The world could one day be filled with nothing but those little cogs, little men clinging to little jobs and striving toward bigger ones. ~ Max Weber at the beginning of the 20th century
Soul-destroying, meaningless, mechanical, monotonous, moronic work is an insult to human nature. ~ E.F. Schumacher
Employees have become commodities. ~ American economist George Tyler at the end of the 20th century
The fundamental issue is why economies exist. The reasonable and naïve answer is so people may sustain themselves, be gainfully employed, and enjoy their lives.
Modern capitalism aims at an altogether different goal: relentless resource exploitation for profit. Under this system, humans are a disposable commodity, to be used and discarded when no longer needed; a costly cog in the machinery of revenue generation.
The standard capitalist formula is trying to do the same business with fewer people. ~ Warren Buffett
If it could, capitalism would make do with white rats. ~ Moroccan French sociologist Jean Baudrillard
The American workplace is physically and emotionally taxing. 78% of workers must be present at their workplace during regular business hours. 1/3rd have no control over their schedule. Over 70% have intense or repetitive physical exertion on the job. 2/3rds work at high speeds or under tight deadlines. Over half of American workers are exposed to unpleasant or hazardous working conditions. 20% face a hostile or threatening social environment at work. Women ubiquitously experience discrimination and unwanted sexual advances, while men are subject to verbal abuse.
There is little systematic, representative, and publicly available data about the characteristics of American jobs today. American working conditions paint a stark picture. The workplace is taxing, both for less-educated and for more-educated workers. ~ American sociologist and economist Nicole Maestas et al in 2017
Though slavery is outlawed, modern employers do their best to find a substitute. 20% of American workers are bound by non-compete agreements that prohibit them for changing jobs to anyone the employer deems a competitor. This perpetual indentured servitude is even required of low-wage workers who have no access to proprietary information. Over half of American fast-food workers are barred from going to work for another fast-food joint. Wages in states that allow non-competes are 4% lower than those that do not.
That the market system grossly rewards capital over labor is a matter of distribution. However sorry such inequity may be, an even greater tragedy plays out in wasting people’s lives by not providing employment for all those who are willing and able to work.
Job insecurity reduces both physical and mental health. ~ Belgian psychologist Tinne Vander Elst
Unemployment has a profound impact on those who suffer it for extended periods. Youth are alienated from the society that provides them no opportunity. Despair drives them to crime and rebellion.
Local job losses can both worsen adolescent mental health and lower academic performance, and, thus, can increase income inequality in college attendance, particularly among black students and those from the poorest families. ~ American economist Elizabeth Ananat et al
For those prematurely put out to pasture toward the end of their working lives, facing penury leads to suicide. Since the 2008 recession, suicide rates have risen in the US and Europe.
People quietly offing themselves is pastoral compared to what others do. The young mass murderers that sporadically pop up at schools across the American landscape are driven by rage in facing the prospect of a wasted life. The killers return to the institution which inadvertently deceived them to render their final denouement on a broken society.
Gun violence can result from disappointment and despair during periods of unemployment, when getting an education does not necessarily lead to finding work. ~ American sociologist John Hagan
The Economic Value of Skill
In the past several decades, the American and British labor markets have increasingly favored the well-educated. Wages for college graduates have increased in real terms, while those without high-school diplomas has dropped.
This recent rise in earning power for skilled workers is a historical rarity. In the past, the skilled-wage premium has been fairly stable, save for 2 sharp declines.
The 1st drop came in the mid-14th century. Life in medieval England was short and interest rates high. Taking on a 7-year apprenticeship to become a craftsman came at a heavy opportunity cost.
Interest rates in England began to decline toward the end of the 13th century. When the Black Death struck in 1348, wiping out over 1/3rd of the English population, interest rates fell further. Apprenticeships became much more attractive. The increased skilled labor supply relative to unskilled workers drove down the wage premium.
