Cheap Labor is in Demand. Live with it!!!!, What is Your Humanitarian Solution? Options

[billfmsd]

There is no way around the demand for cheap labor. Rather than continue to price ourselves out of the market, we need a creative solution that is also the most humanitarian.

I'd like this thread to be mostly about solutions.

My solution is a combination of embracing welfare (which I call allowance) and robotics. Feel free to poke holes in this one.

What is your solution?

[billfmsd]

For those of you who don't want to think that hard, I've added this poll on the subject.

[billfmsd]

I can't believe so few of you have an opinion on this subject.

This core of what motivates NeoCons.

[dggfwtx]

Well, it wouldn't exactly be easy, but one thing that would help immensely would be to have federal health care coverage for all Americans. Rising health care costs have been one significant factor in the current cycle of depressed wages.

[Pie]

Good observation, dgg. The larger the insurance pool, the lower the cost, as many people who are young & healthy are not in the current insurance pools.

Another very difficult "solution" : Americans can learn to live with less and try to consume in a way that supports the small business person and diversity in the corporate world. In other words, pay a living wage to workers, let the cost of products reflect that, and spread the "pain" amongst all of us.
(I know, I know- in my dreams).

The robotics idea: would that not just displace more workers ?
Skilled or other ? We must have some means to employ people of all skill levels.

I am grasping for straws here ... as long as unbridled immigration is the norm, Bill is right and there is no way to stop cheap labor. And without cheap labor, we cannot compete internationally.
Rock-Hardplace.

[dggfwtx]

Another very difficult "solution" :  Americans can learn to live with less and try to consume in a way that supports the small business person and diversity in the corporate world.  In other words, pay a living wage to workers, let the cost of products reflect that, and spread the "pain" amongst all of us.
(I know, I know-  in my dreams).

Related and also dreaming: If Americans can learn to live with less, so should corporations. Corporate earnings do not *have* to escalate by greater and greater margins every year. Stockholders were spoiled by the big stock run-up of the 1990s, and to the detriment of American workers, the continuing drive for higher and higher earnings has caused cutbacks in jobs, benefits and salaries.

I forget the exact figures, but a lower percentage of corporate earnings is returned to workers now than has ever been since that statistic was trackable.

[Pie]

Another good point, dgg. Greedy stockholders (Americans) forcing corporations to constantly increase their earnings. And I wonder what percent of the stockholders are still American- I would guess a majority- but what about foreign investors ? I am not well versed in
economics.

[billfmsd]

Another very difficult "solution" :  Americans can learn to live with less and try to consume in a way that supports the small business person and diversity in the corporate world.  In other words, pay a living wage to workers, let the cost of products reflect that, and spread the "pain" amongst all of us.

I'm all for consuming less. But I'm not sure how the wages effect this. Are you saying that employers paying less would cause consumers to consume less?

The robotics idea:  would that not just displace more workers ?

I guess I'm a techno-socialist. I think it's better that a worker gets displaced by a machine than gets underpaid, as long as the persons basic needs are provided by the government. That's why I'm for welfare, which I consider allowance. Robots add to the economy, so the economy can afford to provide for citizens.

Japan embraces robotics. I don't know how well is it working for them. It looks like they are doing OK. Does anyone know the effect?

[dggfwtx]

I'm all for consuming less. But I'm not sure how the wages effect this. Are you saying that employers paying less would cause consumers to consume less?

I believe that Pie means just the opposite, Bill. Raise workers' wages, then pass the cost on to consumers. Because goods would cost more, the assumption would be that consumers would consume less.

In order to remain competitive in the marketplace, many companies have been reluctant to raise the price of goods, or have held price increases below their own increased costs. Unfortunately, too often, to make up for that, companies have decided to reduce labor costs instead of increasing the price of goods. In other words, consumers are benefiting at the expense of the people who make what they purchase.

Of course, if consumers then buy less, the employees will feel the brunt of it anyway. So there we are ....

But if wages were keeping up with *real* inflation, which they are not, in theory the consumers should also have more to spend. I say in theory, because increased health-care costs are basically eating up wage increases of most full-time employees.

[Just Thinking]

The easiest way is to require all government agencies to buy MADE IN THE USA only. In additon, it must be from sellers, contractors, makers, etc. that do not have even one outsourced job. That would give us back our jobs, and then we could reach a hand out to raise up the others. That is the humane way.

