The American Skills Gap

The skills gap in U.S. manufacturing has hit a vast array of industries that are having trouble filling their workforce needs with properly trained workers who can step right in and help companies.

As an example, across the jobs spectrum in the laser industry, from designing equipment, to finding workers to install and repair laser machinery, to manufacturers that need skilled employees on the plant floor, the lack of workers with the necessary skills has become a major problem.

To believe an exhaustive new report by the Organization for Economic Cooperation and Development (OECD), the skill level of the American labor force is not merely slipping in comparison to that of its peers around the world, it has fallen dangerously behind. A new OECD study finds that the US is well behind its global competitors in math, reading, and computer skills.

The highly skilled in the United States earn a much larger wage premium over unskilled workers than in most, if not all, other advanced nations, where regulations, unions and taxes tend to temper inequality. So if the rewards for skills are so high, why is the supply of skilled workers so sluggish? The answer is not clear.

Socioeconomic status is a barrier. Not only is inequality particularly steep, little is done to redress the opportunity deficit of poorer students. Public investment in the early education of disadvantaged children is meager. Teachers are not paid very well, compared with other countries. And the best teachers tend to end up teaching in affluent schools.

To speed growth, we must close the widening skills gap that exists in all of our industries. Washington lawmakers do not appear to be inclined to take the proactive lead that is necessary. This means that large companies and industry organizations will have to take the lead. That can be accomplished through lobbyists in the capitol or sponsoring training programs. The question is will private industry take the lead when labor costs are so much lower in other nations?

Sources for this article is news.thomasnet.com/IMT/2013/12/10, The New York Times,OECD

The Stock Market is thrilled – You should not be …

In case you were hoping that America’s three-decade-long trend toward extreme wealth inequality was starting to reverse itself, Pew has some bad news for you.

Nothing has changed.

The rich are still getting richer… and everyone else is still getting hosed.

Today’s monthly job report reinforces that fact.

Out of the marvelous 204,000 new jobs “Leisure and hospitality employment rose by 53,000 in October. Within the industry, employment in food services and drinking places increased by 29,000, the same as its average monthly gain over the prior 12 months.

Employment in retail trade increased by 44,000 in October, compared with an average monthly gain of 31,000 over the prior 12 months.”

In other words of the 204,000 new jobs 97,000 were in low paying positions. Most of these jobs pay less than $15.00 an hour. At $600 per week (15 x 40 hours) their total annual income is $31,200. That number is below middle class. Those in the $10 to $12 hourly pay rate are clearly part of the poor.

So celebrate the number of new jobs if you must. Just realize that this society is creating a nation of poor people.

Wal-mart is making money and so are the owners of corporate stocks.

Buy – Made in America

A Youtube video worth watching.

More Than Half of Wal-Mart’s Hourly Workers Make Less Than $25,000

I have written about the low pay that is received by retail is destroying the middle class. Here is a confirmation posted on businessweek.com.

By Susan Berfield October 23, 2013

Wal-Mart Stores (WMT) is the country’s biggest private employer. Its low wages have incited labor protests and congressional criticism, and have created a cottage industry of public policy research. The company has responded with facts and figures that sometimes raise as many questions as they answer.

Now Wal-Mart has provided some new and useful information: More than 475,000 of its 1 million hourly store employees earn at least $25,000 a year for full-time work. This figure comes from Bill Simon, the president and chief executive officer of Walmart U.S., who presented (PDF) it at Goldman Sachs’s (GS) Global Retailing Conference last month. The statistic, which was listed under the heading “Great job opportunities,” means as many as 525,000 full-time hourly employees earn less than $25,000 a year.

OUR Walmart, the union-backed workers’ group that’s been staging protests and asking for higher wages, pointed this out during a press conference in Washington, D.C., on Wednesday. (The company’s presentation is also on its website.) Three store associates, as well as three Democratic members of the House of Representatives, called on the retail giant to pay all of its full-time workers at least $25,000 a year.

“A decent wage is their demand—a livable wage, of all things,” said Representative George Miller (D-Calif.). The problem with companies like Wal-Mart is their “unwillingness, not their inability, to pay that wage,” he said. “They hand off the difference to taxpayers.” Miller was referring to a congressional report (PDF) released in May that calculated how much Walmart workers rely on public assistance. The study found that the 300 employees at one Supercenter in Wisconsin required some $900,000 worth of public assistance a year. Catherine Ruetschlin, an analyst at Demos, the progressive policy center, noted during the press conference that raising wages can be good for the overall economy. “Putting money into workers’ wallets puts cash in the registers of retailers, and with it the need for new employees,” she said. “We estimate that a raise to $25,000 a year would lead to at least $11 billion of new GDP and generate 100,000 new jobs.”

“We have hundreds of thousands of associates who are making $25,000 a year or more,” says Kory Lundberg, a Wal-Mart spokesman. “And the opportunity exists for those who aren’t to grow into the career they want. We promote 160,000 people a year.” Lundberg also explained how to parse some of Wal-Mart’s figures. The company has 1.3 million hourly workers, which led OUR Walmart to claim at the press conference that 825,000 of them made less than $25,000 a year. Lundberg points out that Simon’s presentation was referring to the 1 million who work in the stores. (The rest work as truck drivers and at the Bentonville (Ark.) headquarters, among other places.) So about 52 percent of its associates make less than $25,000 a year—not 63 percent.

