Interesting thoughts on the Unemployment news

[jainen]

>>what do they have to offer me that would make them worth a "living" wage??<<

You got it backwards. Why should someone waste their skills or even just their time if you won't pay them enough to live on? Low wages attract, well, people who can't get anything better. Offer a wage that people can afford to accept and you will get people who can afford to accept it.

>>If your assertions about business are correct, why is GM losing Billions now when they used to make Billions in profit?<<

Not exactly a typical business model, at least for my clients, but the answer is simply that they didn't pay attention to what people wanted to buy. Look at Ford selling Jaguar this month, losing billions not because of wages but because they made a stupid capital investment. Maybe if they had put those billions into wages they could have atttacted some better engineers, or at least ad men.

[Jack from Ohio]

You skipped my first question....

"Do you, or have you ever, hired employees for YOUR company?"

[BulldogTom]

<<< they don't think your offer is good enough. You already know you can't find anyone else, so you either pay them more or you do without. >>>

<<< but apparently there is a shortage of those qualifications in the labor market so naturally the price goes up.>>>

So, you make my point for me. Thank you Jainen.

There is no unemployment crisis or shortage of jobs when workers have the ability to refuse to work in the available jobs unless the wages increase. What are all these unemployed people doing then if not taking jobs that pay less than what they want? How are they living?

The answer is they are being subsidized by Uncle Sam or Mommy and Da-Da. That is what is skewering the supply and demand labor balance. It is an extraneous factor in the market that causes the imbalance.

And you still have not answered why a private project should cost 40-60% less than an identical government project. That is purely payoff for political contributions and votes by politicians.

Tom

Lodi, CA

[kcjenkins]

>>what do they have to offer me that would make them worth a "living" wage??<<

You got it backwards. Why should someone waste their skills or even just their time if you won't pay them enough to live on? Low wages attract, well, people who can't get anything better. Offer a wage that people can afford to accept and you will get people who can afford to accept it.

You miss the point, Jainen. It is not the employers job to base his offer on what the employees want. He sets his offer based on what he can sell his product or service for. And his customers decide that. If he has to raise his prices in order to pay higher wages, and that causes him to lose business, he may be better off to just not hire that employee. We have all seen businesses go out of business because the market would not pay what they charged for their product. It is customers that ultimately set the prices, for any product that the customer has options about buying.

But the point is that if the person applying for the job really needs a job, he will take the best offer he gets. And then he will work hard to make himself worth more, learning new skills and doing the best he possibly can to give value for his pay. That will almost always lead to his getting a raise. Because while he may not be worth that much while he is training, if he works hard to learn and to give his best to the job, he will soon be worth more. And employers are willing to pay for work that is worth more. But the worker has to be willing to prove that his work is, in fact, worth more. This is basic economics.

[jainen]

>>This is basic economics.<<

No, it is NOT basic economics. It's an interesting theory, but it is not reality anywhere in the world. After WW2 American corporations tried to force that kind of model, but even they gave up because it doesn't work in an international labor market.

The BASIC economics of labor is that if you offer $1400 but housing and transportation costs $1500, I CAN'T take the job even if I want to. Lots of good, hard-working people simply can't afford to take that job. That's what was wrong with the welfare system before Congress passed the disastrous reforms that made so many children homeless.

As Tom points out, there is still support from government and family members. The main beneficiaries of that are the employers who can get away with paying what would otherwise be less than subsistence wages.

As for the power of the customer, what I said about General Motors was that their PRODUCT was not acceptable. American consumers are not particularly cost-conscious, as the recent 100% increase in gas prices proves. That is because they can generally command whatever wages they need. THAT'S the way the American economy has stayed strong ever since we abandoned indentured servitude and slavery. It was, for example, one of the keynotes of Henry Ford's success.

Pay your workers well, Tom, and you won't have to worry about finding new people to take your three months of training. (I don't know why public works should cost more than private ones, except when I served on a school board I learned that the state architect requires far higher quality than your average homeowner.)

Jack, I have no experience on the hiring side. But I know why workers turn down crummy job offers; I do have experience with that.

[Jack from Ohio]

...Jack, I have no experience on the hiring side. But I know why workers turn down crummy job offers; I do have experience with that.

I knew your answer to that question before I ever asked it. Some things are so very self-evident to those of us who have been in the place to hire people.

Your answer just reinforces my position and the facts in the market today.