The 2nd big decline came with industrialization. Craftsmen whose skills took years to hone were replaced by machine operators with little training. The share of unskilled workers in the English workforce rose from 20% in 1700 to 39% in 1850. The ratio of artisan wages to laborers’ wages started to drop near the turn of the 19th century and did not recover until 1960.
What has distinguished the computer age to date from the era of industrialization is the favoring of skilled workers. This may change as smarter robots become available. As the wage premium for a particular skill set rises, firms are given a greater incentive to replace the workers who have such skills.
As it is, 4 of the 5 fastest-growing American occupations are in personal care: none of which necessitates having gone to college.
Globalization and automation have weakened the position of workers and their ability to secure a decent wage. ~ US President Barak Obama in 2016
Automation is mechanical labor-saving. Robotics is a combination of computerization and physical manipulation via mechanical device, based upon sensing the environment. The employment of robots in manufacturing is factory automation.
Since the onset of industrialization, replacing labor with machinery has been a major modus operandi for increasing profit. An automated glass-bottle blowing machine was introduced in 1905. With it, a 2-man crew could produce 17,280 bottles in 24 hours at 11¢ per gross, compared to 2,880 bottles by a crew of 6 manually, at a cost of $1.80 per gross.
In the 1930s, Japan was in the forefront of developing components for use in industrial automation: making “magic eyes” – proximity switches – along with solenoid valves, relays, and timers.
In the United States, widespread factory automation began in earnest after the 2nd World War. General Motors established its automation department in 1947.
The automatic telephone switchboard was introduced in 1892, along with dial telephones. Bell Labs’ interest in automation drove key developments in computerization. The Bell telephone system was completely automated in the late 1960s using digital technology.
In the mid-1960s, American metallurgist Kenneth Iverson was heading a wobbly conglomerate that had only 1 profitable business: steel fabrication. Unable to buy domestic steel at an affordable price, or get decent imported steel, Iverson decided in 1968 to extend Nucor Corporation into vertical steelmaking: from ore to finished product. In doing so as cheaply as possibly, Nucor innovated what would increasingly become the industry standard: mini-mills.
Nucor automated its mini-mills as much as possible. Advances in robotics in the decades that followed made mini-mills increasingly competitive against the traditional large mills.
Mini-mills accounted for 10% of US steel production in 1970. By 2006, over half of the national steel output came from mini-mills. Mini-mill production share has risen since.
Between 1962 and 2005, the American steel industry shed 400,00 jobs: 75% of its workforce. Domestic production dropped ~40% during that period, having gone south and overseas. The rest of the job loss owed to automation.
The advent of microprocessors afforded robotics at much lower cost than before. Car makers were especial enthusiasts for factory automation from the early 1980s. Between 1993 and 2014, the American car industry more than doubled its productivity while shedding 28% of its workforce.
Industries employ robotics as soon as they became cost-effective. As robots became more technically proficient and adaptable, particularly through the use of increasingly sophisticated vision systems, their application range broadens. In practically all industries where robots are applied, output rises at less cost with fewer workers.
From 1999 to 2007, for every robot per 1,000 workers, 6 people lost their job, and wages fell ~0.5%. From 2000 to 2018, automation replaced 1.5 million American workers. A 2016 projection put 6% of all US jobs being lost to robots by 2021.
Greater capital mobility and heightened international competition has led to unrelenting pressure on prices, which results in buyers continually looking for new producers who offer lower costs, including for labour. ~ Kevin Hewison
Computerization has advanced so that even small companies can replace, or at least hasten, many worker tasks with software. This trend is accelerating.
Even hiring has become automated. As more people applied for jobs after recovery from the 2008 recession got underway, employers substituted algorithms for people in the hiring process whenever possible. Job applicants feel dehumanized by the process.
These artificial barriers make people feel the hiring process is impenetrable. ~ English human resources coordinator Heather Davies
The world’s top tech companies are spending billions in a race to build the best AI and capture the massive market potential, which means the technology is rapidly improving.
