Cause of the Decline in American Productivity
October 2, 2009
One reason for the American industrial decline has been attributed to the reduction in productivity growth. While America once led the world in productivity (with fewer paid vacation days and longer work hours). But that has changed, and now we find ourselves competing with the under-developed nations of the world for our jobs.
But is this decline in productivity due to the American worker?
Several years ago when I was working for a large retailer I calculated that if the president of the company’s salary was eliminated from the company’s expenses it would allow everyone of the other thousands of employees to be given a raise of over $10,000 each. But, of course, taking away that highly compensated senior manager’s salary and bonus and giving it to the workers whose sweat and effort created that wealth would not change the overall productivity of the organization (except for that one-ten-thousandth of a person who lost their job as president).
On the other hand, those dollars could have been spent on hiring new employees to perform additional work processes and thus increase the organization’s productivity. In this case roughly 25% more workers could have been hired (since the average salary was about $40,000 per year at the time). And this would have resulted in a 25% increase in productivity.
Or to be more accurate we need to consider the capital needed for plant and material to be used by those new employees. At that time it cost about $2 million to set up a new store. (Now it costs more, but we are talking about what could have been done at that point in time when I originally made these calculations). And so only about half of the annual savings from the elimination of the president’s salary and bonus could be used for actual new employees and the other half spent on the one time cost of additional plant and materials. This still leaves us with about a 12% annual increase in productivity … which most companies would be more than happy to achieve on a continuing basis.
Thus it can be argued that the decline in productivity of the American worker is not due to their own lack of discipline or declining work ethic. Rather it is due to the greedy increases in the salary and bonuses of American corporations’ senior managers and their self perpetuating boards of directors … rather than their investment in additional workers that actually produce goods and services … that has caused the decline in American productivity.
The Reason for the Collapse of American Manufacturing Jobs
October 2, 2009
I was sitting in my ophthalmologist’s office this week and picked up the current issue of Time magazine. It had an article discussing why Detroit was in such trouble. Part of the blame was placed on the auto industry and auto workers union for joining forces in allowing worker’s wages to rise to unsustainable levels. They almost had me convinced of the correctness of their argument the workers had brought the collapse of the auto industry upon themselves for demanding wages that allowed them to attain a “middle class” standard of living.
But then I thought about the collapse of the American textile manufacturing and furniture manufacturing industries in my home state of North Carolina. Their non-union wages were about one-third to one-half the level of those paid to the unionized American automobile manufacturing industry workers. And still their jobs had suffered the same fate as the auto workers jobs! So “middle class” wages being paid to American workers is not the cause of the disappearance of America’s manufacturing industry jobs.
Instead it has been the willingness of top managers to diminish the value of the worker’s contribution to the manufacturing process causing the collapse of a multitude of American industries. Whenever the management of a company decides to move its manufacturing off-shore where a desperate worker is willing to work for less than his American counterpart (primarily because that worker is willing to accept a lower standard of living), the value of the worker’s contribution to the end product is diminished.
To make the situation worse, the top manager and his self perpetuating board of directors give themselves raises and bonuses for having reduced the cost of making the product which they continue to sell for the same price. So the gap between the incomes and standards of living of the top managers and the workers (or unemployed former workers) widens.
As the “world economy” developed what should have happened is that those new workers performing the same manufacturing processes should have been paid the same as the American worker producing that same product. This would have resulted in the raising of the standard of living of that developing nation and increased demand for American made products … and a sustaining of the growth of the “middle class” standard of living across a broad spectrum of people all around the world.
American senior managers and government leaders could have chosen to export America’s workers’ high standard of living to the rest of the world. Instead, they greedily chose to import the world’s poverty to the American worker while fattening their own pocketbooks.
The American Standard of Living
October 2, 2009
For many years attaining the American standard of living has been the goal of most of the other people of the world. For generations millions of people from all over the world have come to American to give their families the benefits of our standard of living.
But that scene will be changing in the future. We are now suffering a decline in the American standard of living. We are being told that American wages cannot remain where they have historically been because of the “world economy” in which we must now “compete” for jobs. If that is so, jobs will continue to drain out of America until our wages … and our standard of living … has fallen to the level equal to that of the rest of the world.
Furthermore we are told that the current recession in our economy will experience a jobless recovery. We shouldn’t expect a rise in the available jobs for the American worker until our standard of living gets down to the level of the third world workers. At least then we won’t have to worry about illegal immigrants pouring into our country taking our jobs away!
An Employee’s Responsibilities
August 20, 2008
All of my working life I have had to be responsible for how I spent my time while on the payroll of my employers. I was expected to show up five days (or more) each week. I was expected to work on their behalf at least my full 40 hours each week (and often times it was extended to 50 or even 60 hours when my employer had need of me to get their work done). The rules of my employment allowed me a fixed limited number of days off each year for vacation, personal or family illnesses and medical care, and, in some cases, even a few “personal time” days off. And if I had not lived up to these expectations of my employers, I would have been reprimanded, warned, disciplined, and, ultimately, terminated. If I had not behaved responsibly I would have lost my job, and justifiably so.
