Thursday, August 25, 2016

Is China "taking all our jobs"?

Assembly of a car in the 1970's took twice as many people as it does today, even though cars today are far more complex.  Are the Chinese "taking our jobs away" or are we losing them to automation?

Watching the video above, I was amazed how many people worked at union plants back in the 1970's, many of them sort of just standing around.   It is the way I remembered it during my days at GM.   Just the painting scenes give pause, as about a half-dozen workers are involved in painting each car, even with some primitive automated painting systems in place.

Today, cars are painted robotically using a number of robots but very few actual workers.  The end result is not just a better paintjob, but a car that lasts far longer and rusts less.  Also, less paint is wasted to the atmosphere, improving plant emissions.

American factories today look like ghost towns compared to the past.   Fewer people are needed to assemble cars than in the past - less than half as many.

So, where did the jobs go?   Well, there are still jobs to be had, of course, assembling cars.  But the wages aren't what they used to be.   Foreign car makers - nearly all of them - have factories in the US, but pay non-union wages.   Nissan pays as little as $15.50 an hour in Mississippi for part-time labor.   Before you howl in anger, bear in mind that is about $31,000 a year annualized, and that's a pretty damn good wage in Mississippi these days.

It is, of course, what we were paying UAW workers at GM back in 1978 when I worked there.

The reality is, the idea you could graduate from high school and then go down to the factory and get a "good paying job" and then be set for life is no longer the case.   And in  fact, that sort of lifestyle was present only for a brief blip in our nation's history.

Unions, using extortion, were able to blackmail companies into paying wages that were anywhere from 3X to 10X the local labor rates for unskilled labor.   And by padding the payroll with excess workers, they raked in millions in union dues and pension funds.   It was organized crime basically, and this is the "good old days" that some folks want to go back to.   Crappy overpriced goods were the only choice for most Americans back in the "good old days" where buying a television set was a big a deal as buying a car - and often cost as much.

Think carefully before you pine for the good old days.

And those union jobs were not for everyone, either.   In most cases, you had to have a friend, a relative, or some other connection down at the Union Hall in order to get a cushy union job.   If you had no connections, well then, go fuck yourself.

Still pining for the "good old days"?

There is a lot of ink spilled about the "disappearing American Middle Class" and maybe to some extent this is true.  Then again, a lot of this hand-wringing is based on our definition of "Middle Class" which has been distorted lately.   If you drive through America, you still see our cities ringed with hundreds of miles of suburbs, all nice houses which apparently someone is buying as they are building even more of them as we speak.

The problem is, I think, we define "middle class" in terms of a median between the very rich and the very poor, and there are a helluva lot more very rich these days, or at least the very rich have a helluva lot more, or at least according to some people, they do.   This tends to skew our perception of what "middle class" means.

Most Americans, I think, would define "Middle Class" as having a nice 4-bedroom house with a two-car garage, at least 3-4 cars in the driveway, a smart phone for every member of the family, all the cable channels, and of course, the vaunted six-figure income.   And there are a lot of folks out there who are living this lifestyle, along with a mountain of debt, and then wondering "where it all went" and then blaming the politicians for their woes.

Simply stated, we live a better lifestyle today than in the past.   A "poor person" today arguably has a better lifestyle or at least better crap than a middle-class person did back in the day.   My Father bought his first color television in 1975 - long after my "poor" friends had them (color television was largely the norm by the mid-1960's).   Today, even folks in the ghetto have a nicer flat-screen television than my parents could have dreamed of in the 1970's.

The man at the Trump rally holding the sign saying "Make America Great Again!" and whining about how awful he has things likely drove there in a $50,000+ pickup truck that seats six people.   Irony is lost on these folks.

Did his job go to China though?   Maybe, maybe not.   Automation took a lot of these brain-dead jobs away long ago.   Unionism took away the rest of them.   Companies forced to spend all of their capital on wages cannot compete long in the marketplace before failing.   And that is what happened to a lot of those old-line companies.

And factories are not forever, either.   Drive through New England and you will see thousands of old factories dating back to the 1800's, now converted to lofts or offices for high-tech firms.   The idea that you can bring back the old looms and water-wheels of that era is, of course, laughable.   Their time in the sun came - and went.   And that is a natural part of business.

The idea that we can "go back" to an earlier era is not only flawed, but dangerous.    We cannot simply revert to earlier times and values - it is impossible to do.   But even if we could, it would not be desirable to do so.   What the "Make America Great" again folks fail to remember is the stag-flation and failing economy of the 1970's and 1980's (yes, even during the Reagan wonder years).   And part of this problem was that union workers were holding American industry hostage.

It is a populist message, to be sure - and it is telling people what they want to hear.  And what a young white man with no more than a high school education wants to hear is that high-paying jobs are his for the asking and that unskilled labor has a high value in the marketplace.    The fact that he has no marketable skills or much economic value is not a message any politician wants to make.

So we blame the Chinese and the Muslims, and whoever "other" is a convenient whipping boy today.

But the reality is, there are a lot of high-paying jobs in this country  - or even just decent-paying jobs - going unfilled for lack of qualified candidates.   Maybe learning a skill is a better option than waiting for a political overhaul and a return to yesteryear that will never happen.

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NOTE:  Some will be quick to point out that "skilled" jobs such as IT related jobs are being outsourced to India.  I would disagree that managing a bunch of PCs and servers is a "skilled job" and moreover, when you make a shitty product and charge too much, you encourage your customer (or bosses) to automate and outsource.    Consider the "IT professional" at your office.  A slovenly lad who spends all day long on Reddit or playing computer games, who uses his limited powers and knowledge to leverage himself into a position of indispensability to the company.   As with the union assembly-line worker, they are not being "outsourced" so much as they gave their jobs away.