Digital computers have transformed work in almost every sector of the economy over the past several decades. We are now at the beginning of an even larger and more rapid transformation due to recent advances in machine learning, which is capable of accelerating the pace of automation itself. A much broader set of tasks will be automated or augmented by machines over the coming years. The implications for the economy and the workforce going forward are profound. ~ American economist Erik Brynjolfsson & American computer scientist Tom Mitchell in 2017
Truck driver is the most common job in the world. There are 3.5 million of them in the US alone. Several companies are competing to create self-driving vehicles and may well have the remaining problems licked by 2020. The effort has had a long fruition. Experiments on automated driving began in the 1920s. A Japanese engineering lab created the first autonomous vehicle in 1977. Self-driving prototypes proliferated in the 1980s.
By 2021, a disruptive tidal wave will begin. Solutions powered by AI/cognitive technology will displace jobs, with the biggest impact in transportation, logistics, customer service, and consumer services. ~ American technology analyst Brian Hopkins in 2016
Just as it did with manufacturing, robotics is now coming to a wide range of service industries. By 2025, machines will be better at diagnosing medical images and researching case law than people can. Software will crunch accounting numbers. Bloomberg already employs AI to write company earnings reports.
Mathematicians may innovate their way out of work. Math mavens now try to figure structures in high-dimensional spaces: something which stretches the human mind beyond its natural parameters.
You can build an intelligent machine that is designed for that. It actually lives in a mathematical space, and its native behaviors are mathematical behaviors. And it can run a million times faster than a human and never get tired. ~ Indian American physicist Surya Ganguli
As before, the boon in productivity will be at the expense of workers. From 2016 to 2030, 25% of service-industry jobs may be replaced by robots. The massive shift will be much faster than previous labor-market transformations. Low-skilled workers, such as waiters, will suffer the largest loss in employment.
The collision of demographics, automation and inequality is likely to create decades of disruption. ~ American economist Karen Harris et al
Some technologists muse that 90% of the population will end up redundant to machines. Surely people will revolt against corporate dehumanization before then.
Particularly in urban settings, the lack of employment is tinder for lighting a fire of social unrest. ~ American labor leader Andy Stern
The upshot is that jobs requiring middling skills have declined as a share of employment. Meanwhile, highly skilled workers remain in demand. Robotics penetration into service industries will accelerate this trend, creating an even more unequal economy.
For the foreseeable future, automation and digitalization can be expected to push down on levels of employment and wages, and contribute to increases in income and wealth at the top of the distribution. ~ World Economic Forum in 2018
The loss of mid-skill jobs has meant that the labor market for low-skilled has been flooded, making it easy for companies to pay less, and thereby pushing wages toward the legal minimum, without health or pension benefits. As the rich get richer, a hand-to-mouth existence for common folk has become more common. With bouts of exception, the middle class economically slid downhill with the maturation of capitalism.
Families unable to escape poverty despite working full time blight any economic system. Unlike most other rich democracies, America chooses not to provide those who work with a wage sufficient to avoid impoverishment. Indeed, its wage structure causes taxpayers to subsidize low-wage employers. ~ George Tyler
10% of American working households are poor. A household led by a woman, someone in an ethnic minority, or with a low education is likely to be employed but impoverished.
There are millions of Americans working, playing by the rules, and they’re still trapped in poverty. ~ American sociologist Scott Sanders
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The culmination of the foregoing trends, exacerbated by favorable tax treatment for capital and corporations, has been to widen the income gap between those who make money with money and those who more diligently work for a living. This trend is worldwide, and especially pronounced in countries which are economically developed.
Trade and technology’s toll on wages has often been abetted by loosening employment laws. Stiff labor-market regulation propped up labor’s share of income in Europe in the late 1970s. Then, prompted partly by stubbornly high unemployment, employment liberalization swept the continent as a political movement. Labor’s share of income plummeted as a result. Privatizing state-owned companies further loosened labor’s hand on the rudder of economic reward.
