Yeah, but it's the dumb workers' own fault. Got nothing to do with the economy.:

"Federal Reserve Chairman Alan Greenspan, disputing election-year assertions that the U.S. economy is producing lower-quality jobs than it has in the past, said yesterday that continuing wage sluggishness reflects the fact that many workers are ill-prepared to take advantage of the opportunities that the economy offers.

Growing U.S. income inequality largely reflects differences in workers' education and job skills, not an underlying problem with the economy, Greenspan said during a House Financial Services Committee hearing, echoing many of the remarks he made before a Senate committee the day before. What, they don't have enough job skills to work at Wal-Mart or McDonalds?"

Sheesh!

This is from the Washington Post. http://www.washingtonpost.com/wp-dyn/articles/A4121-2004Jul21.html

Yes, the quote in J. B.'s comment is remarkable. (Though the last sentence in the quotes is J. B.'s, not the Post's). G seems to be saying that, if everyone could get a college degree, there would be no low-wage jobs. That is astounding.

The Post article also says:

[[But the [Economic Policy Institute] cites other reasons for the recent slide in inflation-adjusted wages. Although employment has been rising recently, the job losses during the recession and slow pace of hiring since have left the economy with "an oversupply of workers relative to employers' demands," economists Jared Bernstein and Elise Gould wrote in a recent analysis. "There is little pressure to bid up wages."]]

So there is an oversupply of labor. Which brings back that argument we recently had about immigration (legal and illegal). It seems clear to some that immigration is being used to keep this oversupply of labor in place. How can one, from a progressive perspective, argue against limits to immigration and, at the same time, decry stagnant wages created by this oversupply of labor?

Because I take my favorite mainstream economist, Stephen Roach, more seriously that the downward pressure comes not from internal labor market pressures as much as from global labor arbitrage based on low wages around the world.

Cutting down on immigration doesn't solve the problem of global pressure to lower wages here in the US and may create new problems-- Europe has unemployment problems yet has far tighter controls on their borders in regard to developing nations.

So, no, I don't think immigration is the problem, since that's just distributing the population around the globe and may be relieving pressure to lower wages in other parts of the world.

And in any case, if I care about economic inequality within the US, I should also care about global inequality and immigration is actually a method that directly improves that-- especially given the large amount of funds sent back to developing nations by those immigrant workers.

Global labor arbitrage, as I understand it, refers to the globalization of the labor market. Outsourcing of manufacturing and services is one component of that, but immigration surely is another. Even though outsourcing is the larger issue, for many jobs (like flipping burgers, or working at a hospital, etc.) outsourcing is not what creates wage pressure -- immigration is.

But I am confused about the overall theme here. The original post seemed to lament the fact that "wages of average workers are stagnant" -- but if this is due to the fact that wages of Chinese and Indian workers are improving, and that is a good thing, what is being criticized? The equalization of economic conditions that globalization seems to be effecting will mean that the lot of American workers has to deteriorate as that of overseas workers improves, no? (I think Chinese / Indian wages are less then 5% of American ones).

Isn't there a contradiction here?

JS: Wages are depressed not only by labor surplus (as in immigrants), but also by demand shortfalls. (In other words, the labor surplus is relative.) If you can't afford long hospital stays (maybe after having taken a pay or benefit cut), where is the hospital workers' raise supposed to come from? Probably not from the money that goes into executive pay, stock dividends, real estate prices , etc.

As I have pointed out elsewhere, in my business unit (software development), most hiring is happening in Asia (India & China).

JS- Who said wages are improving in the developing world. In many cases, wages in Mexico and Indonesia are under pressure from even lower wages in China. And Chinese workers wages are being artificially suppressed by a dictatorship that bans any union trying to fight for higher wages.

ONe of the most important fights for better wages in the US is to fight for better wages in the developing world.

JS,

The other component here is workers organizing. The only long-term solution to employers keeping more and more of the profits is workers organizing unions and refusing to provide their labor without better wages and working conditions. The globalization of the marketplace makes internation labor solidarity much more important, and, unfortunately, the US labor movement is far, far behind US companies on this score.