Most other Americans work under these same general set of circumstances. If we show up on time everyday and do our job, then we get paid our salary (for so long as we get our work done properly and on schedule, keep our boss happy, the company remains profitable, and our jobs are not out-sourced or off-shored). If we don’t follow those rules, then we can justifiable expect to be fired.
Why is it so different for all of the politicians whom we, the citizens of these United States, “employ” to take care of the general oversight, management, and direction of our various governing bodies? Almost all of them are paid as much or more than the average American worker. They are given jobs that seem to have more work needing to be done than they even get completed. And they promise to do so much more than they ever accomplish.
On the one hand it seems that the politicians aren’t devoting enough of their energy and attention to getting the work we “hired” them to do, nor doing a very good job in terms of the public’s interest in what they do get done, and yet they seem to be running around on “our time” doing all sorts of things for their own benefit. They have time to campaign for their next elective office, spend time raising money to spend trying to make us believe that we should “re-hire” them, taking trips with narrow focused “special interest individuals and groups,” visiting exotic foreign places on “fact finding missions,” attending meetings in expensive vacation retreat locations, and deciding for themselves just how many days of “recess” or “vacation” time they will take off from doing the public’s work.
Why is it so different from how I always had to perform for my employers? Why is it that I had to stay until my employer’s work was done, and these elected politicians get to run around socializing with their friends and donors and taking off several days around every holiday known to mankind, a few extra days off here, and a few more there, and still more for their political parties, when their work is not yet done?
It seems to me that it is time for the “employer” to issue a reprimand to many of our “employees,” and maybe even “fire” a few of them for the poor performance they have given us. Our expectations need to be raised to a level more like we have all had to meet for our employers.
And it is certainly time for our politicians to start behaving more responsibility toward their employers, the American public. Our elected officials need to show us that they take their jobs seriously (or if that was never their intent, then resign and let someone else take their job who will). They get paid for a full week, and so they need to put in a full week’s work … and do that every week. They shouldn’t take more vacation than the average American worker (that’s about two weeks putting those with more up against those who get none). And when there is more needing to get done than can be done between 9 and 5, then they need to stay on the job until the work is done (it’s called “overtime” and salaried workers don’t get any extra pay for doing it, it’s one of the benefits salaried workers get when their happens to not be enough work and the hourly people are sent home without pay, so be happy about it).
That’s how an responsible employee behaves towards his employer.
The United States is #1?
August 17, 2008
Like most Americans I have grown up believing that the United States of America is the world leader in everything. Believing that our justice system is the best in the world. Believing that our health care system is the best in the world. Believing that our standard of living is the best in the world. Believing that our education system is the best in the world. Believing that the products we are buying are the best in the world because our free enterprise system “naturally” causes inferior products to be weeded out by superior products being offered in our free and open marketplace.
Unfortunately over and over again in recent years I have come to learn this is not the case in category after category. Most recently, and what brings this subject to mind today, I have learned while looking through a book showing what is available in the line of home appliances that we Americans once again are being sold inferior products by our mass retailers and American based manufacturers. We are simply not offered the best there is available and so we go on buying from the selection we are given thinking we are making the best choice of all the things that exist in the world. While in fact there are European home appliances that are far superior to the American products in terms of energy efficiency and water resource conservation.
Likewise our sunscreen products are inferior to European sunscreens according to a recent newspaper article by Joe Gradon of The People’s Pharmacy fame. While our government agencies are “we thought” looking out for our health, they are allowing known cancer producing ingredients to be used in American sunscreens. All the while for years the European sunscreen products have banned those potentially harmful ingredients and used other more effective ingredients in their place!
And, once again, while American politicians argue over how to fix our problems of sky rocketing health care costs making it unavailable to more and more people, we learn that several other countries provide better care for a lessor cost than Americans can obtain. Those who still have the benefit of employer provided health care may be coming to realize that health care costs are rapidly rising, but until they become one of those who have lost their link to an employer making it available to them they cannot know the full story of just how broken the American health care system has become. Being one of those who has lost that connection in recent years (due to two job losses related to out-sourcing and off-shoring of American jobs) I have become all too aware of the high cost trying to provide health care protection for myself and my family on my own.
The belief that “The United State is number one!” is just part of the “Great American Dream” that has become more Madison Avenue advertising and political hype than it is reality, I am sorry to say.
For too long we have rested on our laurels and allowed our leaders to fatten the pocketbooks of their “fat cat” friends as well as their own pockets. Meanwhile the working class has been allowed to slide into the lowered expectations of the “new world economy.” When we become part of the “world economy” and American workers (not just manufacturers and service providers) are forced to compete with those who do not have our former standard of living, we cannot expect but that the American worker’s standard of living will be driven down to that of the third world worker.