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Income inequality illustrates the moral corruption inherent in capitalism. From the late 20th century, workers in the financial sector have been paid at many multiples of those laboring in other industries. Also notable is the jump in compensation to top-level corporate managers.
Bank tellers are basically currency cashiers and are paid accordingly. In contrast, high-end financial fiddlers are inordinately compensated because of the obscene volume of money they can generate by their machinations. Corporate management rigs employment to reward those relative few who have the specific skills and social connections to join the clique.
One of the sorriest consequences of our financial system is the toll exacted on the legitimacy of providing great rewards for great contributions. Finance certainly contributes to prosperity, but the vast wealth secured in recent years by a small number of financiers does not map into a commensurate increase in created or financed new industries or turned around failing companies. Rather, they have used subsidized borrowing to leverage the returns of questionable schemes, secure in the knowledge that if things go wrong the authorities will step in. ~ Indian American economist Amar Bhidé
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The gross income discrepancies that generally exist owe to the nature of the labor market, which is unique compared to other goods. Unlike all other commodities markets, the supply of labor comes from consumers, whereas labor demand is determined by producers.
Labor is like other industries in not being competitive in the sense that economists use the term. What that means is that workers will not receive the value they contribute, as the economic deck is stacked.
Instead, wages are determined by the relative bargaining power between employers and workers, and that balance of power has always been skewed away from labor. This is especially true in the absence of strong labor unions, which have become an anachronism owing to the political sway that corporations have. Labor union power in the US and UK is puny compared to what it was in the 1930s.
The American middle class in the immediate post-war period was largely populated by blue-collar workers who attained their socioeconomic status thanks to unions.
The US auto industry symbolized blue-collar upward mobility. The real incomes of autoworkers doubled from 1947 to 1973. Because many other companies – unionized or not – adopted auto-industry pay rates, wages went up across the board. This golden age for labor ended with the 1st oil shock in 1973. Inflation set economies reeling. Companies looked for ways to lower costs. As labor was the highest cost, workers were first to feel the squeeze.
In 1983, 20% of all American wage and salary workers were union members. In 2018, only 10% were in unions.
The labor market doesn’t work the way the classic models suggest, especially since union membership and federal labor standards have been eroded by years of corporate attacks. Wages are not set by some pristine equilibrium between supply and demand; workers are not paid their marginal contribution to their firms’ output. In the real world, pay is determined by a negotiation between workers and employers, and employers typically have a lot more negotiating power than their employees do. ~ American labor maven Ben Spielberg
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Globalization and firms moving factories overseas from the 1970s eviscerated labor’s power. The high inflation in the 1970s destabilized economies, withered workers’ savings, and ironically gave rise to reactionary political movements in the US and UK (Reagan & Thatcher, respectively) which would further undermine union power.
Oddly, the political reaction was supported by blue-collar workers, who were worried over what was happening to them, but failed to comprehend what would happen with a change of regime that favored business. Reagan’s pandering with optimism worked, and workers paid the price.
One of President Reagan’s earliest acts was to break the air traffic controllers’ union; a union which had endorsed Reagan for president.
As unions withered, large corporations were able to hire non-union replacement workers and ship jobs overseas. Wages eroded.
With workers fearing for their jobs, highly profitable firms across America successfully demanded large-scale wage and benefit concessions across the board, allowing them to freeze total employment cost in real terms (i.e., adjusted for inflation).
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For steady employment, those relative few with capital largely determine who is allowed to make a living. Like musical chairs for livelihoods, getting a job is a competitive scramble. Underneath it all, the market mechanism powers a heartless system operating under the guise of ‘freedom.’
Government is left to remedy the systemic deficiency of abiding underemployment. Most governments address the problem in a cursory manner: more with bluster, and blaming the unemployed for their predicament, than actually helping those that the market has set adrift.
