I always looked at outsourcing manufacturing as a sort of virtual automation — a virtual increase in overall productivity. (That’s one angle anyway — not being a pro I don’t immediately come up with all the others.)
And so a million manufacturing workers displaced by Chinese go to work elsewhere for lower value added jobs — but — in this theory, 149 million other workers a rewarded with marginally lower prices which equate to virtually higher value output (higher pay anyway).
But that never happened here.
Not in our union-free labor market. Everybody else (149 mil) just kept getting squeezed, squeezed, squeezed — as they would have been squeezed in any case.
In a German style, fully labor organized labor market — or just market — there would have been a big drag put on the highest value added manufactures leaking to the Far East, though some is leaking to East Europe.
In a German style, fully labor organized labor market, workers would be ever re-trained to be more productive in a way that cannot be easily outsourced — leading to auto manufacturing workers there being paid twice as much ($60/hr) as the highest paid US auto assembly line workers were ever paid here ($30/hr). While Germany manufactures ten times (10X!) as many motor vehicles as the US per capita and exports nine out of ten.
Meanwhile in our bean-counter (a.k.a., 1%) controlled US economy we now outsource the manufacturing of the wings and fuselage of Boeing’s latest offering to compete with Airbus — its 787 Dreamliner …
… we are now outsourcing our highest value added production — never happen in Germany.
” The composite wings arrived last week, built by Mitsubishi Heavy Industries Ltd. (7011.T) at its facility in Nagoya, Japan. They were flown to Seattle in Boeing’s specially adapted 747 jumbo freighter, which it calls the Dreamlifter.
” Also last week Boeing took delivery of the main fuselage, made up of sections constructed by Japan’s Kawasaki Heavy Industries Ltd. (7012.T), Fuji Heavy Industries Ltd. (7270.T) and Alenia Aeronautica, which is a unit of Italian aerospace group Finmeccanica SIFI.MI. http://www.reuters.com/article/us-boeing-idUSN2136064220070522
” For example, Italian firm Alenia Aeronautica makes the center fuselage, French firm Messier-Dowty makes the aircraft’s landing-gear system, German firm Diehl Luftfahrt Elektronik supplies the main cabin lighting, Swedish firm Saab Aerostructures manufactures the access doors and and Japanese company Jamco makes parts for the lavatories, flight deck interiors and galleys. ” http://money.cnn.com/2013/01/18/news/companies/boeing-dreamliner-parts/
What’s needed is the return of the $20/hr job — at this point for most low skilled work. The minimum wage was $11/hr in 1968 when per capita income was half today’s. A $15/hr minimum wage would transfer all of 5% of income from the top 55% who now take 90% of overall income (or it could be said from the top 89% who now take 70% — more on that) to the bottom 45% who now take 10%.
Not counting pushups. Hopefully pushing up most low skilled wages to $20/hr. Less likely for inefficient fast food with 33% labor costs — but more likely for hyper-efficient Walmart with 7% labor costs — and probably normally efficient firms like with Walgreen’s running 10-15% labor costs.
In a union based middle class it should be extremely easy to sell the taking back of half the top 1%’s, 20% with confiscatory taxes completing the return to the American dream circle.
And never forget year-in, year-out per capita economic growth patching up any holes.
To finally catch on the nature of the freedom to join a labor union — backed by felony penalties and even RICO invoking — WE SIMPLY HAVE TO RESTRUCTURE OUR IMAGE OF THE LABOR MARKET from one of the employee negotiating with the employee — TO ONE OF THE EMPLOYEE NEGOTIATING WITH THE ULTIMATE CONSUMER. Then we will (at last) understand the true nature labor market warping and muscling of today’s employers’ abuse of MONOPSONY power — and understand (finally) the inexcusable gap in the laws supposedly barring labor market monopsony.
Remember the felony will not be about losing a job — but about warping employee ability to squeeze the ultimate consumer. (Same way we automatically conceptualize the ability to squeeze the consumer when we talk minimum wage raise).
The Wage That Meant Middle Class
By LOUIS UCHITELLE, APRIL 20, 2008
” The $20 hourly wage, introduced on a huge scale in the middle of the last century, allowed masses of Americans with no more than a high school education to rise to the middle class. It was a marker, of sorts. And it is on its way to extinction. ” http://www.nytimes.com/2008/04/20/weekinreview/20uchitelle.html
NOT IN (CENTRALIZED BARGAINING) ORGANIZED LABOR EUROPE. Not even in fast food jobs in Denmark.
I don’t usually bother with our silly kid troll — probably shouldn’t now — anyway with company coming, safe from bothering the rest of the day.
