1979 and 2003.

The overriding lesson is simple: If your job can be done by a machine, then it soon will be. So try to be the guy who sells the machine.

______________

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.

-- posted by Normxxx

Top 86. Nov 4, 2005 7:18 PM

» Kirk - Re: Man Versus Machine

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In response to Man Versus Machine posted by Normxxx:

Think of how many typist jobs were lost simply due to MS Office. Secretaries used to spend all their time organizing meetings between engineers and others on the teams I worked on in the mid 1990's and I think software has this mostly automated now.

Even engineers were told back in the early 1990's that the only way to keep a good job was to learn new skills.

Don't forget too that $10 an hour buys you an undocumented worker you can hire at most busy streets I'm told. We sure have them up and down El Camino Real in the Bay Area.

-- posted by Kirk

http://www.siliconinvestor.com/readmsg.a...

Top 87. Nov 6, 2005 8:46 AM

» Kirk - Micron expansion pumps 860 jobs, $1.2 billion into Manassas

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Nice to hear of a few new engineering and mfg jobs.

Micron expansion pumps 860 jobs, $1.2 billion into Manassas

Friday November 4, 5:39 pm ET

Microchip manufacturer Micron Technology will invest $1.2 billion in its Manassas plant and bring 860 jobs to the city, more than doubling the plant's current employment.

The company has been upgrading the plant on Godwin Drive for the past year to produce a new line of its 300mm flash memory chips, according to an announcement Friday by Gov. Mark Warner.

Analysts say the Boise, Idaho-based company (NYSE: MU - News) has seen a surge in demand in recent months for its microchips used in MP3 players and cell phones with cameras, but company officials didn't indicate Friday that the Manassas plant would be used for those particular products.

The 860 new jobs -- added to about 800 people already at the plant -- will run "across the board" and include many high-tech engineering and manufacturing positions, says spokesman Todd House.

When Micron bought the plant from a division of Toshiba in 2002, it laid off 560 of its 1,200 workers. At the time, Micron was in the midst of a massive downsizing effort and cut 10 percent of its worldwide work force.

But demand has clearly bounced back for Micron's products. Warner also approved a $2 million grant from the Governor's Opportunity Fund to support Manassas' work force development efforts to train workers for Micron's plant.

"Micron's decision to locate a 300mm facility in Manassas is a reflection of our belief that the commonwealth of Virginia provides the right environment for business," says Steve Appleton, Micron's chairman, president and CEO, in a prepared statement. "Virginia's commitment to pro-business tax policies and an educated work force are key factors in helping Micron."

Published November 4, 2005 by the Washington Business Journal

-- posted by Kirk

http://www.intuit.com/about_intuit/caree...

Top 88. Dec 4, 2005 11:31 AM

» Kirk - Intuit Hiring

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Something very rare happened today.

The San Jose Mercury News came with a sticker attached to the front page advertising jobs at Intuit!

I did a quick look for a software QA manager for a friend who is always looking for a better job and found they had jobs available in Mtn. View and San Diego, both where she has family and friends.

This is pretty amazing and is a good sign for the economy.

-- posted by Kirk

Top 89. Feb 3, 2006 8:10 AM

» Bill_Duffy - More H-1Bs

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Real wages today for Engineers are lower than they were in 1972. Bringing in more Foreign Engineers will keep it that way. That's great for the companies, but it's counter productive.

Why would any young person invest the $100K for an MSEE if the returns are so low and uncertain?

Seems like Engineering is a bit like the NBA; a short exciting career. But unlike the NBA, the players are not paid a lifetime of earnings in their short 15 year career.

This is now way to encourage careers in Science or Engineering.

Bush: Increase H-1B visas
KEEP AMERICA COMPETITIVE, HE URGES CONGRESS
By Jim Puzzanghera
Mercury News Washington Bureau

WASHINGTON - In a move welcomed by Silicon Valley tech companies, President Bush called Thursday for Congress to increase the number of visas available for high-skilled foreign workers as part of his new effort to boost U.S. competitiveness.

The White House did not specify how many more of the H-1B visas it wants, but said the current annual allotment of 65,000 -- plus 20,000 more for foreign workers with advanced degrees from U.S. universities -- was too low. Bush's call could energize attempts to increase the yearly cap on the controversial visas.

Valley companies covet them to fill jobs, claiming there are not enough qualified Americans. But some high-tech workers say the visas just allow companies to hire cheaper foreign employees beholden to the firms that sponsor them.

In a speech at 3M's corporate headquarters in Minnesota, Bush said more engineers, chemists and physicists are needed in the United States. He touted the six-year H-1B visas as a way to temporarily fill those jobs.

``I think it's a mistake not to encourage more really bright folks who can fill the jobs that are having trouble being filled here in America -- to limit their number,'' Bush said. ``And so I call upon Congress to be realistic and reasonable and raise that cap.''

At the height of the dot-com boom, Congress temporarily increased the number of H-1B visas to a high of 195,000 a year from 2001 to 2003. But as part of the deal to get the large increase through Congress in 2000, the annual cap reverted in 2004 to its pre-1998 level of 65,000. It's remained there ever since.

