Obama looking at all options for creating jobs

The AP has this article saying: “President Barack Obama is considering all options to create jobs, including another stimulus package, while trying to pull the economy out of a deep recession and deal with a record deficit, White House advisers said Sunday. … Unemployment stands at 9.8 percent, with more than 4 million jobs lost this year. The deficit has reached $1.4 trillion and the national debt $11.9 trillion.”

The USA now has approaching ten million unemployed people by official counts, and probably at least another ten million underemployed. Even the Wall Street Journal thinks this is significant: “And today real unemployment is at historic levels. The headline jobless figure tells only part of the story. When you add in the millions working part time because they can’t find a full-time job, and those who have simply given up looking, the unemployed and underemployed account for one in six workers.”

It is a good thing the government is looking at creating jobs through a “stimulus package”, compared to letting people starve (even as over a million US children are now homeless now). But it will not be enough unless it is on the order of a trillion dollars a year (20 million unemployed and underemployed times fifty thousand dollars a year per job). And with increasing automation and so on, one can expect this problem to just get worse, not better. Even devaluating the dollar might not help as much as one might think to create good jobs in manufacturing, given an oversupply of workers given rising productivity per worker and limited demand means a race to the bottom for wages (both locally and globally).

The question is, at what point will we get structural reform, like a basic income for all? At what point will people come to accept that business as usual is an illusion?

The deepest issue is that the US economy has essentially created no net new “good” jobs for decades. Sure, some good jobs have been created, but far more have been lost. By 1950s standards of “good”, think about jobs that are not too hazardous to physical or mental health, pay enough to raise a family on just one income while owning a house, and have health benefits and retirement benefits. Or, essentially, pay enough to be solidly middle class on one job. By those standards, there are very few “good jobs” in the USA. Granted, some of this is also about rising consumer expectations in the USA. But not all.

The US economy has been unable to create any net increase in good jobs for decades, and instead has been overall shedding “good jobs”, like through offshoring, through increased automation, and through better designs that are longer lasting or easier to produce. So, what is different about now that we should suddenly see lots of good jobs created?

Still, there are a few “good jobs” out there even now, since: As Layoffs Persist, Good Jobs Go Unfilled: “In a brutal job market, here’s a task that might sound easy: Fill jobs in nursing, engineering and energy research that pay $55,000 to $60,000, plus benefits. Yet even with 15 million people hunting for work, even with the unemployment rate nearing 10 percent, some employers can’t find enough qualified people for good-paying career jobs. … But as more jobs vanish for good, the gap between the unemployed and the requirements of today’s job openings is widening. Throughout the economy, an average of six people now compete for each job opening – the highest ratio on government records dating to 2000.”

But, it’s already been said that there is, say, a glut of PhDs in general, so more education in the USA may not really help all that much for everyone, even if it might help some specific individuals with the right aptitudes and interests who get exactly the right training. Part of the problem is also that, as in the above article, employers are less and less willing to invest in “on the job” training that might take many months to a year or longer; in our vastly competitive economy, nobody wants to invest in people who are harder to own than robots and other machinery. This will be another issue driving increased automation and increased joblessness — that spending money on technology may seem a more reliable investment for a firm than spending money on people who may change jobs. Thus, we may see more and more investment in machines that deskill complex tasks but less in people, creating a skill gap for the few jobs that remain. Still, as long as wages are low, and there is a lot of competition, and technology changes quickly, investing in one’s own education by taking on undischargeable student loan debt is itself pretty risky.

There are some employers who are exceptions, Drawing on the strength of people: “For the past 20 years stamper ITW Drawform, Zeeland, Mich., has been building a strong training program and a thriving corporate culture. The company’s commitment to training is apparent through its ability to retain quality employees and produce complicated deep-drawn stampings that many shops can’t. … The company has taken a complete opposite stance of many manufacturers that have adopted the attitude that they can’t afford to train their press operators because they will then leave for a higher-paying job. “By investing in training, we don’t usually lose people because they respect and understand what we do,” Meengs said. In 2002 the stamper invested in 4,000 hours of in-house training together with 8,000 hours of outside training. “Our employees are the future of the company. We encourage them to learn new skills by attending seminars and adult education courses, such as a basic machine shop class held at the local college. The more our operators know, the more valuable they become,” Meengs said.” Despite what many managers may believe, money is not the main motivator that keeps talent from leaving. A key way to retain good employees is to establish a corporate culture that internally drives them to do their best. Everyone is more productive, creative, and committed when they work in an environment that serves basic human needs. This is more than providing a clean and safe environment. Meengs recommends thinking in terms of a corporate culture that fosters individual recognition, praise, project ownership, challenges, opportunity, fair wages, and a part in the decision-making process.”

Now, that is the kind of initiative that should be rewarded by a stimulus package, if there was any fairness in the world. Perhaps money given to a stimulus package should have strings attached to it to only go to firms that are similar in outlook about training and corporate culture to ITW Drawform? It might help a lot, at least in the short term.

Still, even US$55,000 a year can be difficult to live on in an urban area or other place with a high real estate cost and other rising costs. People can and do manage it, but often with many sacrifices or help from parents or other relatives. That’s about the median family income in the USA (though it varies widely by state), and in round numbers about $4000 a month in take-home pay. But the median house in the US is still about US$170K, or approaching $1500 a month in mortgage interest plus taxes (varies), plus another $500 or so a month in upkeep, plus utilities of maybe $400 or so between heat, electric, and phone/internet. Add in the upkeep and gas for a car to go to work ($300 a month or more), and that leaves about $1300 a month to live on (food, clothes, toys, medical copayments, medicines, pets, presents, charities) even without a second car or travel to relatives. That’s a big stretch for a family with children, assuming nothing big ever goes wrong (like catastrophic illness or disability of a non-outside-employed non-insured spouse); it turns out most families are worse off, given typical insurance, when the spouse who does not work outside the home becomes ill or dies then when the “working” spouse is disabled or dies. So, $55K a year is still life on the edge for most US families.

Granted, one can rent a small apartment or buy a cheap trailer, walk to work (for the right job), eat rice and beans, buy second-hand clothes, and so on. It is possible. Some families living in areas with cheap rent and who are frugal and like to garden and be creative and gregarious may do quite well on $55K a year and build up savings. Maybe it is even healthier.

There just is a structural problem there relative to the expectations of many people in the USA — shaped in part by the media. And the more people who downsize to fit a sustainable reality in terms of current finances, the less need for jobs given less consumption. And this optimist ballpark analysis (like, no student loans) suggests US house prices will not rise much anytime soon (and may continue to slide, at least relative to inflation) simply because most US families are already stretched at current housing prices. A related historic graph of house prices divided by median family income .

Median means in the middle, some people are doing very much better than that, but many are doing much worse. This is basically what happened to cause a disappering middle class. Now it takes two “good jobs” in a family to live what is depicted in the media as a comfortable middle class life (nice house in a nice school district with money in the bank and a retirement nest egg and occasional travel and frivolity), but then you have twice the risk of illness or job loss of making family finances fall apart. And, the fact is that many of those “good jobs” are in places where housing is fairly expensive, precisely because it is bid up by two-income families with “good jobs”. For those two parent families who want to only have one main income, homeschooling is a good option, because it allows you to live in a place without what are called “good schools” and thus have cheaper rent.

Of course, rethinking what work means might be even better than creating “good jobs”.

Somewhat unrelated, but here are five reasons to stop saying “Good Job!” Now that parents can spend more time with their children (a good part of joblessness), many parents may finally have more time to read about the latest thinking on good parenting, accepting that sometimes what is latest is not always best.

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