So, the progressive, pro-immigrant position is to strengthen workers' rights, make sure they're applied to ALL workers, including undocumented immigrants, and raise standards for everyone. Simultaneously, use US economic clout to demand similar improvements in workers' rights internationally.

Saying there is an "oversupply of labor" is an oversimplification. What kind of skills, what career area, what level of experience and what "quality" of labor matters --- and where that labor resides relative to where it is needed, and how mobile it (the labor) is.

It's ALWAYS been true that the skill and experience available in the US is not a great match with what employers need; markets are not nearly perfect, and "people markets" even less so than "product markets" for several reasons. When I headed the staffing and development function in two companies, there were ALWAYS serious shortages of people numerous fields; now there are shortages in whole SECTORS (health care is one glaring example).

Aggregate statistics are not very helpful here. The challenge is for individuals to get the training and information (about where jobs and career opportunities are and will be), for employers to figure out how to take inexperienced people with potential and get them up the learning curve quickly, for schools to figure out how to equip kids with the skills and insights and knowledge and attitudes employers need. It's not really a "numbers" problem that will be solved with overarching legislation and/or "policy". Like most things, it is a battle that needs to be won in the trenches, one step and component at a time. And it will only be won after those with vested interests (potential employees, employers, the educational sector, community leaders, parents) stop "blaming" and start "fixing", in their own locales.

Government does not HAVE the answer because, sad to say, it's mostly run by people only vaguely familiar with what it takes to be an employer, educator, or private sector employee. In fact, as long as we allow government to play the role of "problem solver" on labor economics, the people and institutions that must FIND their own answers will not be "front and center" to the extent they must be.

Businesses are resourceful because they have both incentives and a very definite "other" reason to be so: the alternative (for a corporate executive who doesn't deliver bottom line results quarter after quarter) is to get fired. So, businesses WILL find their own solutions for getting the talent they need, as efficiently and economically as they can, from wherever. I doubt you can legislate anything that will prevent that from happening.

In my city, yesterday, I noticed (just off the grounds of a major hospital complex) a "health sciences" middle school. I'm assuming that's a magnet school that is trying to get kids prepared for that career field even before high school. That's what I'm talking about.

A lot of topics have been touched here -- but going back to the original one:

1. The "global labor arbitrage" that Nathan mentioned puts US workers in direct competition for wages with Chinese, Indians, and others.

2. Regardless of whether wages in India and China are rising or not, this creates downward pressure on US wages, and will continue to do so in the foreseeable future.

Trying to raise Chinese wages will not materially change the picture for US workers, because of the enormous differential. Unless workers can negotiate effectively (or just vote their interests in elections), they will suffer.

Corporations cannot be expected to raise wages of their own free will. They will do it only in response to market conditions (which seem to be going the other way thanks to or globalization and immigration) or under pressure from an organized workforce.

If only those most affected by this picture would organize, or just registered to vote, and realized their political power, they would be on their way to a solution. But I think there still exists a dilemma for progressives who want US workers to fare better while at the same time much of the work done for US businesses is farmed out overseas, and the labor pool continues to be augmented by illegal immigration.

Terry Ott & others: worker's skills

One way that industries react to (1) actual shortages of high-skilled labor, and (2) the "going" custom of high-skilled workers demanding a premium, is to dumb down job requirements, or trying to design processes where individual contributions depend less on individual brilliance and knowledge that is only in an individual's brain, but repeatable process.

Whether that is successful can be debated, an certainly companies are still and will always be willing to pay good dollar for above-average contribution, but in my career I have been exposed to various ISO-9002, CMM, etc. process efforts, and what I saw on "unofficial" training slides pretty much stated that one major thrust of such workflow standardization measures is to reduce the dependency on individual knowledge & brilliance, i.e. commoditizing your workforce to a larger extent.

The idea is to use computerization & extensive workflow documentation & formalization to make your individual advantages irrelevant. Of course this does not lend itself to all jobs, but to many. Where it works, you can replace quality by volume, and there will be enough "human units" around to not let you run into capacity limits. Given today's computer & communication technology, you are not limited to one country/timezone.

Just what I observed & speculated, mentioned for your consideration. Please let me know what you think.