This post has been edited by Just Thinking: Dec 17 2005, 11:33 PM

[billfmsd]

The easiest way is to require all government agencies to buy MADE IN THE USA only.  In additon, it must be from sellers, contractors, makers, etc. that  do not have even one outsourced job.   That would give us back our jobs, and then we could reach a hand out to raise up the others.  That is the humane way.

Republicans tried that in the 1970's and 80's. It didn't work and the car companies took advantage of American trust with poor quality cars. These are the same car companies that are outsourcing jobs now.

Quality counts.

This post has been edited by billfmsd: Dec 18 2005, 04:33 PM

[havnaer]

I tried to add something a couple of weeks ago, and life intruded. I'll try again.

First of all, cheap labor is always in demand. Employers are always trying to get the best value for their hourly wage. That said, it should be noted that labor is a commodity just as wheat, steel, and cheap little plastic toys are commodities. The market drives the price, unless acted on by outside interference. This may sound like Neocon economics, but in fact, it is just the way it is. We Liberals need to recognize it and go even further.

When we talk about cheap labor today, we're mostly discussing manufacturing labor. Over the last two centuries, the U.S. was the source of cheap manufacturing labor. The first half of that period, sophisticated manufacturing was performed in Europe and the U.S. almost exclusively. After WWI, Germany could have been the cheap labor market had Britain and France not frozen them out. WWII destroyed all of Europe, leaving the U.S. as the sole source of manufacturing excellence.

By the mid 1950's, however, Western Europe rebuilt its factories, and built them better than ours - new technology, new facilities. Not only did they have cheap labor, but it produced superior products in many respects. As demand for those products grew, however, the labor pool in Europe (and Japan a decade behind), demanded better wages. That led to higher prices for European/Japanese products, but consumers justified the higher prices with significantly better quality. Eventually, workers in those countries priced themselves out of the market. The Japanese solution was protective tariffs. This backfired when other countries placed tariffs on Japanese products, freezing out the majority of the market for Japanese goods. This is a lose-lose situation for Japanese workers - without tariffs, Japanese products don't sell at home; with tariffs, Japanese products don't sell abroad. The European solution is to simply live with high unemployment, taxing citizens to support a growing underclass. The social problems created by having a permanent pool of unemployable citizens makes the Socialist solution unattractive.

The U.S. (and other countries) often have to deal with workforce segments that become obsolete. Steel, Automobile, Garments, Electronics, and a host of other industries become more economical when produced by the cheapest workforce. Typically, the Manufacturing Engineering is perfected in the host country (U.S., Britain, France, Germany, Japan), then the production line is transferred to the client country with the lowest labor cost. By engineering out the human input as much as possible, quality can be maintained at a level equivalent to the host countries' labor force.

Add to this the productivity advantages that come from new technology. Computer control and Internet communications are the latest in a long line of Industrial Revolution advances that make workers more productive and reduce the need for the same number of people to perform the same work. Yet, like all advances of this kind, more jobs are created supporting the new technology than are lost to obsolescence.

The dilemma for Joe Shopfloor, though, is making the transition from factory worker assembling parts, to information worker - negotiating contracts with Chinese suppliers; insuring Indian software is properly installed in a factory in Mexico; shipping parts from everywhere to a factory in Xian, China; selling the product to customers world-wide; transferring products from Xian, China to Omaha, Nebraska; and providing on-site support to customers with problems.

Currently, these transitions are faster and more wide ranging than ever before. It took 100 years for U.S. steel companies to move through this cycle. The Automotive Industry took about 60 years. The computer industry took perhaps 30 years to transition manufacturing old IBM 3080 Mainframes in the U.S. to nearly all computer manufacturing taking place in China. Chip manufacturing took half that long, again.

So the dilemma we have today is that so much of what we manufacture gets outsourced so quickly, there's little job security. When Globalization means competing with subsistence workers in the Sudan, what do Americans do to avoid transforming parts of the country into Third-World status like London's East End?

The solution, IMHO, is four-fold:

1. Train better workers. Many nations demand more of their children than we do in U.S. schools. This isn't an attack on American Teachers who do an often heroic job. Educational policymakers need to set the bar higher at the K-12 level and prepare all children for university education. In addition, increased government subsidies for post-secondary education will create workers with productivity gains that offset their higher wages.