In the US, even with public education and retraining opportunities, a significant proportion of the adult population is chronically underemployed or unemployed. This is an excellent recipe for crime and despair.
Adult unemployment in the US 1977–2015 averaged around 22%, with sharp increases in the wake of economic downturns. The youth employment rate is twice that of adults in their working prime.
Unlike the US central bank (Federal Reserve), which ostensibly has no political ax to grind, the touted unemployment rate put out by the US Bureau of Labor Statistics under-reports by a factor of 4. But even the Federal Reserve lives in la-la land when it comes to characterizing employment. In January 2017, Federal Reserve chair Janet Yellen declared “the economy is near maximum employment,” at a time when only 63% of adult Americans had a job.
Meanwhile, those employed by businesses face the constant pressures of exploitation. Since labor is often the most expensive component of corporate doings, employees are squeezed as much as the competitive environment allows.
Employment figures are silent on the quality of employment. Those on the meanest of measly jobs are considered fully employed.
In May 2018, the US federal labor department celebrated their rigged unemployment rate dipping below 4%. The false figures had gullible economists marveling at how well capitalism had done to recover from its doldrums of a decade earlier and left them scratching their heads why real wage rates had not gone up.
To conventional economists, good news is treated as a tribute to the capitalist system, while burst bubbles are explained away overindulgences of enthusiasm and failures of regulatory oversight. In actuality, the toils and tribulations of workers continue unabated. For most, getting by is the best that can be done.
During growth periods, workers are added to payrolls. Wage levels may rise during good times, but not always. Following the 2008 recession, incomes for the average worker stagnated, while those in the upper income tiers made more.
As growth slows, companies shed workers: unemployment rises. The sprouting surfeit of unemployed labor lets businesses squeeze wages and crack the whip for more hours for the same pay.
The United States has the highest proportion of workers in poorly paid jobs, and the highest number of annual hours worked by poor families with children. ~ American political economist Tim Smeeding
Every downturn sees fewer well-paying jobs emerge in the subsequent recovery. So it was in 2010, after the 2008 recession, when less than half of the jobs that came back paid as well as they had in 2007. This has been a continuing trend. 94% of the 10 million new jobs in the US 2005–2015 were either temporary or contract-based, not the traditional salaried positions with fatter compensation.
America has had blighted generations before, like those born in the decade after 1835 and especially the decade after 1905, which was cursed by both war and the Great Depression. The children of today’s baby boomer generation have joined that discouraging list, beset by weak wages and wealth erosion. ~ George Tyler
Despite the recession that began in 2008, seniors working rose while jobs for young people fell. Youth are now having to compete for low-paying jobs against their grandparents, whose life savings were tied to investments that sank.
The number of those working past 65 is at a record high. ~ American financial journalist Floyd Norris in 2012
There’s a myth that in the 1950s, everyone was very loyal to companies and companies were very loyal to people. But we always had a contingent work force that could be laid off at any time. They were called women. ~ American economist Ann Huff Stevens
An old employment dynamic was invigorated in the 21st-century: temporary workers. Besides companies not bringing on full-time employees, the Internet facilitated connecting freelancers with consumers. The list of personal services provided on-the-fly has ballooned: everything from walking the dog to legal aid for being dogged by the law.
Precarious work is increasingly common and is expanding on a global scale, replacing what has long been regarded as standard employment. ~ Kevin Hewison
The majority of those with precarious employment would prefer steady work. An insure job makes it difficult to make commitments, such as buying a home, or even get married.
An explosively growing example is peer-to-peer ridesharing. The largest such company is Uber, which was founded in San Francisco in 2009. A mobile phone app made connecting Uber drivers with passengers easy. The company raked in $37 billion in revenues worldwide in 2017. Meantime, the average pay of drivers of ridesharing and delivery firms dropped 53% from 2013 to 2017 as more drivers entered the market.