[jainen]

>>Some things are so very self-evident<<

Let's talk some more about Henry Ford. The average wage on auto assembly lines was $2.34 for a nine-hour shift. Ford bumped it to a minimum of $5, and cut the work day to eight hours. The Wall Street Journal called it an economic crime. (That was in 1914, when the mainstream solution to economic troubles was "let's have a war.")

Later wages went up to $10 a day on the theory that such earnings would expand the customer base, but originally all Ford wanted to do was make sure he could motivate workers (the factory job wasn't much fun) and prevent turnover with costly retraining. His assembly-line system had reduced overall manufacturing costs so much that he could afford a higher payroll. That's an important point, because back then labor wasn't all that big a thing. The real investment was in land, buildings, and new machinery--that's why it was called capitalism.

Nowadays our industrial base has substantially moved overseas, and we are left with "intellectual capital" and data in a service economy. Capital costs have been vastly reduced, so labor IS worth correspondingly more. Yet we still hear moans about how "workers have the ability to refuse to work in the available jobs unless the wages increase." Well, duh!

[joanmcq]

GM could have been at the forefront of the electric car market if they had had even a smidgeon of long term market analysis. Instead, they are going bankrupt by having bet their whole basket on 'big honkin trucks' after burying their alternate fuel vehicle. Toyota did a little anaysis and came out with the Prius, and now can't keep 'em in stock even though the credits are gone for them and they cost more than other comparable products. If management makes asinine decisions a company will go under regardless of what the workers are paid.

I think both of you are a bit right. If Tom can't find workers, he is either not paying enough, or the eligible workers refuse to move to Fresno (small dig). Jainen's workers can't afford to live on the wages; either the dole pays more (so no-one except the very proud will take the job) or you have to take the job, double up & give up some of your expectations..take the bus/bike/have a kazillion roommates/eat a lot of pasta. I've been at all ends of the spectrum (except for the filthy rich end; I'm still waiting for that one!), from picking fruit in the summer during college because there wasn't any other work and starving in the process, to my currently fairly comfortable existence. And some young people are useless (as are some older ones) and some young people start Google.

[Jack from Ohio]

>>Some things are so very self-evident<<

Let's talk some more about Henry Ford. The average wage on auto assembly lines was $2.34 for a nine-hour shift. Ford bumped it to a minimum of $5, and cut the work day to eight hours. The Wall Street Journal called it an economic crime. (That was in 1914, when the mainstream solution to economic troubles was "let's have a war.")

Later wages went up to $10 a day on the theory that such earnings would expand the customer base, but originally all Ford wanted to do was make sure he could motivate workers (the factory job wasn't much fun) and prevent turnover with costly retraining. His assembly-line system had reduced overall manufacturing costs so much that he could afford a higher payroll. That's an important point, because back then labor wasn't all that big a thing. The real investment was in land, buildings, and new machinery--that's why it was called capitalism.

Nowadays our industrial base has substantially moved overseas, and we are left with "intellectual capital" and data in a service economy. Capital costs have been vastly reduced, so labor IS worth correspondingly more. Yet we still hear moans about how "workers have the ability to refuse to work in the available jobs unless the wages increase." Well, duh!

I must certainly live in a different USA than you do. It is, after all, 2008 not 1914. We are living in a global market, and as such, unskilled workers have become less valuable. Skilled workers and people with careers, training, post-seconday education have features that make them valuable to employers that have jobs that require more than a rudimentary education to do.

Show me the source of the idea that... "All Americans are ENTITLED to one single job that will provide a living wage with no effort on their part other than to show up." That is the basic idea you are espousing.

[jainen]

>>I must certainly live in a different USA<<

Do you? In my USA of 2008 the employees are a company's most valuable asset. If they aren't, the company should invest in some who are.

Maybe your opinion is another of your "self-evident" truths. That reminds me of the Declaration of Independence, which by the way is the source of the idea you asked about, that everyone has a RIGHT to the necessities of life.

But that really isn't what I meant. Even an unskilled worker has time and effort to offer an employer, and is perfectly free to refuse to accept a low wage. He can look elsewhere or do without, the same choices the employer has.

[Jack from Ohio]

>>I must certainly live in a different USA<<

Maybe your opinion is another of your "self-evident" truths. That reminds me of the Declaration of Independence, which by the way is the source of the idea you asked about, that everyone has a RIGHT to the necessities of life.

You must definitely live in a different dimension...

From the Declaration if Independence...

"That all men are equally free and independent; that they are endowed by their Creator with certain inalienable rights; that among these are life, liberty and the pursuit of happiness."

I did retain some of my High School History and Government classes...