All of the benefits of the last 100 years which the American labor movement gained for the American worker are being lost. It is not just a problem with forgein manufacturers not being required to meet the same environmental standard as U.S. factories which gives them an unfair advantage when competing in the marketplace. But it includes the saftey standards, the higher standard of living for that worker, and the additional costs for those which the foreign manufacturer does not have to provide which makes it absolutely impossible for an American worker to compete in the “world economy.”
There is no “advanced technology” industry or job which the American worker can move into which cannot be done just as well by some foreign worker for less money. This is simply because those foreign workers are just average humans, just like the American worker. Given a little time they can be trained to do all the same things that the American worker can do … and they will do it for a lower pay scale because their standard of living is lower.
Until we insist that the playing field is leveled in terms of environmental, work safety, and standard of living for the worker, the life of the American worker will continue to worsen. And just because it hasn’t happened to you yet, don’t believe that it cannot and will not happen to you and/or to your children someday.
I know that all of this sounds depressing and gloomy. But unless we change the direction we are going, this is what the future holds. Maybe we need to start considering and adopting some radical changes if we want to restore the United States to being Number One again!
Why Not Fix the Drain?
August 15, 2008
According to the University of North Carolina’s Kenan-Flagler Business School* it is estimated (using 2004 numbers) that the Hispanic population in North Carolina contributes $756 million per year in direct and indirect taxes while costing the state $817 million for education, health care, and criminal-justice system costs. That is a net loss (or cost to other “profitable” taxpayers) of $61 million per year.
The same study estimates that 600,000 Hispanics live in North Carolina including 270,000 illegal immigrants. It is estimated that 33,600 Hispanics live in Forsyth County. And, if the proportion of those are illegal is as in the state overall, then 15,120 illegal Hispanics live here in Forysth County. Likewise (assuming that all Hispanics cost the same, when probably most of the “extra” cost is associated with the illegals, not the legal Hispanics), if the average net “cost” to other taxpayers is the same, then those illegals are costing Forysth County taxpayers $1,537,200 per year.
Given this background it amazes me that our Forsyth County Sheriff Bill Schatzman has opposed the county government’s efforts to be part of a federal program that would allow his deputies to enforce federal immigration laws!
Instead Schatzman says, “They are part of what makes the country what it is.”* Well, yes, I suppose they do make it what it is — which is in trouble! What they do is drain our economy! As proven by the study above illegal Hispanics make no net positive contribution!
So why doesn’t Schatzman want to enforce the law? After all he was a senior FBI agent for many years prior to his election to the be our Sheriff, wasn’t that supposed to be what he was doing while on the federal taxpayers’ payroll? And isn’t that we elected him to do here in Forysth County?
While he may claim there isn’t enough money to run the program, the fact that it costs our county more to have them here than they contribute makes that line of reasoning invalid.
So the only reason I can find for his dragging his feet on doing all he could be doing to enforce the laws of this land is reflected in his comment stating “I’m looking out of my window at a major high-rise, and I would say that more than half the workers are Latino — Mexican and undocumented. If ICE pulled up and rounded them all up today, what would the construction company do?”*
Obviously Sheriff Bill Schatzman is more interested in the extra margin of profit the construction company will make building an $18 million downtown luxury apartment building using illegal workers, than he is in enforcing the law and making it possible for the taxpaying legal Americans (who, by the way, built all of the buildings of our city in the years prior to the recent influx of illegals) to get those same jobs today.
Sheriff Schatzman, what would the construction company do? They would hire LEGAL Americans and still get the job done!
So why not fix the drain on our economy by enforcing the law?!? Do your job, enforce all the laws, not just the ones you happen to agree with, that’s what my tax dollars are paying you to do.
*NOTE Information from the study and quotes of Bill Schatzman were taken from the article “City, county feel powerless,” Winston Salem Journal, August 3, 2008, page A12.
Why I Rant
Every time I sit down and read the newspaper or watch the news on TV I find myself muttering under my breath — or grumbling too loud for my wife — about the craziness of what I find out is going on in this troubled world. Once in a while I fire off a letter the the editor (and several have been published), but I feel a need to be able to let the world know my opinion more often than the editors of the Winston Salem Journal will give me space.
Ocassionally I just feel the urge to express my opinions publicly. I doubt that many ever notice and expect that even fewer care, but regardless of whether they are ever read or not, here I can present some of my thoughts ... so my wife doesn't have to listen to my pent up ramblings at a volume that makes her think I am angry.
And that is why I have set up this Rants blog to get all those thoughts off my chest. While I doubt it, maybe the world will become a better place because one more sane voice spoke up about things!
So, since you are here, pick a topic and see if you agree with me. If you don't, just grin and bear it (since unlike some other blogs I don't allow you to add your own comments here — I tried that for a while, but the spammers kept trying to add their own commercials) ... or click onto some other page more to your liking — my site has lots of more interesting things to offer. Or maybe even find a soap box of your own.
There! At least I, for one, feel better already!