In the wake of Uber and other ride-sharing firms, traditional cab companies have been hurt. The price of a New York City taxi medallion (the right to have a cab) dropped 20% from 2013 through 2017.
Labor Market Fluidity
US labor markets became much less fluid in recent decades. A shift to older businesses, an aging workforce, and policy developments that suppress reallocation all contributed to fluidity declines. Reduced fluidity has harmful consequences for productivity, real wages, and employment. ~ American economists Steven Davis & John Haltiwanger
In the United States, much of Europe, and Japan, labor is bifurcated into secure, predominantly skilled jobs and precarious, mostly unskilled work. The split owes to inflexible labor markets that make it harder for workers to climb the job ladder.
Labor market solidification partly owes to structural changes in the economy. New businesses create jobs; old ones, not so much. Occupational licensing raises barriers to entry for occupations that once were open to those with pluck and skill. American employers used to be free to sack workers more or less as they pleased, but “employment at will” has been eroded by court decisions which create an implicit contract between employee and employer. The flood of online information now available allows employers to better discretely screen applicants, leading to less use of trial employment, where workers may prove themselves beyond their past.
A significant labor solidification force is oligopolization. Because the American economy is dominated by so few large employers, US employment is roughly 12% lower, and wages depressed at least 22%.
The US labor market is highly concentrated. ~ Spanish economist José Azar et al
Fluidity has fallen most for the young and least educated: those who especially need a break. For youth on the make, loss of fluidity makes it harder to move to better jobs, change careers, or win pay raises. For the unemployed, work opportunities come along less often: jobless spells lengthen, thereby morphing someone unemployed into unemployable via the perceived sin of idleness.
The U.S. economy faced serious impediments to high employment rates well before the Great Recession, and sustained high employment is unlikely to return without restoring labor market fluidity. ~ Steven Davis & John Haltiwanger
The decade-long recovery from the 2008 recession illustrated the volatility of the marginal labor pool. The disadvantaged were the last to be hired and will be the first to let go when the inevitable downturn arrives. The benefit of a heated economy to underclass employment pales to the penalty when the economy cools.
Employment & Inflation
In the years following the 2008 recession, the official unemployment rate fell far faster than the recoveries in American and Britain seemed to justify. Whereas the UK unemployment drop could be chalked up as job growth, US figures reflected frustrated workers leaving the labor force.
The dynamics of the British and American economies diverged in the wake of the 2008 crash. Output in both economies tumbled sharply, but the US bounced back relatively quickly, except in employment. In the UK, the trends were reversed: a brutal decline in output and feeble recovery, but the downturn in jobs was subdued. The distinction in employment practices reflected differences in inflation rates.
Relatively high inflation in UK meant that pay stubs shrank in real terms: British workers became cheaper relative to the prices of goods and services. Lower real wages encouraged hiring, while inflation checked borrowing for capital investment. Productivity fell, but employment was propped up. By mid-2018, official unemployment in the UK was miniscule but so were wages: less than they were a decade earlier, in the teeth of the 2008 recession.
America’s nominal wage growth was similar to Britain’s, but inflation was milder. As a result, real wages in the US nudged up following the 2008 crunch. That encouraged firms to squeeze more from their existing workforce rather than hire more workers.
In shock from a financial shelling, chastened banks are only willing to lend for tangible collateral – like buildings and equipment – that can be seized in a default. Companies that rely more upon machines than men therefore perform better in a recovery, pushing down demand for workers. Without a big drop in wages, weak labor demand yields a jobless recovery, or one that pays less for the workers who are hired: a rise in temporary positions, but not full-time employees. Such was the case in the US in the wake of the 2008 recession.
As the American economy continued to recover in the mid-2010s, the labor market tightened, but wages did not keep pace with inflation. This was quite unlike the beginning of the century, when wages rose with a tight jobs market. The situation in the 2010s demonstrated how strongly the market economy had become stacked against the average worker.