Show me the document that establishes the rights to anything except the PURSUIT of happiness. Yet, the "entitlement" mentality is poisoning the very fabric of what made this county great for 230 years.

[David1980]

If we so wanted, we could have a job for everyone willing to work. Just end minimum wage. At hourly rates in the pennies companies are going to be able to pay people to do things that would have cost more to do proper. For example, those parking lines in a parking lot? You don't need them if you can pay people to lay down and make "human lines" for you to park between. Photocopies? A thing of the past! Pay a sketch artist to make a duplicate for you.

Okay, so we're not going to do that. Sadly as technology improves jobs that made sense at one point in time simply don't make sense today. Jobs will be eliminated. The question is who's jobs? If 50% of all labor needed in the US was eliminated what would the result be?

Most jump to the scary thought of 50% unemployment rates. However, consider this: What if instead of using half as many people to do the remaining work you used the full amount of people and worked them half as hard. If the improvements made to allow this increase efficiency enough you could work a 20 hour week, and get the exact same pay you get working 40 hours now.

The real problem for me then isn't unemployment or the loss of jobs, but rather how we allocate those remaining jobs. Done right at virtually no cost everyone gets free time to do what they enjoy. Done wrong standards of living suffer while unemployment sky rockets.

[Jack from Ohio]

That is an interesting theory you propose. Think about this...

If every business were required to pay every employee $40k/year, no one would/could pay the resulting higher prices for goods and service. Are you willing to pay $15 for a big Mac? How about $2 for a can of soda? Milk at $10 a gallon? Gasoline prices would be higher than ever due to the increased cost of labor at the pump.

One of the driving forces in our global economy is the American public's desire to pay the cheapest price possible for everything. This is proven by people flocking to a new Wal-Mart instead of continuing to give their business to the local businesses. Yet, Wal-Mart (who has NO control over where people choose to spend their money) is portrayed as the evil big business that puts small hometown businesses out of business.

As Americans, we have a double standard concerning wages, responsibility, and prices. We want ultra-cheap prices, but we want high paying jobs just because.

<<<"Most jump to the scary thought of 50% unemployment rates. However, consider this: What if instead of using half as many people to do the remaining work you used the full amount of people and worked them half as hard. If the improvements made to allow this increase efficiency enough you could work a 20 hour week, and get the exact same pay you get working 40 hours now.">>>

The unions at GM have been using this method for years. The results are very real as GM is closing more plants every day. Other car makers expect workers to provide 40 hours work, for 40hrs pay, and compensate their people for productivity and quality. Check who is number one, two and three on the lists of car sales, and customer satisfaction with their cars.

[zeke]

"The real problem for me then isn't unemployment or the loss of jobs, but rather how we allocate those remaining jobs"

This is the scariest thought yet! 47 years ago today I raised my right hand & swore to defend & uphold our constitution. Nowhere in MY constitution do I find any explicit or implicit state power to "allocate those remaining jobs"

Zeke

[joelgilb]

None of this matters the world is ending on July 15, 2008! I have even given up hangings until then. (JK)

[Catherine]

None of this matters the world is ending on July 15, 2008! I have even given up hangings until then. (JK)

Why that particular day? (There are still signs on lampposts around here warning people that the Rapture will take place on some day in October, 1997 -- we're still here, no one disappeared to my knowledge.)

[joanmcq]

What also could be reallocated is how the jobs are compensated. How does a company justify paying CEOs multi millions or billions per year? Before anyone lables me a commie pinko, realize in the rest of the western capitalist world, executive compensation does not compare to what some execs are paid here. For example, when Daimler-Benz bought Chrysler, the Chrysler execs were paid far, far more than their German counterparts. Which company is more profitable? Wal-Mart in Germany manages to pay their workers a decent wage, and all of the health, vacation & other benefits required by their government, and still remain profitable enough to want to open stores there. Why not here? Could the exec pay and perks be the difference? Also, the mom & pop stores cannot compete on the same terms as the big boxes, not only because of the economies of scale. The big boxes often get huge tax breaks for locating in a particular area, so that the community can get the short term benefit of sales tax reciepts. Wal-Mart isn't paying the sales tax, the consumer is. But Wal-Mart can undercut prices in part because of not paying property taxes or paying reduced property taxes. So in the long run the community suffers because of a short term benefit.

[Jack from Ohio]

...Also, the mom & pop stores cannot compete on the same terms as the big boxes, not only because of the economies of scale. The big boxes often get huge tax breaks for locating in a particular area, so that the community can get the short term benefit of sales tax reciepts. Wal-Mart isn't paying the sales tax, the consumer is. But Wal-Mart can undercut prices in part because of not paying property taxes or paying reduced property taxes. So in the long run the community suffers because of a short term benefit.