The OECD “Better Life Index” figures Germany’s “average household net-adjusted disposable income per capita is USD 31,925.”
For the US, USD 41,071 — more than 25% higher.
And that’s with fewer people working (74% of people aged 15-64 in Germany, vs. 68% here).
Don’t have links; don’t need them; common knowledge is that we (the US) work more people, more hours, more years — ergo, higher output per person — which in US ends up going to the top 1%.
The average home size in Germany is about half what it is here:
And more people own their homes in the US, 64.5% vs 52.5%.
We have a lot more room over here for single homes. More room another reason we are more productive; retail productivity much expanded with necessary room for giant shopping malls and big boxes not available in more crowded continents. Germany also has rent control that is market compatible and really works.
[cut-and-paste]
Strikes me that when rents double and triple, the same money could be going to build twice and three times as much housing instead of uselessly lining the landlords’ pockets (I think economists call this collecting rents).
Part of the solution, besides easing up on zoning like Seattle or happening to have plenty of land to extend construction to like Houston, might simply be a working market-realistic version of rent control like Germany and Paris and many Euro places (Singapore housing is 80% public I think).
Main idea: if landlords want to cash in on demand they will have to build to profit by it. Help; before we are all forced to move to Mexico!
My comment to the too typical progressive hesitation on the $15 minimum wage: really don’t have enough data to say with much certainty what the employment impact will be
Let’s look at what I call “market research data” on the minimum wage — instead of history or whatever progressive economists are waiting for. Labor is selling its wares in the market, right? Why not look at the prospects just like you would look at an, um, prospectus?
As I endlessly rehash: the minimum wage was $11 an hour way back when per capita income is half what it is today. We know that Walmart for example has 7% labor costs and a $15 min wage can be calculated to add 3% to Walmart’s prices — while adding $600 billion + to the wallets of Walmart’s potential (low income) consumers.
Same actually works out for fast food — 33% labor costs (25% price rise) — but 45% of workforce gets an average $4 an hour raise ($2000 a year) — and don’t forget demand for food tends to be inelastic.
Given the extreme low labor prices in our pathologically de-unionized economy, I feel we cannot wait five years to gradually phase in a wage the consumer will pay now. No union would. In Illinois where the min just rose to $10.50 we could jump to $12 as soon as we could see $10.50 did no harm (fewer jobs that pay more is not necessarily harm) — maybe just a few months, and so on.
From a “prospectus” basis, that sounds awful convincing — and the need is can’t wait desperate.
“We know that Walmart for example has 7% labor costs and a $15 min wage can be calculated to add 3% to Walmart’s prices — while adding $600 billion + to the wallets of Walmart’s potential (low income) consumers.”
What about the labor costs built into the products Walmart sells?
What you both miss is that an increase in wages doesn’t necessarily mean that prices go up. First, increased wages mean that profits go down.
At this point both increased wages and lower profits are desirable. Lower wages lower demand and increases private debt. Increased profits make industry complacent, reducing pressure for productivity gains and innovation, while increasing financial sector instability. The decrease in demand and the increase in profits combine to reduce virtuous business investment, the investments in new production or in productivity.
“At this point both increased wages and lower profits are desirable.”
Not to the business owners! (And if the wage increases are artificial, they are not desirable to those people priced out of their jobs.)
“Lower wages lower demand and [increase] private debt.”
I disagree. I see no reason to assume that a dollar going to an employee will increase the demand. The employee will demand one dollar more in goods and services, and the business owner will demand one dollar less. It’s a wash. Even if the business owner does save it (http://www.nytimes.com/2016/01/24/magazine/why-are-corporations-hoarding-trillions.html), the banks turn around and lend out the money to people to buy stuff — cars, boats, houses, etc. Demand.
And there we also see the collapse of the “private debt” argument. If someone is borrowing the money, isn’t someone else lending it?
“Increased profits make industry complacent, reducing pressure for productivity gains and innovation…”
This is quite true. High wages, however, encourage companies to find ways to replace the laborers (productivity gains).
“… while increasing financial sector instability.”
I have no idea either way on that one. Why would high profits do that?
Re: Trade and Jobs: A Note – Paul Krugman
I always looked at outsourcing manufacturing as a sort of virtual automation — a virtual increase in overall productivity. (That’s one angle anyway — not being a pro I don’t immediately come up with all the others.)
And so a million manufacturing workers displaced by Chinese go to work elsewhere for lower value added jobs — but — in this theory, 149 million other workers a rewarded with marginally lower prices which equate to virtually higher value output (higher pay anyway).
But that never happened here.