Then Lundberg led me deep into the company’s website to find where Wal-Mart states its average full-time hourly wage: $12.83. How many employees work full-time? Wal-Mart will only say that it’s the majority.

Military-Industrial Complex Equals Jobs

The 223rd and final C-17 cargo plane was delivered to the Air Force last week. The plane was manufactured at Boeing (the old Douglas Aircraft facility) in Long Beach, California. That’s the last airplane manufacturing facility in Southern California. The plant will be closed by 2015 and will result in the loss of 3,000 jobs.

Here is the problem. While Boeing cited sequestration, the Pentagon has made it clear for several years that it didn’t require more C-17s. However, lawmakers pushed through more orders to preserve jobs.

As reported in Businessweek, October 29, 2009, “Every year since 2006, the Pentagon has said that it has enough C-17s. And every year, Congress overrules the military and authorizes funds for additional planes. In October the Senate approved $2.5 billion in the 2010 budget for 10 more C-17s, which would bring the fleet to 215.”

The United States has created high paying jobs by ordering complex technology and other aerospace/biotech products from American companies. To a great extent the military-industrial complex has been the driver of jobs.

We give $1.3 billion of aid to Egypt in the form of military hardware. We even gave Russia $126 million in aid in 2010.

Top Recipients of U.S. Military Aid, FY2010

Country	$ U.S. millions
Afghanistan	6,800.3
Israel	2,799.5
Egypt	1,301.9
Iraq	1,006.0
Pakistan	913.9
Jordan	303.8
Somalia	204.0
Colombia	185.8
Russia	126.8
Sudan	104.9
Mexico	96.0
Poland	55.6

Is this the only way we can provide our citizens with good jobs?

Companies that Benefit from War

A Review of an Aug 28, 2013 post. Look at all the money those war material manufacturers will be making. Is this Obama’s job stimulus program? Green is for m-o-n-e-y.

It was no surprise that the stock market dropped yesterday. A 1.59% drop in one day on the S&P 500. After all the threat of the United States at war in Syria could have an additional impact on our country. Most likely it will impact every country as the cost of oil and other commodities increases.

Then today the stock markets in the United States have risen by .3%. How can that be? Why would the stock market rise when the threat of war is still so prominent?

MSN Money seems to have the answer. “Sales for the world’s 100 largest arms producers amounted to $411 billion in 2010, according to the Stockholm International Peace Research Institute. That was up 1% from the year before, a modest rise that was held in check by the drawdown of foreign forces in Iraq.”

The top ten listed below.

United Technologies

Arms sales in 2010 $11.4 billion

L-3 Communication

Arms sales in 2010 $13.1 billion

Finmeccanica

Arms sales in 2010 $14.4 billion

EADS

Arms sales in 2010 $16.4 billion

Raytheon

Arms sales in 2010 $23 billion.

Raytheon’s web site says, “The combat-proven Tomahawk is the world’s most capable cruise missile and is ideally suited for critical long-range, precision-strike missions against high-value with minimal collateral damage.”
Arms sales as percent of total revenue: 91%.
Total Number of Employees: 72,400.

General Dynamics

Arms sales in 2010 $23.9 billion

Northrop Grumman

Arms sales in 2010 $28.2 billion

Boeing

Arms sales in 2010 $31.4 billion

BAE Systems

Arms sales in 2010 $32.9 billion

Lockheed Martin

Arms sales in 2010 $35.7 billion
Among Lockheed’s major products are the Trident missile and the F-16 and F-22 fighter jets.
Arms sales as percent of total revenue: 78%

Is this the impact of the Military–industrial complex?

City Mismanagement

In 1950, Chicago’s population peaked at about 3.6 million people. Since then, the city has lost nearly 1 million residents. Corruption, government bureaucracy, high taxes and a lack of a significant wealth-generating industry have all been cited as factors.

The city’s fastest growing industry is Business Products & Services according to a study conducted by city government. Seaton Companies, a headhunter firm is their largest fast growing company. While head hunting companies do create jobs, the numbers would be small compared to the more likely industries like finance and manufacturing.

On Wilshire Blvd. Beverly Hills – Panasonic DMC FZ28, f/5.6, 1/500 sec., ISO 100, hand held

Los Angeles seems to be taking a page from the Chicago playbook. Added taxes, added fines, and potential lost jobs are the consequence of surrendering to environmentalists. The latest decision by the Los Angeles city council is to ban plastic shopping bags at all stores and require stores to charge 10¢ for every paper shopping bag.

The Los Angeles County unemployment rate is 9.3%. To drive that number even higher the city council should consider new taxes at restaurants, hotels, and amusement parks. The reason would be we need more money to clean the streets or hire more police.

Of course this makes no sense. But who said City Hall is sensible?