CM: That is a very important and valuable point. I might not phrase it quite the same way, but the point stands that if a company can standardize/automate a process via technology, and has the capital to do so, probably that reduces cost and enhances quality simultaneously. And payroll shrinks unless the company is growing significantly. By "quality" in this context I mean "uniformity", which is the holy grail in much of manufacturing and logistics management.

In the history of the world there is only a brief period (including now) when humans have been "plugged in" to repetitive, specialized jobs such as in a factory, although this HAS been true in much of US history because our society is such a youngster, relatively speaking. (Read William Bridges excellent book, JobShift, for a perspective on this). I have come to view this is an "interlude" only, which in time will disappear as we figure out how to apply technology to virtually everything that is mundane by nature. So, you are using the term "dumbing down" of work, where I would use the term "smartening up" of processes and equipment. End result >>> same same.

What I've told my kids and now my grandchildren is: First, try to do for a living what you really have a passion for doing. If that doesn't allow for making enough money, then for the time being it will have to be a sideline. BUT what you THEN do to support yourself should require the "human touch" and the interaction of mind, attitude, and things and ideas/decisions such that what you have to offer will be valued and, in a sense, unique. Not that someone else couldn't do it, just that someone else would probably do it a bit differently and in a way that might appeal less (or more) than the way you do it.

That doesn't mean the work has to be terribly sophisticated. Heck, pet grooming and barbering fits the description, house cleaning fits, laying tile fits, automotive repair fits, law enforcement fits, physician assistant fits, electrical equipment installation fits, boat and furniture repair fits, carpentry, medical office administration, UPS delivery person or limo operator fits, restaurant manager, chef. And of course, for those willing to "pay the price" to get qualified there are many professional and specialty technical occupations that fit under the heading I've described.

I have relatives and friends who've done all of these things. Job security was never an issue and wages have never been "falling off".

What I caution folks about is relying too much or for too long on an occupation where attitude, thinking/decision making, and initiative (doing something very well to add value) is incidental to the work getting done. Those are the jobs that are most likely to go away (via technology or offshore outsourcing). Those jobs, in my opinion, are being done by human beings only temporarily because the technology is lagging behind the demand for their output. But it will catch up, sooner rather than later. And if you yourself have been "dumbed down" by thinking that this kind of thing is your life's work and "lose your edge", then you are a casualty.

Hey, this is all opinion. I'm sure I'm oversimplifying, and hope I am not misrepresenting. It's offered not in the hope of pronouncing the "one clear truth", but rather in the interest of getting reaction and moving our thinking forward.

Here is another point. In my ideal world, schoolchildren would begin to study "the nature of work", careers, and learn about occupational choices and the requirements and implications of them. Even about labor economics and employer/employee relationships. A child I know got C's on her good days in grade school, and a fair number of D's in High School but kept talking about becoming a doctor. She seemed unconvinced that her parents knew what they were talking about, and there were times that her parents even DID encourage her in the hopes that they might see the academic needle budge. She needed straight talk about what it takes, academically. And she needed some help from a really well-informed person to figure out how an average student might actually get into a good job in health care, short of being an MD. I think schools could help bring this "career studies" stuff together, but I wonder if they are even trying to.

Terry Ott: Your points about passion and "human touch" are well taken. It is usually not difficult to tell whether somebody likes their job, or is in it only begrudgingly and for the money.

What I was aiming at (and this is not to contradict you), but did not make explicit very much, is not replacing mundane work by automation, but attempts to make more currently creative work mundane, or split "mixed" jobs into "elite" thinker/design/management jobs and dumbed-down "assistant" jobs, with the ultimate goal of broadening the available workforce for the latter, and getting more "bang" out of the former.

I'm not saying it (always) works, but it is being tried (and has been for long).

If successful, it "frees up" your "high potentials" from mundane distractions, and allows you to hire "low-grade" (and relatively lower-paid) worker drones for the latter. A nice side effect is that there are (presumably) fewer elite jobs, and you can hire more "high potentials" into the lower-grade jobs at lower pay. And the lower-grade jobs lend themselves better to outsourcing, as it is easier to define service levels, performance criteria, etc.

