Subsidizing Laziness — May, 2004
The Model-A killed the horse and buggy.
The airplane killed the Pony Express.
Alexander Graham Bell killed Samuel Morse.
Video killed the radio star.
Thousands of young punks on high-tech aluminum and composite bicycles are killing the steel industry. But, don’t try to tell Thomas Usher this. He thinks it’s George Bush’s fault.
It’s been called the ‘economics of progress’, and it’s real (Will, 2004). But you can’t vote progress out of office, so the unemployed are looking for someone to blame.
The textile industry left for Southeast Asia.
The U.S. auto industry is vacationing in Mexico.
The tech support industry decided India was nice this time of year.
General Motors would like to buy foreign steel; it’s cheaper. But, don’t tell steel industry leaders this. They think it’s George Bush’s fault.
It’s called ‘international competition’, and it, too, is real. It’s been around longer than the United States, but we’re still reluctant to accept the fact that U.S. companies could be subject to its effects. And, of course, you can’t vote international competition out of office, so the unemployed are looking for someone to blame.
The thing boiling my noodles over is, we need not vote anyone out of office or find anyone to blame. We’re in control of the burners, they’re set too high, and we’re not keeping an eye on them.
When low paying, low skilled jobs wave goodbye to the shores of the U.S., U.S. workers win. U.S. companies win. And, when new technology ushers out the old, the opportunity to win exists again. This seems counter-intuitive, but I haven’t argued that economics is intuitive. It’s anything but. There are reasons Charles Wheelan named it the ‘Dismal Science’ (Wheelan, 2003).
We know that ‘American’ jobs are going abroad. We know that new technology is crowding out the old. But, what most people ignore is, U.S. GDP is increasing – continuously. This means that the collective wealth of the nation is increasing – continuously. So, why are people unemployed? Why are corporate profits eroding? I’ll tell you. We’re subsidizing laziness.
When the U.S.sends its manufacturing processes overseas, it does not staff its factories abroad by forcing people to work at gunpoint. Nike is able to find employees because people want to work for Nike. $5.00 an hour is great money if you’re accustomed to making $2.75 an hour. And, when people get better jobs, they buy more. So, as we ‘export’ jobs, we create foreign markets for our goods and services.
Now is when most people argue that the board just met and voted themselves higher salaries for sending jobs overseas and saving so much money. That sounds good to me; they’ll buy more. The fact is that for most companies, labor is the single largest expense of doing business. So, while the board room is likely all smiles, I’m quite positive they’re not sharing all the money they just saved. We’d have to create new tax brackets for that.
The U.S. Department of Labor’s Employment and Training Administration includes the automotive, biotechnology, geospatial, health care, and information technology industries as being amongst the highest growth industries in the U.S. Pardon the rocky start this segue is taking; I’m working on telling you where much of the aforementioned money should be going. All of these industries rely heavily upon increasing technology. And, as we all know, improvements in technology don’t grow on trees; they’re made in laboratories. So, fueling growth in these industries – and they’re growing – requires research and development. Research and development is expensive. Would you like to know why? Highly skilled labor is expensive.
Now, Nike is not a high technology company and they have comparatively small research and development budgets. So, where are they spending all the money they just saved? That’s a good question. It turns out Nike invests its new found funds so that companies with ambitious research and development projects can afford all that expensive, highly skilled labor I mentioned. I believe Intel has borrowed money at one time or another. General Electric may have also.
Now, a Mr. Titlow stands in the unemployment line, having lost his job monitoring quality control on Air Jordans because he wasn’t keen on the idea of moving to Asia and working for pennies on the dollar. He’s none too excited about all this fancy research and development money that’s floating around and could count on one finger the ways in which he’s happy about expanding foreign markets. Well, Mr. Titlow, your attitude needs adjusting. And, you’re costing the rest of us money.
I have a soul; I swear. It simply doesn’t motivate me to weep for the likes of Mr. Titlow.
You see, Mr. Titlow is part of an interesting group of Americans. In December, The Los Angeles Times reported that 1,500,000 unemployed Americans made no effort to find employment over the preceding 30 days, even though they wanted work. It seems they were too ‘depressed’ or too ‘discouraged’ to look for work (Streitfeld, 2003). Please wait, Mr. Titlow, while I rosin my bow.
Another circle of friends in which you might find Mr. Titlow is the American ‘underemployed’ – those working less than full time who would rather be working full time. The U.S. Department of Labor and Statistics reports that in March, 4,593,000 Americans were working only part time because their employers had cut their hours or because they could only find part-time employment (U.S. Dept. of Labor, 2004).
Now, for the benefit of Mr. Titlow and friends, let me throw some other facts at you. Since 2002, the federal budget for postsecondary education has increased by more than $2 Billion. The projected budget for Fiscal Year 2005 includes another increase of more than $2 Billion (U.S. Dept. of Education, 2004). This includes money for student loans and grants. Add to this private sector funding of postsecondary education, and you have quite a little sum of money. Sadly, amongst those aged 25 and over, high school graduation rates remain below 85%, and those with college degrees remain around one in four (U.S. Census Bureau, 2004).
Let me throw all this together and set my mental blender to ‘cogitate’ – that’s just above puree. We have companies looking for higher skilled labor. We have more than 6 million people with extra time on their hands. We have tens of billions of dollars in postsecondary education money. We have a prime opportunity to gain more education or training and take advantage of higher skilled, higher paying jobs that are being created. But, of course, Mr. Titlow is too depressed and discouraged to consider any of this. He’d rather consider who to blame and who to vote out of office.
Me, I blame the Mr. Titlows. Between 2000 and 2002, state unemployment insurance payments more than doubled. In the same period, Social Security payments for social welfare programs increased by $46 Billion (U.S. Census Bureau, 2004). We’re subsidizing a collective laziness at a time when the increasing wealth of the nation is ripe for the taking. I don’t understand all the crying and finger pointing.
We’re not ‘exporting’ jobs. We’re creating better ones and some folks are just too lazy to improve their own lot in life. Please don’t get me wrong. Changes in life this big are not easy. But, if we’ve got troops in Iraq and Afghanistan that work on college degrees between rotations to the combat zone, Mr. Titlow can certainly find time between episodes of ‘Survivor’ to crack open a federally funded textbook or two. It’s the least we can ask of you, Mr. Titlow; we’re paying for it.
So, if you’re unemployed and looking for someone to blame, take at least a moment to consider if you’d benefit from some federally funded credentials your neighbor is so kindly paying for. The person to blame may be you.
Now, if you’ll excuse me, I’ve some community service to perform. I’ve got to go ride my aluminum and composite bike.
~ topher
1. The Economics of Progress. George F. Will. Washington Post. 20 February, 2004.
2. Naked Economics: Undressing the Dismal Science. Charles Wheelan. W. W. Norton & Company. September, 2003.
3. US Unemployment Figures Miss Millions. David Streitfeld. The Los Angeles Times. 29 December, 2003.
4. Labor Force Statistics. Department of Labor, Bureau of Labor Statistics. 30 April, 2004.
5. Education Department Budget History Table, 1980 – Present. U.S. Department of Education. 5 February, 2004.
6. USA Statistics in Brief, 1990 – 2002. U.S. Census Bureau. 16 March, 2004.