Sunday, June 26, 2011

Sluggish Economy Stubbornly Resists Lack Of Effort To Stimulate It.

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This past week, President Obama was in Pittsburgh to tout a government/industry/academia initiative for technology. CNN had this to say:

President Barack Obama -- whose poll numbers have dipped in recent weeks amid a stubbornly sluggish economic recovery -- touted the hard-hit manufacturing sector Friday, saying the country's best production days may well lie ahead.

"We are inventors, we are makers, and we are doers. If we want a robust growing economy, we need a robust manufacturing sector," Obama told a crowd at Carnegie Mellon University, the school founded by steel industrialist Andrew Carnegie nearly 100 years ago.
The NY Times:
President Obama visited a university research center in Pittsburgh on Friday to announce a new partnership between the government, industries and leading universities to speed the movement of technological advances to commercial users. The trip was the latest of his increasingly frequent travels to battleground states to showcase administration efforts to create manufacturing jobs.

After touring the National Robotics Engineering Center at Carnegie Mellon University, a high-technology facility adjacent to a rusted factory symbolic of the area’s industrial past, Mr. Obama said federal agencies would invest more than $500 million to seed the initiative. Of that, $70 million is to go to robotics projects like one he viewed at the center: a boom-box-size robot that inspects sewer pipelines, made by a company started by a Carnegie Mellon professor.
Now, I am all for technological advances. My professional field is Software Quality Assurance and Testing and I have worked in every phase of software development projects. I remember all the "world of the future" type stories that Disney and other film makers would do, showing their visions of how robots would affect the world of the 21st century, making life so much easier for everyone from the assembly line worker to the housewife in her kitchen. Yet for all the potential this initiative may have for the long term future, it does nothing for the "stubbornly sluggish economic recovery." The US economy needs something along the lines of $500B investment (and that is probably no where near enough) in initiatives that bring jobs now, not five or ten or twenty years from now.

We need good jobs for people so that they don't need to juggle four jobs just to eke out a living (via the NY Times):
Some of these workers are patching together jobs out of choice. They may find full-time office work unfulfilling and are testing to see whether they can be their own boss. Certainly, the Internet has made working from home and trying out new businesses easier than ever.

But in many cases, necessity is driving the trend. “Young college graduates working multiple jobs is a natural consequence of a bad labor market and having, on average, $20,000 worth of student loans to pay off,” said Carl E. Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers.


An entry-level salary often doesn’t go very far these days. According to a study by the Heldrich Center, the median starting salary for those who graduated from four-year degree programs in 2009 and 2010 was $27,000, down from $30,000 for those who graduated in 2006 to 2008, before the recession. (Try living on $27,000 a year — before taxes — in a city like New York, Washington or Chicago.)

Many earn even less than $27,000. Maureen McCarty, 23, who graduated from American University in 2010 with a journalism degree, makes $25,000 before taxes as managing editor of, a blog focusing on gay issues, with no benefits like health insurance or a 401(k). The salary doesn’t cover her expenses, so she often baby-sits five nights a week for six families in the Washington area.
See this for my wag on trying to survive on minimum wage - and I was not describing trying to do so in New York City or Dee Cee.

MSNBC had this the other day on how people who are un and underemployed pay their bills:
Transamerica enlisted polling firm Harris Interactive to survey 668 people who had been fully employed but are now unemployed or underemployed, meaning they are working part-time but would like to be working full-time.

Not surprisingly, the most common source of funds were savings and unemployment benefits, with half of those surveyed reporting that they rely on each of those. About one-third also reported relying on credit cards and/or a partners’ income.
When the unemployment runs out, the retirement funds don't last a whole lot longer either, believe me.

MSNBC also had this article last week on jobs going unfilled due to "lack of qualified applicants:
Despite an unemployment rate of 9.1 percent in May, nearly three million job openings went unfilled — up from roughly 2.1 million when the recession ended in June 2009. To be sure, that's not nearly enough jobs for the roughly 15 million Americans who are out of work.

But many of those positions remain unfilled because employers can't find qualified candidates to do the work. From manufacturing to health care, employers report that they can no longer rely on hiring entry level workers and training them on the job.


Darlene Miller, CEO of Permac Industries in South Burnsville, Minn., said the days are long gone when a new hire could learn how to operate machinery on the job. Miller said she would add another half-dozen workers to her payroll of 38 workers — if she could find people skilled at operating the high-tech equipment she recently purchased to boost productivity.


Miller is a member of President Barack Obama's Council on Jobs and Competitiveness, which recently announced a goal of turning out an additional 10,000 American engineers annually by leaning on the private sector to boost university funding, add internships and create other incentives.
So apparently while sitting on record amounts of cash, industry is willing to invest in technology but not people. Again from the MSNBC article:
“In the '60s and '70s you could go from an entry level job on the loading dock to manufacturing engineer or accountant to maybe a manager in a corner office,” said Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce. “It doesn’t work that way anymore. The qualifications have gone up. The commitment between employer and employee has gone down. And (employers) don’t want to take five years to get you ready. They want you ready to start working — and learning — the day you walk in the door. “
What this article conveniently misses is that a lot of businesses, in their search for a better deal in a new location, create these types of problems for themselves. They want the state and local governments to subsidize the building of new facilities; they want the long term tax breaks and credits to "create new jobs" in the new locale but they are still not willing to bring a corresponding level of investment in the people to develop the necessary skills themselves. Friday's Hartford Courant had the results of a poll of area businesses:
Fully 25 percent of the firms in the Hartford-Springfield region said they had been approached by other states, according to a report issued Friday by the Connecticut Business and Industry Association. More than 650 firms participated in the 2011 Hartford-Springfield Business survey.


Forty-three percent of respondents said the region's quality-of-life is its greatest asset; 30 percent of firms surveyed said the area's best asset is its proximity to customers, while 17 percent cited the area's skilled work force as its primary asset.
If management does not actually value proximity to a skilled labor force, then management should probably not whine about not being able to find workers with appropriate skills.

Now, poaching of businesses has long been a staple of life in the US. Growing up in small town Kentucky, I remember when the factories first came to town from the upper parts of the Midwest. I also recall how easily a factory could shut down and move on if a union were brought in.

I saw this story this week on the governor of the state in which I reside wooing of the Chicago Mercantile Exchange. Of course, if the CME were to move from Chicago to Florida, it would not help the overall economy of the US as it would destroy a corresponding job in Illinois for every job it created in Florida. And how soon would it take for the CME folks to start whining about not being able to find qualified workers in Florida.

It just seems that too many corporate executives look only at the next quarterly profit statement rather than at a long term sustainable future, for their companies and for their workers.

And because I can:

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