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January 3, 2011 10:07 AM Age: 10 yrs
STAY TUNED – 2011 TRENDS - THINK JOBS/JOBS/JOBSCategory: Hank Boerner Articles
Source: Hank Boerner – Featured Commentator, G&A Institute
January 1, 2011
It’s said that the neat demarcations of our calendars – days, months, years, decades – don’t necessarily provide us with a bright line between eras or decades and even centuries. The 20th Century ended for many people when the September 11, 2011 terror attacks inflicted great emotional, physical and psychic damage on the United States of America. From that point on we were clearly in a new (and uncertain) era in America, and decidedly in a new century, this 21st. The petty disagreements about when the new century actually began (was it New Year’s Day 2000 or 2001?) quickly faded for most of us.
The American Century – the 20th: We now enter a new decade in this already tumultuous 21st Century. The 19th Century saw the zenith of the British Empire (“Brittania Rules the Waves”; “The Sun Never Sets on the British Empire” and so on). The 20th Century was the “American Century,” as declared by published and America-booster Henry Luce of Time magazine early in the 20th. The end of the Era of Great European Empires began at the start of the 20th Century and the end of the Gilded Age of the 19th Century ended with global conflict of World War I (known as “The Great War” until WW II came along).
America Rising: The collapse of Old World empires was coincident with the rise of the American Empire, with its fantastic agricultural production, manufacturing output, transportation networks (including the new Panama Canal), heavy weapons output, and other factors that soon eclipsed that of not only nations but entire continents (such as western Europe).
As we proceed into this new century and the start of its second decade, what will become of the American Economic and Financial Empire that was built over the last century-plus? When WW II ended, the manufacturing bases of Japan and Germany, former foes, lay in ruins. America, “The Arsenal of Democracy” for the dozen-plus nations united in war against the Axis Powers (Germany, Japan, Italy) accounted for more than half of all world trade in the early 1950s. The export output of our factories and agricultural lands was snapped up by many other nations. Over time, especially with the end of the Cold War, world trade expanded geometrically (think globalization), and while the US share was down to 25% of total the volume of such trade was fantastically expanded in the 1945-2005 period.
BRICs and Other Competition: Today, we see other nations positioned for the kind of fantastic growth that the US economy enjoyed for many decades (through two world wars, numerous regional conflicts, a Great Depression, several Wall Street crashes, and the September 11 attacks on the homeland). Goldman Sachs identified the leaders to watch several years ago: the BRICS (Brazil, Russia, India, China) and others have added more countries to the watch list (South Korea, Australia, Indonesia, etc). The USA has challengers in many sectors of the economy and especially in manufacturing and financial services/banking. If “it” can’t be done here (like getting your teeth cleaned or hair cut or home remodeled) chances are “it” can be done in a country with much lower labor and operating costs (making shoes in Asia, apparel in Bangladesh, assembling cars in Cherry plants in China and Tata factories in India, and so on).
Bangladesh? Yes – many of the apparel jobs once held by US workers are now in that country. Three million workers averaging $43 monthly in wages turn out garments; production doubled in the period 2004 to 2006 (NY Times). We cannot regain our once significant home-based garment and shoe industries in the globalized environment. What industries or sectors are next?
A Post-American World? As we enter the second decade of this 21st Century – what author Fareed Zakaria refers to in his book as the “Post-American World”-- what may be in store for American workers? We have challenges to address in this Stay Tuned commentary series. I’ll present my views on my America’s top issues and challenge, mindful that crystal balls are often very cloudy or at times opaque... But we should start with the most important issue for millions of Americans (families and individuals) – a job.
Stay Tuned to…the jobs picture in the USA. Jobs, jobs, jobs – the future success of our economy is dependent on jobs – preserving what jobs we have and creating millions of new jobs for today’s and tomorrow’s workers.
Over the past two decades the Wall Street Wizards have cheered and Main Street has jeered as American companies downsized and jettisoned their valuable human assets through rounds of terminations, layoffs, furloughs, downsizing, rightsizing, and outsourcing. Corporate share prices would rise as corporate employee reductions were announced, a clear/visible symptom of the capital market’s fascination with short-term corporate gains at the expense of long-term sustainability. Comes a time when there are consequences to face -- and it seems to be now.