2. Eliminate high-skilled imported workers. Chapter H-1B of the INS code specifies that when highly skilled workers aren't available locally, companies can sponsor foreign workers on temporary work visa for up to three years to fill the need. Companies have used this loophole to lure foreign Engineers and Scientists at less than half the salary of native-born Americans. It isn't that the talent isn't available locally, its just not available at a low enough price. This federally-mandated unfair labor practice should be eliminated.

3. Invest in new technology. Government investment in new, ostensibly frivolous, projects produces huge dividends for private industry. The U.S. would arguably not be in the technological leadership position it is today were it not for NASA Space program investment and Reagan-era defense investment. Despite Neo-Con arguments to the contrary, private industry does not have deep enough pockets to commit to wildly expensive, decades-long research into the truly basic scientific advancement necessary to remain at the forefront of technology. Government must keep pushing the boundaries of knowlege outward. The dividends reaped will be new jobs, and in many cases, whole new industries employing highly paid Americans as the only ones with the capability to perform them.

4. Continue to press for Globalization. This may sound crazy, but the experience of nearly all countries that develop a manufacturing base is ultimately higher wages for their workers. Once a factory is established, it is expensive to close down. Eventually, workers realize this and agitate for higher wages. The U.S. should also press for better corporate citizenship overseas - higher safety and pollution standards. Supporting labor organizing (or at least not actively opposing it) and penalizing poor corporate citizenship with added import fees will raise the price of foreign goods on par with the U.S. In addition, it will speed development of new markets for American products, just as Globalization proponents predict.

[rla]

I think it is a mistake to conceive of labor as a commodity. Historically, as the means of creating wealth shifted from mostly land to factories and large scale
transportation systems to knowledge and skills in the information age, a skilled
labor force is an asset in the same sense that land, machinery and cash are assets. Investing in the training and well-being of workers should be considered
investment--not expense. This big F***-up is just one on the ways the socalled
accounting "profession" retards progress in western culture. In the political arena,
cheap labor conservatives have systematically limited the quantity and quality of education available to the general population. In this respect they have a common interest with religious literalists who also don't want people to be too educated.

[havnaer]

I think it is a mistake to conceive of labor as a commodity. Historically, as the means of creating wealth shifted from mostly land to factories and large scale
transportation systems to knowledge and skills in the information age, a skilled
labor force is an asset in the same sense that land, machinery and cash are assets. Investing in the training and well-being of workers should be considered
investment--not expense. This big F***-up is just one on the ways the socalled
accounting "profession" retards progress in western culture. In the political arena,
cheap labor conservatives have systematically limited the quantity and quality of education available to the general population. In this respect they have a common interest with religious literalists who also don't want people to be too educated.

I agree, although I think it depends on the scale and the quality of the labor. If it's just you selling your labor, it's a commodity. If its General Electric's workforce, its an asset. If its a crew of migrant farm workers picking cabbage, its a commodity. If its Lockheed-Martin's engineering staff, its an asset. Micro- vs. Macro-

The company I work for considers its workforce its most valuable asset. As such, it invests heavily in education to develop employees' skills. Traditionally, however, members of my profession have viewed themselves as commodities, selling their knowlege to the highest bidder. This worked wonderfully well when there were hundreds of contracts and dozens of employers. Industry consolidation and productivity gains from technology have reduced demand for employees, driving the growth of pay down from 5% to 3% annually.

Large corporations also take great pains to select the premium entry-level employees for their workforce. This Darwinian tactic insures that their investment in individual employees will generate the best return.

Conservatives who espouse "dumbing-down" the population to generate cheap labor need to be called on it. That strategy hurts not only poor and middle class Americans, but wealthy corporate interests as well. Every single Corporate CEO will tell you that they need a better educated workforce, for three reasons: 1) They're tired of training new employees in basic skills, like counting back change; 2) Better trained employees are more efficient and generate their own productivty improvements that earn money for the company; 3) When the supply of highly skilled employees expands while the demand for them stays constant, the price for those employees goes down - cheap labor.