Labor-market recovery from financial crises is characterized by either higher unemployment (jobless recovery) or a lower real wage (wageless recovery). Inflation determines the type of recovery: low inflation is associated with jobless recovery, while high inflation is associated with wageless recovery. ~ Argentinean-American economist Guillermo Calvo et al
Shipping Jobs Overseas
A long-standing way to cut costs is to employ the cheapest labor. Putting factories in foreign countries has been particularly pronounced in the US.
US manufacturing employment peaked during the 2nd World War. It has been downhill ever since.
American multinationals started shipping jobs to neighboring Mexico in the early 1980s. Car makers were among the first. The practice quickly spread. Companies left their home turf and went shopping for suitable locations to invest. The trend to offshore production has accelerated in the 21st century.
American companies often save on costs by finding lower wages abroad, not by enhancing the abilities of American workers. ~ American economist Tyler Cowen
Overseas jobs have robbed millions of American workers of the means to make a comfortable living. Of the 3.9% fall in labor’s share of income in the US 1985–2010, 85% of the drop can be attributed to jobs lost overseas.
Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice. That’s disappeared. Profits and efficiency have trumped generosity. ~ American economist Betsey Stevenson
From 2000 to 2009, American multinationals cut US employment by 2.9 million while expanding employment overseas by 2.4 million. Many of these transplanted factories produce products that are shipped directly back to the US, displacing goods that had been previously made domestically.
Apple is an example of why it’s so hard to create middle-class jobs in the US now. If it’s the pinnacle of capitalism, we should be worried. ~ American economist Jared Bernstein
Apple earns $400,000 in profit per employee: top rung in wringing lucre from its workers. It has done so by shipping jobs overseas whenever possible. 32% of Apple’s 63,000 employees are in foreign lands.
A much larger army of 700,000 contractors engineer and manufacture Apple products. None of them do so on US soil.
Those jobs aren’t coming back. ~ Steve Jobs in 2009
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Weeks before the first iPhones were to come out, in 2007, they needed to be revamped: at the last minute, Steve Jobs demanded that the iPhone screen be glass, not plastic, which was easily scratched. (It is ridiculous that this had not been considered early on, but managers reflexively went with plastic because it was cheaper.) This material change necessitated an assembly-line overhaul.
New glass screens arrived at the factory outside Shanghai near midnight. A foreman immediately roused 8,000 workers from their beds in the company’s dormitories.
Each employee was given a biscuit and a cup of tea, then put to work on a 12-hour shift, fitting glass screens into beveled frames. Within 4 days, the plant was producing 10,000 iPhones daily.
The speed and flexibility is breathtaking. There’s no American plant that can match that. ~ Apple executive
Contract workers for Apple were working 12-hour shifts, 18 days in a row, despite repeated requests for a day off. Exhausted workers could not help falling asleep at their stations. In 2010, 14 overwhelmed Apple factory workers in China committed suicide.
Worker safety and well-being are our top priorities. We are aware of no other company doing as much as Apple to ensure fair and safe working conditions. ~ Apple corporate statement
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The US has stopped producing people with the skills we need. ~ Apple executive
Industrial engineers have to oversee production work in factories. Apple claimed that the Chinese could readily meet manpower demands that the US could not, and at a much lower cost than imaginable using American workers.
The entire supply chain is in China now. ~ Apple executive
China is not just cheap. It’s a place where, because it’s an authoritarian government, you can marshal 100,000 people to work all night for you. ~ American economist Susan Helper
Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people. ~ Adam Smith in 1776
Apple is exemplary of large product companies across America and the western industrialized world. For the most part, only niche companies that have not reached sufficient size to manufacture overseas still make products domestically.
There are notable exceptions among international corporations. While it has assembly plants around the world for bikers in foreign countries, Harley-Davidson makes its American motorcycles in the United States.