The Unemployed/Underemployed/Underutilized: We have official government unemployment rates of 9%. The situation is far worse in some towns where manufacturing firms were the major employers. If we count the long-term out-of-work, the underemployed, the part-time employed (those who can’t find full-time work), and those who have given up looking – the real rate is easily double that. During the years of the Great Depression unemployment affected 25% of the workforce, a condition that scarred many families for years and generations to follow. Estimates range, but up to 27 million or more of us are in these circumstances today. Certainly not a healthy state of domestic affairs and perhaps not sustainable over the long term without direct government intervention of a very serious nature. We have structural employment issues to deal with; some work is available but not in the communities where the unemployed live. Three US industries are especially hard-hit: construction and real estate; financial services/banking, and manufacturing.
Stay Tuned to…housing, symbolic heart for many trying to achieving the American Dream. The USA boasts of one of the highest rates of home ownership in the world, thanks to comprehensive public policies that respond to the dream of home ownership. (Think of Fannie Mae and Freddie Mac; FHA mortgage guarantees; the GI Bill for returning veterans; mortgage interest and tax deductions – all public policies designed to expand home ownership.)
Sixty-five out of US 100 households “own” their own home (single family, multiple family, condo, co-op etc.). But for too many now, the dream has become a nightmare. There are an estimated 4.3 million home owners in default, in foreclosure, or in danger of becoming so. Source: The New York Times, November 2010, a month in which another 30,000 homeowners joined the class of the beleaguered. This nasty overhang is keeping housing prices down – maybe good for bargain hunters – and certainly bad for homeowners with their house value underwater -- or worse.
Circle back to the importance of jobs -- with an inability to sell their homes, many American working class families can’t afford to uproot and go where the jobs are (say, out of the Midwest crippled manufacturing communities, and to states and regions where jobs may be). Too many mortgages exceed the present value of the occupied homes. Without home sales many jobs go missing in related industries – no furniture purchased; no lawn service contracted; no new appliances purchased. And this already grave situation is completed by the mess created by the Masters of Mortgage Banking, with documentation gone missing when homes are in default and being foreclosed. Judges in various jurisdictions stopped proceedings and state attorneys general are conducting investigations. Who knows where this will end – job creation will not be helped while this situation exists.
Stay Tuned to…populist anger on the rise. The November 2010 mid-term elections were an indication of the state of unrest of the American public. “Throw all of the bums out” may become a bumper sticker for coming elections. Doesn’t matter which party – both Republicans and Democrats have too often played to the base elements in their parties and ignored the worsening plight of the jobless, the threatened homeowner, the young college grad who can’t find work, the senior under financial pressure on fixed income (do I buy food or prescription drugs this month?) – and the deteriorating state of the American middle class.
Fears about losing jobs, not finding jobs, not earning enough if they have a job, seeing family wealth and income decline – these fears pose real threats today to the orderly conduct of the political and governmental sectors. We don’t know the real impact of this trauma on the American Society. This has become as serious for many families as the experiences in the Great Depression of the 1930s.
Stay Tuned to…the worsening state of electoral process in the US democracy. Big bucks are flooding in to election campaigns (as much as $2 billion in the November 2010 races). With the US Supreme Court giving the green light to large companies to fund candidates who support their positions on issues, our electoral process may become very distorted in terms of issues and challenges addressed and outcomes that favor the elite, the privileged, the money class, the corporate chieftains. All yachts rise on this tide, a comedian quipped – yes, and many middle or moderate income lifeboats are swamped and some sunk.
Stay Tuned to…debate about the Wealth and Income Divide – the wealth gaps that are creating two American societies, in part thanks to federal and state policies that favor the elites. This is related to the jobs crisis. Once upon a time, in the [20th] American Century, high school and technical school graduates could work their way up the economic ladder into the middle class, often in well-paying manufacturing jobs (think of the wealth created by 400,000 General Motors employees at the peak of that company’s employment). Today, many of those opportunities have mostly disappeared, and unemployment and underemployment is especially high among African-Americans and Hispanics. We are in danger of creating a permanent economic underclass with grave societal implications.