The (in my view more likely) scenario and drawbacks are thus:

(1) Creative work (in the broader sense, so that it also covers software engineering, product design, scientific analysis, policy making, manufacturing/service process definition etc.) tends to happen in leaps; often enough solutions are only found or breakthroughs achieved after mulling over something for a considerable period, which may range from hours to weeks. Doing lower-grade mundane work on the side may actually help giving the mind some rest and provide input. By squeezing out all of those "inefficient" distractions, there is the danger of increased exhaustion, mental blockages, and detachment from reality -- the mundane work also provides context.

(2) Removing some experience (or the requirement thereof) from the mundane jobs does not really work well; quality will drop. To some extent it can be replaced by more quantity, but only in part.

(3) Companies will find that the product experience and complex thinking process inside the heads of the "high-power" mixed-job people or closely knit teams are difficult to formalize, take out of context, and communicate. This may really be just a variation of (2).

Mind you, I'm not arguing that the people doing the lower-grade jobs are of lower quality as individuals, a misconception often made. What makes the contribution lower-grade is not necessarily only lower competence levels, but the organizational setup of the work process that inhibits better contributions, by reducing information flow and also motivation (so that their heart is not in it -- connection to your point).

Dumbing down those jobs also carries an opportunity cost -- the people doing the low-grade work may do higher-grade work instead.

The same is true for many manufacturing and service jobs -- typically the people in the field or on the factory floor know best how to improve the work flow, or what needs improvement. Making policies at higher levels, keeping them "dumb", and discouraging feedback and empowerment, may lead the organization down the wrong path, e.g. increasing work pressure and requiring more overtime instead of optimizing processes, or doing other improvements that would lead to higher quality.

What enables this in large part is the excessive growth of mega-organizations that make this economy of scale possible, and in which such policies are pursued.

As a result, jobs become less fulfilling for many, people become more grumpy, and economy & society suffer as choice in products & services is reduced while quality goes to the lowest common denominator, and activities that don't lend themselves to this scheme become "unprofitable".

That's perhaps too much simplified (and too much exaggerated), but as I think not too much off.

Overtime pay will end for 6,000,000 workers next month so there will be even more of an inequality problem. It's funny how Greedspan did not mention this. Workers will be working for free while corporations reap the profits.

I was in downtown Miami for the FTAA protests which, at times got pretty bad. I apologize for threading here on an off topic subject, but I was wondering whether stem cell research is being discussed this week at the convention.

I know that Congressman Peter Deutsch introduced a bill into congress that would lift the ban on federal funding for this form of in vitro research that President (hopefully not for too long) Bush introduced three years ago. If anyone is interested, visit the website below to urge President Bush to allow scientists to do thier job!

http://www.peterforflorida.com/petition/stemcell.html

I was in downtown Miami for the FTAA protests which, at times got pretty bad. I apologize for threading here on an off topic subject, but I was wondering whether stem cell research is being discussed this week at the convention.

I know that Congressman Peter Deutsch introduced a bill into congress that would lift the ban on federal funding for this form of in vitro research that President (hopefully not for too long) Bush introduced three years ago. If anyone is interested, visit the website below to urge President Bush to allow scientists to do thier job!

http://www.peterforflorida.com/petition/stemcell.html

I was in downtown Miami for the FTAA protests which, at times got pretty bad. I apologize for threading here on an off topic subject, but I was wondering whether stem cell research is being discussed this week at the convention.

I know that Congressman Peter Deutsch introduced a bill into congress that would lift the ban on federal funding for this form of in vitro research that President (hopefully not for too long) Bush introduced three years ago. If anyone is interested, visit the website below to urge President Bush to allow scientists to do thier job!

http://www.peterforflorida.com/petition/stemcell.html

A comment left on an article I wrote on tax cuts here:
http://pharyngule.org/index/weblog/
comments/debtor_nation

Linked to an absolutely facinating article by Paul Krugman reviewing some possible reasons why the interests of the rich have been so successfully adopted by portions of the voting public who really do not benefit from them. I highly recommend anyone who has an interest in why the economic elite have managed to gain such unequal wealth while currying favor for those unequel policies which engender that ever wideing gap with the masses whom are being screwed read this:
http://www.Ise.ac.uk.collections/LSE
PubliclecturesAndEvents/pdf/20040526-WhitherAmericaPaulKrugman.pdf