There is the issue. The city councils of Chicago, Los Angeles, and many other cities are responding to pressure groups rather than doing the right thing. Of course they say they are doing the right thing. With high unemployment in Los Angeles and a falling population in Chicago, are they doing the right things?

A Growing Welfare Class in the United States

I hear the constant drum beat that 47 million Americans pay no taxes. That those people are on the dole. All those people don’t really want to work. The argument goes they are happy sitting in their homes doing nothing.

Is this all really true? If so, how did this happen?

A Google search [percentage of Americans paying income taxes] confirms that about one half of all Americans do not pay income taxes. The sites How Stuff Works, Fox News, The Washington Post, Reuters, and others all offer their take on why this is fact and some offer arguments about changing the taxing system. All the postings do affirm that everyone pays Social Security and Medicare taxes.

From How Stuff Works: So who are the 49 percent of Americans who don’t pay income taxes? The vast majority are the lowest income households, the elderly and young working families with children.

The reason this situation exists and is becoming worse was clearly defined in a Market Watch article posted on April 24, 2012.

Manufacturing employment as a fraction of total employment has been declining for the past half century in the United States and the great majority of other developed countries. A 1968 book about developments in the American economy by Victor Fuchs was already entitled “The Service Economy.”

Although the absolute number of jobs in American manufacturing was rather constant at about 17 million from 1969 to 2002, manufacturing’s share of jobs continued to decline from about 28% in 1962 to only 9% in 2011.

From CNN: A very large portion of U.S. apparel imports comes from Bangladesh. Many companies have been shifting orders there, because labor costs in the country are so low. Bangladesh is on track to surpass China within the next seven years as the largest apparel manufacturer in the world.

It is already the third biggest exporter of apparel to the U.S., behind China and Vietnam. The value of clothing imported from Bangladesh into the U.S. has quadrupled over the last decade to $4.5 billion annually, according to the apparel group.

Go into any store in the United States and you will find most products have been made in another country. Talking to a lady at Trader Joe’s just yesterday and she complained that the fresh produce is primarily from Mexico.

Back in 2007 the total unemployed that included part time workers and those who have given up searching for a job was below 8.5% of the likely working population. Today that number is 13.9%. That is the BLS number referred to as U6 on the monthly reports. It’s an improvement from the maximum number of 17.1% reached in October 2009.

I can’t prove it but I believe no one wants to live poorly when they see the things they can have with an income. Unfortunately the poor are also the least educated. That condition of poor education is partially lack of opportunity and partially lack of capability. Not all of us are capable of working in Silicon Valley or performing surgery at the Mayo Clinic. Those less technical jobs have been sent to the places where labor costs less. Every company has the right to lower their costs. Middle class and blue collar America has paid the price for those off shored jobs.

So the wealthy of America (they pay most of the taxes) have concluded that welfare is a cheap price to pay to keep peace in the United States. It’s the thing the royalty of France and Russia did not understand. We all know how that worked out. There is no royalty in the United States but there is a wealthy class that is the equivalent of royalty. Once again the U.S. leads the list with 442 billionaires the most of any nation in the world says Forbes magazine. The New York Daily News reports that there are 9 million members of the millionaires club in the U.S.

My prediction is that the welfare class will continue to exist in the United States and is likely to grow throughout the 21st century. This is not negative. It is reality.

America’s Dying Industries

This comes as no surprise. Still it hurts to see these numbers. As you read each of these items you know the reason for the decline in business. This was published on Huffington Post. The reasons are as follows:

The photofinishing decline was the result of the digital camera era and the sharing of photos on internet web sites.
The high cost of labor now makes appliance repair more expensive than buying a new item.
Advertising revenue has declined at most newspaper and magazine publications thanks to the internet and smartphones.
Manufacturing of consumer products is now cheaper in most other nations of the world.

– Photofinishing

Revenue decline 2002 to 2012 -70%. $15.509 million to $897 million

– Recordable Media Manufacturing

Revenue decline 2002 to 2012 -53.6%. $4.144 billion to $3.311 billion

– Money Market and Other Banking

Revenue decline 2002 to 2012 -51.2%. Industry revenue in 2012 $834 million

– DVD, Game and Video Rentals

Revenue decline 2002 to 2012 -49.6%. Industry revenue in 2012 $5.894 billion

– Newspaper Publishing

Revenue decline 2002 to 2012 -48.1%. Industry revenue in 2012 $29.302 billion

– Women’s/Girls’ Apparel Manufacturing

Revenue decline 2002 to 2012 -57.7%. Industry revenue in 2012 $8.603 billion

– Costume/Team Uniform Manufacturing

Revenue decline 2002 to 2012 -49.9%. Industry revenue in 2012 $986 million

– Appliance Repair

Revenue decline 2002 to 2012 -44.5%. Industry revenue in 2012 $3.684 billion

– Hardware Manufacturing

Revenue decline 2002 to 2012 -44.5%. Industry revenue in 2012 $7.484 billion

– Shoe/Footwear Manufacturing

Revenue decline 2002 to 2012 -39.6%. Industry revenue in 2012 $1.712 billion