The Moneyed Elite – vs. the Middle Class? Think about this: Between 1980 and 2005, the top one percent (1%) earners enjoyed 25% of all income gains. Where once CEOs of large companies earned 42 times the pay of the average worker in their firm (in 1960), by 2001 that gap had grown to 531 times! The Moneyed Elite will enjoy the fruits of Wall Street recovery – watch the headlines about the billions’ handed out in January. The Big Four of American Finance – Goldman Sachs, Morgan Stanley, Citi and JPMorgan Chase – will award nearly $100 billion in 2010 bonuses; Bloomberg News estimated the total for all of financial industry employees could be as much as $400 billion. What will the unemployed, underemployed and those who gave up looking think of that news? (Will they know or understand that this is the crowd who piled up $400+ billion in collateralized mortgage obligations or CMO’s with no apparent personal consequences?).
Stay Tuned to…Jobs, Jobs, Jobs! We did say that at the top. Consider first the number of jobs lost in the outsourcing frenzy of American business – numbering in the tens of millions. Consider, what was left just a few years ago, the impact of 7 million or so jobs gone missing after the self-destructive behaviors of Wall Street Wizards and Banking Masters of the Universe who wreaked havoc on the US and global economies in 2008-2009. How long will it take to build the US employee base back up to 2005 levels? How many sustained years of adding jobs will it take (5 years? 7years? Longer?).
The Baby Boom Echo Generation -- children of the 75 million Baby Boomers who were themselves born 1946-1964, dubbed the Millenniums -- will be seeking jobs and career opportunities in the early decades of the 21st Century. What will their opportunities be? Will they have the same opportunity of entering the middle class as their parents did? Will their heavy investment in a college education pay off? Or will there be heavy tuition debts to pay off with no good-paying jobs to enable them to do so? Will the only economic opportunities be in military service? To move to another country?
Stay Tuned to …the political rhetoric that will step up as the new Congress begins its work and the two parties jostle seriously for favor as the 2012 president election campaign gets underway. You’ll certainly hear about jobs, jobs, jobs. And the Clinton mantra will be repeated – it’s about the economy, the economy, the economy. Serious talk: Should we have [short-term] stimulus spending or not? Is there a long-term value to public spending as the Keynesian economic pump, or not? The rhetoric will be pointed – it’s their fault! – and mostly un-specific or un-realistic (and too often pandering) as to remedies that will work.
Short-term, we cannot realistically retrain millions of workers to fit into job opportunities that are going unfulfilled. Jobs are open – many are in the wrong locations. Applicants can’t sell that house to move to where the jobs may be. Too often, skill sets are not a match. Jobs are open – many with skills required that US workers are not prepared for…or unwilling to work at (look at hospitals, and the workforce which is heavily dependent on immigrant labor, from unskilled to semi-skilled and highly-skilled).
In this commentary series -- Stay Tuned! -- I will be examining societal challenges and issues that the American Society must recognize, address and resolve in this 21st Century to maintain our leadership in the 21st.. The Indomitable American Spirit that created the great success of the American Century (the 20th) will have to be tapped to turn things around – 60% to 70% of Americans believe the country is headed in the wrong direction, depending on the survey – and creating good-paying jobs will help the US government, public and business sector address vexing issues that pose internal threats even as external threats and challenges have been increasing.
The journey to a brighter future in America must focus first on jobs, jobs, jobs – what kind of jobs, how they will be created, how permanent the job gains will be, what the pay levels will be (and therefore, what workers can afford) and jobs that pay well and assure the continuance of the American middle class.
Henry Ford, the motor car company Founder figured it out 100 years ago and helped to create the American Century. He believed that if you pay your workers enough and provide incentives enough they could buy the products that they were making on the first mass-production assembly lines. And they did! Contrast that with the recent statements of an airline CEO who boasted about driving wages down for his human assets by shifting the “burden” of providing good-paying jobs to contractor airlines – who then can underpay skilled and experienced pilots who have to sleep on borrowed beds and try to turn a profit on the fixed-fees paid for their subcontracted services.
Is there another Henry Ford on the 21st Century horizon with breakthrough thinking to address our Jobs issues and challenges? Do Stay Tuned!
Hank Boerner is a Featured Commentator of Governance & Accountability Institute.
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