Not in our union-free labor market. Everybody else (149 mil) just kept getting squeezed, squeezed, squeezed — as they would have been squeezed in any case.
In a German style, fully labor organized labor market — or just market — there would have been a big drag put on the highest value added manufactures leaking to the Far East, though some is leaking to East Europe.
In a German style, fully labor organized labor market, workers would be ever re-trained to be more productive in a way that cannot be easily outsourced — leading to auto manufacturing workers there being paid twice as much ($60/hr) as the highest paid US auto assembly line workers were ever paid here ($30/hr). While Germany manufactures ten times (10X!) as many motor vehicles as the US per capita and exports nine out of ten.
Meanwhile in our bean-counter (a.k.a., 1%) controlled US economy we now outsource the manufacturing of the wings and fuselage of Boeing’s latest offering to compete with Airbus — its 787 Dreamliner …
… we are now outsourcing our highest value added production — never happen in Germany.
” The composite wings arrived last week, built by Mitsubishi Heavy Industries Ltd. (7011.T) at its facility in Nagoya, Japan. They were flown to Seattle in Boeing’s specially adapted 747 jumbo freighter, which it calls the Dreamlifter.
” Also last week Boeing took delivery of the main fuselage, made up of sections constructed by Japan’s Kawasaki Heavy Industries Ltd. (7012.T), Fuji Heavy Industries Ltd. (7270.T) and Alenia Aeronautica, which is a unit of Italian aerospace group Finmeccanica SIFI.MI.
http://www.reuters.com/article/us-boeing-idUSN2136064220070522
” For example, Italian firm Alenia Aeronautica makes the center fuselage, French firm Messier-Dowty makes the aircraft’s landing-gear system, German firm Diehl Luftfahrt Elektronik supplies the main cabin lighting, Swedish firm Saab Aerostructures manufactures the access doors and and Japanese company Jamco makes parts for the lavatories, flight deck interiors and galleys. ”
http://money.cnn.com/2013/01/18/news/companies/boeing-dreamliner-parts/
What’s needed is the return of the $20/hr job — at this point for most low skilled work. The minimum wage was $11/hr in 1968 when per capita income was half today’s. A $15/hr minimum wage would transfer all of 5% of income from the top 55% who now take 90% of overall income (or it could be said from the top 89% who now take 70% — more on that) to the bottom 45% who now take 10%.
Not counting pushups. Hopefully pushing up most low skilled wages to $20/hr. Less likely for inefficient fast food with 33% labor costs — but more likely for hyper-efficient Walmart with 7% labor costs — and probably normally efficient firms like with Walgreen’s running 10-15% labor costs.
In a union based middle class it should be extremely easy to sell the taking back of half the top 1%’s, 20% with confiscatory taxes completing the return to the American dream circle.
And never forget year-in, year-out per capita economic growth patching up any holes.
To finally catch on the nature of the freedom to join a labor union — backed by felony penalties and even RICO invoking — WE SIMPLY HAVE TO RESTRUCTURE OUR IMAGE OF THE LABOR MARKET from one of the employee negotiating with the employee — TO ONE OF THE EMPLOYEE NEGOTIATING WITH THE ULTIMATE CONSUMER. Then we will (at last) understand the true nature labor market warping and muscling of today’s employers’ abuse of MONOPSONY power — and understand (finally) the inexcusable gap in the laws supposedly barring labor market monopsony.
Remember the felony will not be about losing a job — but about warping employee ability to squeeze the ultimate consumer. (Same way we automatically conceptualize the ability to squeeze the consumer when we talk minimum wage raise).
It’s the ultimate consumer, s_____! 🙂
The Wage That Meant Middle Class
By LOUIS UCHITELLE, APRIL 20, 2008
” The $20 hourly wage, introduced on a huge scale in the middle of the last century, allowed masses of Americans with no more than a high school education to rise to the middle class. It was a marker, of sorts. And it is on its way to extinction. ”
http://www.nytimes.com/2008/04/20/weekinreview/20uchitelle.html
NOT IN (CENTRALIZED BARGAINING) ORGANIZED LABOR EUROPE. Not even in fast food jobs in Denmark.
There may be a few bright spots in Germany, but it is not all that and a bag of chips.
The OECD “Better Life Index” figures Germany’s “average household net-adjusted disposable income per capita is USD 31,925.”
http://www.oecdbetterlifeindex.org/countries/germany/
For the US, USD 41,071 — more than 25% higher.
http://www.oecdbetterlifeindex.org/countries/united-states/
And that’s with fewer people working (74% of people aged 15-64 in Germany, vs. 68% here).