[poetpj]

you know, for a nation that supposedly does not have a big inflation problem, i see a different picture. health, auto, and car insurance are up... utility prices are up, meat, milk, bread, and vegetables, fresh and canned are measurably up.
Big ticket items are remaining somewhat steady except for coastal property which is leveling off finally.
People are working more hours for less money that isn't budgeted to necessary expenses. education costs are going up, especially college. local taxes and user fees are up as the federal government is busy unbalancing the budget for tax cuts for the wealthy, finding a way to fight the war in Iraq as expensively as it can possibly do, and pass mandated expenses back to the localities and the state.
looking at things, the media folks will tell you that statistics will put people to sleep, so you show how one family looks at their budget, looks at passing up vacations, looks for second jobs, looks at taking lesser jobs when one or both are out-sourced and laid off and people can relate to the same situation.
This phenomena is not just for the lower middle working folks, but has worked into suburbia, with few jobs at any level being secure. just like the states and local governments, the regular people have so many more "mandated expenses" then before, and then you build in the luxuries that have become necessities in our culture.
to go a bit further, when i look at the role of business and government, i don't see what that has to do with religion or personal individual choice issues.
i see the government in charge of infrastructure, support for universal education, security and safety, protection of the public against unfair business practices, securing pension agreements between workers and their former employers, securing confidence in the currency to maintain stability in the economic structures, et cetera.
am i missing something here?

[rla]

I agree, although I think it depends on the scale and the quality of the labor.  If it's just you selling your labor, it's a commodity.  If its General Electric's workforce, its an asset.  If its a crew of migrant farm workers picking cabbage, its a commodity.  If its Lockheed-Martin's engineering staff, its an asset.  Micro- vs. Macro-

The company I work for considers its workforce its most valuable asset.  As such, it invests heavily in education to develop employees' skills.  Traditionally,  however, members of my profession have viewed themselves as commodities, selling their knowlege to the highest bidder.  This worked wonderfully well when there were hundreds of contracts and dozens of employers.  Industry consolidation and productivity gains from technology have reduced demand for employees, driving the growth of pay down from 5% to 3% annually.

Large corporations also take great pains to select the premium entry-level employees for their workforce.  This Darwinian tactic insures that their investment in individual employees will generate the best return.

Conservatives who espouse "dumbing-down" the population to generate cheap labor need to be called on it.  That strategy hurts not only poor and middle class Americans, but wealthy corporate interests as well.  Every single Corporate CEO will tell you that they need a better educated workforce, for three reasons:  1) They're tired of training new employees in basic skills, like counting back change;  2) Better trained employees are more efficient and generate their own productivty improvements that earn money for the company;  3) When the supply of highly skilled employees expands while the demand for them stays constant, the price for those employees goes down - cheap labor.

I agree that it is not completely an either, or situation but I think it is a distinction
that the progressives and liberals could make a lot more political use of. I also don't think the difference is always tied to the size of the operation. Self-employed
is one of the fastest growing categories of workers and it stretches from day
laborer to very high cost professional and technical consulting and marketing. e
mos cst effective way the goverment could engage in job creation is to provide
universal, single payer health care to every one and subsidize the payroll expense
(other than actual wages) for self-employed workers to add helpers--up to about
10 employees for the first three years.

[havnaer]

...(the most cost) effective way the goverment could engage in job creation is to provide universal, single payer health care to every one and subsidize the payroll expense (other than actual wages) for self-employed workers to add helpers--up to about 10 employees for the first three years.

Oh, yes. I missed that. Thanks for reminding me.

I'd actually go farther - Free basic universal health care for all Americans. Pay for it by a 2% tax increase across the board. I can't understand why employers aren't beating down the White House door for it. A 2% tax increase beats a 20% added labor cost any day. Especially since that 20% labor cost increases by an additional 2% every single year.

I've experienced Socialized medicine. It's excellent care provided at LOW cost. The hospital was clean, uncrowded, and absolutely up-to-date. Those Euro's really have got one thing right. Emergency room care with doctor consultation and medication included - $40 for non-citizen me.