Tell me who forces people to go to Wal-Mart instead of the mom & pop stores?? Seems to me, that here in America, we have CHOICE as to where we spend our money. If you have ever purchased anything at Wal_Mart, you have NO GROUNDS to paint them as playing unfairly. You could have bought whatever product it was at another store.

The "Big Boxes" being villianized as the reason for mom & pop stores closing is ABSOLUTELY WRONG!! If people TRULY cared about mom & pop stores, they would continue to do business with them, and then they could continue in business.

[joelgilb]

Why that particular day? (There are still signs on lampposts around here warning people that the Rapture will take place on some day in October, 1997 -- we're still here, no one disappeared to my knowledge.)

As good a day as any!

Besides I am tired of hanging people right now.

By the 15th I will comfortably relocated in Vegas and can start the hangings then if my prediction falls flat!

[Randall]

As good a day as any!

Besides I am tired of hanging people right now.

By the 15th I will comfortably relocated in Vegas and can start the hangings then if my prediction falls flat!

I'm going to Smallville, Kansas. Look for Clark.

[joanmcq]

Tell me who forces people to go to Wal-Mart instead of the mom & pop stores?? Seems to me, that here in America, we have CHOICE as to where we spend our money. If you have ever purchased anything at Wal_Mart, you have NO GROUNDS to paint them as playing unfairly. You could have bought whatever product it was at another store.

The "Big Boxes" being villianized as the reason for mom & pop stores closing is ABSOLUTELY WRONG!! If people TRULY cared about mom & pop stores, they would continue to do business with them, and then they could continue in business.

Wal-Mart is not the only reason mom & pop stores close, but what I am saying is it is not a level playing field. If Wal-Mart is given favorable tax treatment and the local hardware store isn't, then the small store has a higher overhead from the get-go and has an even harder time competing. So someone that might pay 50 cents more for an item at a store that is more convenient may not be willing to pay $1 more, and the small store goes under if they have to charge $1. Of course at this point, with gas at $5 a gallon, the Ace Hardware a mile away is a better deal than driving 7 miles to Walmart to save 50 cents on the widget.

and I don't shop a Wal-Mart, period.

[joelgilb]

I'm going to Smallville, Kansas. Look for Clark.

Wondering if even he can help here.

Or Barack Obama or John McCain?

or

[JohnH]

None of this matters the world is ending on July 15, 2008! ... (JK)

Can you provide a cite for that?

[zeke]

Joel's now the Judge. He needs no cite. I guess he intends to hang us all. Now just where did I put my whiskey money???

[kcjenkins]

Wal-Mart is not the only reason mom & pop stores close, but what I am saying is it is not a level playing field. If Wal-Mart is given favorable tax treatment and the local hardware store isn't, then the small store has a higher overhead from the get-go and has an even harder time competing. So someone that might pay 50 cents more for an item at a store that is more convenient may not be willing to pay $1 more, and the small store goes under if they have to charge $1. Of course at this point, with gas at $5 a gallon, the Ace Hardware a mile away is a better deal than driving 7 miles to Wal-Mart to save 50 cents on the widget.

and I don't shop a Wal-Mart, period.

Actually, Wal-Mart seldom gets tax breaks to come in, and in fact is often resisted by local governments which are dominated in many places by local business people, who often use zoning laws to try to block them. But the funny thing is that almost everywhere that one of those 'big box' stores opens up, local small businesses swarm to locate next to, or across the street from, them. Because they have learned that those stores actually help the small store that offers quicker access.

Think about it, if you ever shop at Wal-Mart, and you are headed that way to buy, say, a new set of windshield wipers, which they have on sale. You get close, see that huge, crowded parking lot, and hey, right next to it, or across the street, is a small Auto-Zone. You decide to pay a little more, just for the advantage of being able to pull in, get in, buy it, and get out, in the same time you could walk into the Wal-Mart. It happens all the time.

The truth is, Wal-Mart is successful because they offer a lot of shoppers things that they need, at prices they can afford. And today, given gas prices, the fact that you can do almost ALL of your shopping in one trip makes it even better. Buy your groceries, your kids new underwear, your new towels, your car products, and fill your prescriptions, all in one trip. It makes good sense for many, which means that those people are better off. And yes, it makes sense for the town, because not everyone can afford to pay extra just to protect a few businesses that don't want competition.