The average home size in Germany is about half what it is here:
http://www.elledecor.com/life-culture/fun-at-home/news/a7654/house-sizes-around-the-world/
And more people own their homes in the US, 64.5% vs 52.5%.
https://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate
I don’t usually bother with our silly kid troll — probably shouldn’t now — anyway with company coming, safe from bothering the rest of the day.
The OECD “Better Life Index” figures Germany’s “average household net-adjusted disposable income per capita is USD 31,925.”
For the US, USD 41,071 — more than 25% higher.
And that’s with fewer people working (74% of people aged 15-64 in Germany, vs. 68% here).
Don’t have links; don’t need them; common knowledge is that we (the US) work more people, more hours, more years — ergo, higher output per person — which in US ends up going to the top 1%.
The average home size in Germany is about half what it is here:
And more people own their homes in the US, 64.5% vs 52.5%.
We have a lot more room over here for single homes. More room another reason we are more productive; retail productivity much expanded with necessary room for giant shopping malls and big boxes not available in more crowded continents. Germany also has rent control that is market compatible and really works.
[cut-and-paste]
Strikes me that when rents double and triple, the same money could be going to build twice and three times as much housing instead of uselessly lining the landlords’ pockets (I think economists call this collecting rents).
Part of the solution, besides easing up on zoning like Seattle or happening to have plenty of land to extend construction to like Houston, might simply be a working market-realistic version of rent control like Germany and Paris and many Euro places (Singapore housing is 80% public I think).
Main idea: if landlords want to cash in on demand they will have to build to profit by it. Help; before we are all forced to move to Mexico!
Germany, Paris, and Singapore all have housing shortages.
And construction money chases high rents (when the government allows building). Where rents are high, construction of new housing will follow.
My comment to the too typical progressive hesitation on the $15 minimum wage: really don’t have enough data to say with much certainty what the employment impact will be
Let’s look at what I call “market research data” on the minimum wage — instead of history or whatever progressive economists are waiting for. Labor is selling its wares in the market, right? Why not look at the prospects just like you would look at an, um, prospectus?
As I endlessly rehash: the minimum wage was $11 an hour way back when per capita income is half what it is today. We know that Walmart for example has 7% labor costs and a $15 min wage can be calculated to add 3% to Walmart’s prices — while adding $600 billion + to the wallets of Walmart’s potential (low income) consumers.
Same actually works out for fast food — 33% labor costs (25% price rise) — but 45% of workforce gets an average $4 an hour raise ($2000 a year) — and don’t forget demand for food tends to be inelastic.
Given the extreme low labor prices in our pathologically de-unionized economy, I feel we cannot wait five years to gradually phase in a wage the consumer will pay now. No union would. In Illinois where the min just rose to $10.50 we could jump to $12 as soon as we could see $10.50 did no harm (fewer jobs that pay more is not necessarily harm) — maybe just a few months, and so on.
From a “prospectus” basis, that sounds awful convincing — and the need is can’t wait desperate.
“We know that Walmart for example has 7% labor costs and a $15 min wage can be calculated to add 3% to Walmart’s prices — while adding $600 billion + to the wallets of Walmart’s potential (low income) consumers.”
What about the labor costs built into the products Walmart sells?
What you both miss is that an increase in wages doesn’t necessarily mean that prices go up. First, increased wages mean that profits go down.
At this point both increased wages and lower profits are desirable. Lower wages lower demand and increases private debt. Increased profits make industry complacent, reducing pressure for productivity gains and innovation, while increasing financial sector instability. The decrease in demand and the increase in profits combine to reduce virtuous business investment, the investments in new production or in productivity.
“At this point both increased wages and lower profits are desirable.”
Not to the business owners! (And if the wage increases are artificial, they are not desirable to those people priced out of their jobs.)
“Lower wages lower demand and [increase] private debt.”
I disagree. I see no reason to assume that a dollar going to an employee will increase the demand. The employee will demand one dollar more in goods and services, and the business owner will demand one dollar less. It’s a wash. Even if the business owner does save it (http://www.nytimes.com/2016/01/24/magazine/why-are-corporations-hoarding-trillions.html), the banks turn around and lend out the money to people to buy stuff — cars, boats, houses, etc. Demand.
And there we also see the collapse of the “private debt” argument. If someone is borrowing the money, isn’t someone else lending it?
“Increased profits make industry complacent, reducing pressure for productivity gains and innovation…”
This is quite true. High wages, however, encourage companies to find ways to replace the laborers (productivity gains).
“… while increasing financial sector instability.”
I have no idea either way on that one. Why would high profits do that?