[havnaer]

you know, for a nation that supposedly does not have a big inflation problem, i see a different picture. health, auto, and car insurance are up... utility prices are up, meat, milk, bread, and vegetables, fresh and canned are measurably up.
Big ticket items are remaining somewhat steady except for coastal property which is leveling off finally.
People are working more hours for less money that isn't budgeted to necessary expenses. education costs are going up, especially college. local taxes and user fees are up as the federal government is busy unbalancing the budget for tax cuts for the wealthy, finding a way to fight the war in Iraq as expensively as it can possibly do, and pass mandated expenses back to the localities and the state.
looking at things, the media folks will tell you that statistics will put people to sleep, so you show how one family looks at their budget, looks at passing up vacations, looks for second jobs, looks at taking lesser jobs when one or both are out-sourced and laid off and people can relate to the same situation.
This phenomena is not just for the lower middle working folks, but has worked into suburbia, with few jobs at any level being secure. just like the states and local governments, the regular people have so many more "mandated expenses" then before, and then you build in the luxuries that have become necessities in our culture.
to go a bit further, when i look at the role of business and government, i don't see what that has to do with religion or personal individual choice issues.
i see the government in charge of infrastructure, support for universal education, security and safety, protection of the public against unfair business practices, securing pension agreements between workers and their former employers, securing confidence in the currency to maintain stability in the economic structures, et cetera.
am i missing something here?

poetp -

Yes. I've noticed some economic sleight-of-hand at the the Commerce Department since at least the Clinton Administration. I'm not sure how it is that we can continue 3% year over year growth (inflation) while prices seem to rise at 5-7% annually.

Since I try not to be a conspiracy theorist, the best explanation I can muster is that some prices jump at outrageous rates - say 20-30% - once every couple of years. Those increases are diluted by relatively constant prices for most other goods. The following month, a whole different batch of prices jump outlandishly, and the prices of last month's gouges level off. Over three years, nearly everything we purchase goes up by 20-30% - a 7-10% inflation rate - but the average rate of increase, month to month, is still about 3%.

'Course I'm only guessing.

But something fishy is sure goin' on.

[billfmsd]

havnaer:

Thanks for the feedback. This is a well-put response to this issue. I 100% agree with 80% of it. Of course I have to joust the 20% that I don't 100% agree with.

Yet, like all advances of this kind, more jobs are created supporting the new technology than are lost to obsolescence.

I just don't see this. I see new technology requiring fewer human workers.

Relative to the company, the new jobs are created for machines, not people. Relative to society, the new technology is not in addition to the obsolescence. It's new technology instead of the obsolescence. So if there is an increase of jobs, it's only temporary until the old jobs are phased out. Unless there is a constant stream of new technology, the net result is a smaller percentage of jobs for people in the long run.

You also have to take into consideration the increasing population. I don't see jobs growing faster than unemployment.

The dilemma for Joe Shopfloor, though, is making the transition from factory worker assembling parts, to information worker

I agree with this as long as it is information products more than services. America needs to worry less about middlemen jobs (information service) and get back to producing products. This includes information products. An example of an information product (or media product) is a DVD movie, a software program, or an academic text book. It takes more people to develop information products, which potentially creates jobs. An example of an information service is selling or managing the above.

The dilemma for Joe Shop Manager/Salesrep/Supervisor/Salesclerk/Customer Service Rep is that, information workers, who don't create or develop media content, are just middlemen. The long-term trend is that information technology eliminates middlemen. Ebay is a good example of this. Ebay, is an auction host. But it doesn't take many people to run Ebay. Most of what makes Ebay successful is an information product (software) that automates the information service. Again, machines replace people.

Having said that, a country can't live on information products alone. There needs to be either information services that protect the illegal pirating of information products and/or a strong manufacturing workforce.

1.  Train better workers.  Many nations demand more of their children than we do in U.S. schools.  This isn't an attack on American Teachers who do an often heroic job.  Educational policymakers need to set the bar higher at the K-12 level and prepare all children for university education.

Being married to one of those heroic teachers, I believe that (the bar as you put it) the standards are high enough. The goals of the standards may be misaligned; but there is no shortage of challenge to the students or the teachers. What our education system needs is a better process, better teaching materials, and better cooperation from outside influences (parents, corporations, politicians) with teachers. The better cooperation needs to happen before the materials and process can improve.

As for the outside influences, parents need to put less pressure on teachers to challenge kids, and provide more parental guidance for kids. This is easier said than done for poor parents working multiple jobs to make ends meet. Corporations need to stop trying to get the schools to produce robotic corporate slaves that only live for their jobs, and help the teachers train human community-oriented problem-solvers. Politicians need to work for the education system more than for the corporations.