But with the high-tech economy improving, the H-1B visas again are in high demand.

The federal government received enough applications for the 2006 allotment that it stopped accepting them on Aug. 12, more than two months before the fiscal year began.

Congress tried to help in 2004, exempting as many as 20,000 additional H-1B visas annually from the cap for foreign workers with advanced degrees from U.S. universities. But U.S. Citizenship and Immigration Services, which administers the program, announced on Jan. 17 that it had reached that cap as well.

Urged on by the high-tech industry, some in Congress tried to increase the annual H-1B allotment to 95,000 late last year. The Senate voted 85-14 in November to include the boost, along with an increase in fees, in a bill to cut the budget. But congressional negotiators dropped the provision in December amid concerns it could cost Republican votes on the budget-cutting bill in the House of Representatives.

High-tech lobbyists said they are working to resurrect an H-1B visa increase this year, possibly as part of broader immigration legislation moving through Congress.

``The economy, particularly in the tech sector, continues to ramp up, and they need access to the best and brightest in the world,'' said Jeff Lande, senior vice president of the Information Technology Association of America, a high-tech trade group. ``The fact that the president is behind us brings tremendous heft to that effort.''

Although H-1B visas are controversial, there may be enough bipartisan support for improving America's global competitiveness that an increase could pass Congress this year.

Bush's domestic policy adviser, Claude Allen, told reporters Thursday that the White House was open to working with Congress on the number of additional H-1B visas.

``Some reports have called for increases of 10,000, others between 20,000 and 40,000. So there are a number of options on the table to be considered,'' Allen said. ``But we'll work with Congress on that.''

-- posted by Bill_Duffy

Top 90. Feb 3, 2006 11:24 AM

» Kirk - Re: More H-1Bs

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In response to More H-1Bs posted by Bill_Duffy:

I agree.

Bush wants cheap labor to come in to work in restaurants for wages lower than Americans with a high school education are willing to work for. He is all for the "guest worker" scam. They get no health care so the tax payers in the middle pick up the tab in this "welfare for the rich" program.

The liberals see these cheap folks as future voters because they have children when they are here who are automatically citizens for being born to illegal parents. Also, all the 85% of people in my neighborhood who claim to be liberals have gardeners, nannies and house cleaners who are often paid under the table. Why give up a good thing when you can be "compassionate" and give a job to people who need it?

On the other end, we have H1B visa's because the high tech companies won't pay a salary and offer working conditions to entice successful semi retired engineers like you and I to come back to work. If you are going to make people work longer than 40 hour union jobs and not pay any more than a crane operator gets in a shipyard (Port of Oakland was paying $115,000 a year to operate a crane... duh... ) then smart, young people are better off going into law or medicine where extra work means extra billable hours or procedures.

-- posted by Kirk

Top 91. Feb 3, 2006 5:45 PM

» Bill_Duffy - Re: Re: More H-1Bs

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Hi Kirk,

Interesting that you mention "smart, young people are better off going into law or medicine where extra work means extra billable hours or procedures."

My daughter takes the LSATs tomorrow; on her way to becoming a patent attorney in biotech.

My son graduates from Columbia in May on his way to Med school to become a Neurosurgeon.

None of my peers has their sons or daughters going into engineering. Sad.

-- posted by Bill_Duffy

Top 92. Feb 5, 2006 1:12 PM

» jbking - Re: Re: Re: More H-1Bs

In response to Re: Re: More H-1Bs posted by Bill_Duffy:

Meanwhile there are those folks like me that studied Math and Computer Science in university, went to the US when looking for work in 1997 and then left since I couldn't stay, YET I could get more than a few interviews for various contract positions that if I had a Green Card or was a US citizen I would have taken and stayed there.

While I would welcome an increase in H-1Bs, I tend to think that Washington wouldn't pass anything like what could be used by American companies looking for talent to fill some spots.

There could be a coming crisis among science and engineers since more over in other countries, e.g. China, India and Russia, will be where the engineers are rather than in the US in any major number.

Regards,
JB

-- posted by jbking

Top 93. Feb 5, 2006 5:49 PM

» Kirk - Re: Re: Re: Re: More H-1Bs

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In response to Re: Re: Re: More H-1Bs posted by jbking:

What prevents you from applying to become a US citizen and staying in the US as a citizen if you want a good, long term job here? My girlfriend and her whole family did just this. I think a country is foolish to not want well educated people to come and stay as PERMANENT CITIZENS... but if they just want to pick and choose the best jobs when companies are paying top dollar for workers then take the money they make home to spend.... then I don't have much sympathy.

The VCs and CEOs want to live in the US and I think half the reason so many jobs are still in the People's Republic of California is it is a very nice place to live and not too expensive if you are rich, which most CEOs at high tech companies are. If they want more, quality people, then I suggest they give themselves a pay cut and pay more to the worker bees they want to attract Pay an engineer more than a crane operator AND don't make him or her work 50% more hours than that crane operator to get the salary and I bet many more would go into the field in the US. Then we'll have to import our lawyers I suppose.... smile

-- posted by Kirk