By Simon Grey, on April 11th, 2012
Master Lock, which has made locks in Milwaukee since 1921, has brought 100 jobs back from China over the last year and a half. And Mr. Bink, who has worked at the plant for 33 years and heads the United Auto Workers local, is sure more will follow. “They are making a lot of capital investment; buying a lot of new equipment,” he said. “That will create more jobs.”
Master Lock’s story dovetails nicely with the budding upturn in manufacturing employment, which has rekindled hope across a Rust Belt pummeled by 30 years of job loss. Nationwide, factories have added 400,000 jobs in the last two years, the first sustained bout of growth since the 1990s, replacing about a fifth of the positions lost during the recession. Other companies, from Otis to General Electric, are bringing home jobs once thought lost for good.
While more domestic jobs are a welcome development, it is sad that they are only now returning because the transfer of wealth is reaching completion. The price of American labor has now begun to decline to the point where domestic production is feasible. This also means that foreign labor’s price has increased to the point where foreign production is no longer feasible. What happened?
In brief, the federal government decided it would be a good idea to hamstring domestic businesses in a variety of ways, including price floors for labor, costly regulations, high corporate taxes, and a large number of other impediments. While doing this, the federal government decided that it was simultaneously a good idea to open up the market to foreign producers, especially those who did not have the same regulatory burdens as domestic businesses.
This caused upheaval in labor markets. It also caused some capital flight. Some Americans lost their jobs, but at least they had cheap goods, most of which the federal government prohibited them from manufacturing. Now, foreign workers have the capital (including intellectual capital) that would have otherwise belonged to US citizens had not the government taken it from them. Now, US citizens have jobs again, only they don’t have all the capital that generally goes with these jobs because the government effectively taxed it away from them and gave it to non-citizens. The kicker of this story is the federal government is nominally a representative democracy, and acts on behalf of its citizens.
By Christopher Briem, on April 11th, 2012
Not anything in the news today that I see, but in general I have to admit I get confused when I read most opining on the source of job growth in the region’s economy. So below is just a straight up look at where recent job gains are coming from in the Pittsburgh region. It’s the job gains that are most likely fueling the migration gains of late which then has a big impact on local real estate markets. The big decline in ‘government’ jobs is of note. Of the 3,300 job loss over the year, just about half (1,600) are losses in state government jobs. 600 jobs were lost in the Federal government, 500 in local school districts and 600 in local government other than the school districts.
By Christopher Briem, on March 30th, 2012
We are just coming up on the 30-year anniversary of what might have been Pittsburgh’s Etch a sketch moment. Three decades ago Pittsburgh was just about halfway through the 18 months that changed it forever. In August 1981 the region’s unemployment rate was 7.2%; a high, but not scary level. Total unemployed in the region measured 86,600. 18 months later in January 1983 over 212 thousand would be unemployed and the unemployment rate was at least officially reported as 18.2%.
At the very worst of the Great Recession (AP style guide requires the use capitals for that), regional economic conditions would barely hit half those numbers. If anything those numbers understate the differences between the two periods. The recent peaks in unemployment rate and total unemployed only reached those levels because there has been a turnaround in migration. There has been several years of net population migration into the Pittsburgh region, and that clearly has an impact on labor force data. Without the new residents coming into the region, neither the regional unemployment rate nor count of unemployed would have been as high. 30 years ago we all know the opposite was going on here with a steady stream of unemployed workers departing the Pittsburgh regon. The result was making those January 1983 peaks peak lower than they might otherwise have been.
Don’t get me wrong, 30 years ago there was still a lot of denial going on. Lots of folks believing manufacturing was going to rebound and there was no reason to shift course. Some of that denial persists to this day, but at some point 30 years ago a plurality of the collective consciousness accepted the inevitable and decided to move on if only because there was no other choice.
By Christopher Briem, on March 19th, 2012
The Atlantic had a short look at the state of the Irish economy of late: Happy St. Patrick’s Day, Ireland! Now About That Miserable Economy …
Hard not to mention that Ireland was once pointed out as paragon for Pittsburgh to follow. See in the PG: We can import the Irish miracle.
Times change.