In the span of a few decades, US industry shrunk by half. Industrial production in 2015 was only 17% of American GDP, compared to 26% in Europe, with Germany as the continent’s primary contributor.
As of 2015, an extensive survey showed that the US does not lack for skilled manufacturing workers, despite employers long decrying a mythical “skills gap;” but skills erode without employment. France is exemplary.
France had high unemployment for well over a decade. As its economy picked up in 2017, businesses could not fill openings because of a skills shortage in the labor supply.
That is not to say that the American labor pool is well-tooled intellectually. The quality of American public education is lamentable.
Inadequate education is a major problem. ~ American economist Jonathan Rothwell
The quality of the US labor supply is not an issue of immigration: 2/3rds of low-skilled Americans were native born.
The human capital base in the United States is quite thin: the US has mediocre labor assets. ~ German statistician Andreas Schleicher
That said, well-educated people have troubled finding jobs commensurate with their education. In 2016, nearly half of US college graduates were working at jobs which required only a high-school diploma.
Regardless of formal education, employers themselves create a skills gap by not training workers. Apprentice and management-training programs have disappeared from the American corporate landscape. There are plenty of workers able to fill all the empty job positions, if only employers were themselves savvy enough to fashion programs that reward labor with some instruction as well as decent pay.
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Once upon a time, economic recovery led to expanded employment of the United States population. Not anymore. The percentage of adults employed has declined sharply during the last 2 recessions and failed to increase much in their aftermath. ~ American economist Nancy Folbre
In the short term, offshoring unlinks economic growth from domestic job creation. US firms can meet rising American demand through imports, with scant need to add more domestic workers. Imports rise, but not employment.
In the longer term, offshoring saps the prospect of economic growth. 70% of the US economy is driven by consumer expenditures. Employment fuels consumption, which drives the economic engine.
Fewer jobs spells less consumption. Growth peters out.
Thanks to destructive outsourcing and faltering investment in research, the US has lost or is on the verge of losing its ability to develop and manufacture a slew of high-tech products. ~ Gary Pisano & Willy Shih in 2009
Bangladesh is the world’s 2nd-biggest supplier of clothes, behind China. More than 80% of its output is exported to Europe or the US.
In 2013, Bangladesh’s garment industry made $19 billion from its 5,000 factories that employed 4 million people. 90% of them are women, who make $38 a month: less than 20% of the wage rate in China; and they are worked to the bone.
At night I was so exhausted. My whole body ached. ~ teenage Bangladesh female garment worker Mahinur Akhter, who, bloody and barely conscious, was dragged from the rubble after Rana Plaza collapsed
95% of the clothing factories are owned by local investors. Factory owners used to average 50% returns on their investments, but that slid to 20% as global oversupply reduced garment prices.
Rana Plaza Collapse
In 2013, a building complex that included a shopping center and 5 garment factories collapsed in Savar, an industrial area near the capital city Dhaka. Planning approval had only been given for 5 of the building’s 8 stories.
The building’s owner, Sohel Rana, ignored warnings of imminent collapse by the appearance of cracks throughout the building in the days before. He instead ordered workers to return to work. Rana tried to flee the country but was caught near the border.
The rescue operation was a fiasco. The area was not even cordoned off. Soldiers and firemen stood by to let locals drag out corpses and survivors. At one point, bystanders pelted volunteers with stones for their slow progress, prompting police to spray tear gas. Day by day, the stench of rotting bodies bloomed. 1,130 were killed and 2,500 injured.
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Somewhere around 60% of the buildings are vulnerable. ~ Bangladeshi civil engineer Mehedi Ansary
Rana Plaza was just the largest and most publicized building tragedy in Bangladesh. In the decade before, hundreds of other factories fell or were consumed by fire; always with casualties. Though over 1,000 workers died from such disasters from 1990 to 2012, no factory owner was charged with any crime.
The trend will continue. Like other countries, Bangladesh’s legal system rarely favors anyone confronting the power structure, including the moneyed class.