As for the materials, we need to move away from paper-based systems and towards electronic systems. It costs less, is updated more frequently, and is more effective. This requires teachers to embrace the technology, which is my only criticism of teachers. Being married to a teacher hasn't made me totally biased.

As for the standards, the amount and the level of information we try to pour into our kids heads is adequate. I believe the problem is in the order the information is taught and the process (the way) information is taught. The order should be more emphasis on economics in elementary, social studies in middle school, and political studies in high school. The process needs to be less emphasis on testing and more on teaching. Teachers aren't given the choice.

2.  Eliminate high-skilled imported workers.  Chapter H-1B of the INS code specifies that when highly skilled workers aren't available locally, companies can sponsor foreign workers on temporary work visa for up to three years to fill the need.  Companies have used this loophole to lure foreign Engineers and Scientists at less than half the salary of native-born Americans.  It isn't that the talent isn't available locally, its just not available at a low enough price.  This federally-mandated unfair labor practice should be eliminated.

I wouldn't call it a loophole. I would call it outright permission to hire cheap labor. The purpose of the code was to give America the flexibility to stay competitive. We don't have to eliminate the practice, we just have to amend the law to make sure that the foreign workers are paid the same as an American worker would expect for the same work.

3.  Invest in new technology.  Government investment in new, ostensibly frivolous, projects produces huge dividends for private industry.  The U.S. would arguably not be in the technological leadership position it is today were it not for NASA Space program investment and Reagan-era defense investment.  Despite Neo-Con arguments to the contrary, private industry does not have deep enough pockets to commit to wildly expensive, decades-long research into the truly basic scientific advancement necessary to remain at the forefront of technology.  Government must keep pushing the boundaries of knowlege outward.  The dividends reaped will be new jobs, and in many cases, whole new industries employing highly paid Americans as the only ones with the capability to perform them.

I 100% agree with this. The government as the biggest customer of American innovation is the best push. But it needs to be extended to education, infrastructure and community building programs as well. Of course the conservatives complain that this is big government. I would remind those conservatives that, the same month we put a man on the moon, we launched another government service called the internet.

4. Continue to press for Globalization.  This may sound crazy, but the experience of nearly all countries that develop a manufacturing base is ultimately higher wages for their workers.  Once a factory is established, it is expensive to close down.  Eventually, workers realize this and agitate for higher wages.  The U.S. should also press for better corporate citizenship overseas - higher safety and pollution standards.  Supporting labor organizing (or at least not actively opposing it) and penalizing poor corporate citizenship with added import fees will raise the price of foreign goods on par with the U.S.  In addition, it will speed development of new markets for American products, just as Globalization proponents predict.

I 99% agree with this. I think we should emphasize Globalization with Regulation, or no Globalization at all. What I believe is happening now is Globalization without regulation. I'm not sure if it is possible to regulate Globalization without a world government to enforce the laws. Without the regulation, the third world countries are exploited and abandoned faster than they can grow or unionize. The 1% is the better way that is yet to be discovered.

[dggfwtx]

poetp -

Yes. I've noticed some economic sleight-of-hand at the the Commerce Department since at least the Clinton Administration.  I'm not sure how it is that we can continue 3% year over year growth (inflation) while prices seem to rise at 5-7% annually.

Since I try not to be a conspiracy theorist, the best explanation I can muster is that some prices jump at outrageous rates - say 20-30% - once every couple of years.  Those increases are diluted by relatively constant prices for most other goods.  The following month, a whole different batch of prices jump outlandishly, and the prices of last month's gouges level off.  Over three years, nearly everything we purchase goes up by 20-30% - a 7-10% inflation rate - but the average rate of increase, month to month, is still about 3%.

'Course I'm only guessing.

But something fishy is sure goin' on.

This is absolutely correct. The government has been cooking the books on inflation since the Clinton administration, and the Bush admin has continued the practice.

I'm not sure of the exact revised formula, but some things are not counted, and some things are pro-rated.

It makes the economy look better than it is, and benefits government and business, but it has an extremely negative effect on the American public by depressing wages and holding down cost-of-living increases in programs such as Social Security.