But that is not why I mention it. The Atlantic touches upon something more relevant to Pittsburgh today. Ireland has had a dramatic transformation in its economy, recessionary times of late not withstanding. I’ve had this discussion with folks from Ireland and it is not me making this statement. But in Ireland it may be that the case of the Celtic Tiger is really the story of the Celtic Tigress. Irish women, much like Pittsburgh women before them, lagged their peers in labor force participation and that fact alone may have kept the Irish economy depressed for so long. So the Atlantic says ” The biggest, and only sustainable, gain of the Celtic Tiger economy lay in coaxing women into the workforce, “.
For Pittsburgh, no matter what you read about transformation this, or transformation that, make no doubt that the most meaningful story of transformation in the Pittsburgh economy has been in the story of female labor force participation catching up with the nation’s. The impact of that is bigger than most everything else we talk about when it comes to economic change in Pittsburgh.
I will throw out there again the quote from 1947 that presages it all. Here is the advice that was ignored until it was too late:
(Pittsburgh) will, however, slowly decline unless new industries employing women and those engaged in the production of consumer goods are attracted to the area.
Which is from a report written by a place called the Econometric Institute based in News York City and titled: “Long Range Outlook for the Pittsburgh Industrial Area”, stamped February 12, 1947 and was for the Allegheny Conference and the Pittsburgh Chamber of Commerce.
If that all strikes you as too distant a history to matter. I will point out again the really remarkable factoid that only in the last couple of years has the number of women working the Pittsburgh region sustainably topped the number of men. For the region as a whole the employment numbers are about even for men as for women. For Allegheny County… it is clearly now a majority female workforce. Ponder that. I have yet to see anyone really take notice, but follow the previous link for some hard data showing the convergence of male and female numbers in local employment data.
By Christopher Briem, on March 16th, 2012
So.. since both the PG and the Trib agree that the biggest news from the latest labor market update is that 10K folks dropped out of the labor market.. things must be bad right?
What nobody mention on the size of the labor force is that some of the 2011 labor force numbers were revised, and revised upward. Ready for this? The December 2011 seasonally adjusted labor force number for the Pittsburgh region was moved to 1.24 million. Up from the 1.231 million originally reported. So an increase of 9K. That December # may be largest labor force ever recorded for the region. I have not actually checked (because the data is not all online yet) all the historical revisions as yet to see if maybe there was some other peak. But the December 1.24 million number is in the press release just out. It is possible October 2011 was higher if it that number is revised. October 2011 is now showing as 1,236,700, which is lower than the December.. but that may change. Whether or not October changes, we are basically bouncing around the peak labor force ever and well within a reasonable range of sample error for the labor force data.
But since it is last month’s news technically nobody is going to look back. Yet if you really think about it, the January data is preliminary as it always is when this monthly data comes out. The harder data here is the December data we have now moved on from talking about. Should be the other way around. Yes, if you really take in what I am saying. The decrease in the labor force everyone is focusing on pretty much the same as the revision upwards in the December labor force numbers the January numbers are now being compared to. Put another way, the 10K people everyone is focused on as ‘leaving’ the labor force are showing up because we now measure 9K more people than were thought to be in the labor force the previous month.
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By Christopher Briem, on March 15th, 2012
The Bureau of Labor statistics just put out its routine revisions of employment data and it looks like 2011 was actually a better year for jobs in the Pittsburgh region that previously thought. Here is what I get for the scale of change which is positive every month by some nontrivial amounts.
| Total Nonfarm Jobs in thousands |
|
|
|
|
Previous |
Revised |
| Jan |
1111.2 |
1116.1 |
| Feb |
1112.3 |
1118 |
| Mar |
1122.7 |
1128.3 |
| Apr |
1137.6 |
1142.7 |
| May |
1139.6 |
1152.5 |
| Jun |
1154.7 |
1160.6 |
| Jul |
1143.2 |
1149.9 |
| Aug |
1140.5 |
1147.5 |
| Sep |
1147.7 |
1155.9 |
| oct |
1162.6 |
1170.4 |
| Nov |
1163.5 |
1171.1 |
| Dec |
1164 |
1169.7 |
By Simon Grey, on March 9th, 2012
Hasbrook, who turned 17 in January according to her Tumblr, is a high school junior from Oregon. During this NYFW, she walked for Marc Jacobs, Proenza Schouler, Theyskens’ Theory, Marc by Marc Jacobs, Lacoste, Victoria by Victoria Beckham, and Houghton. That’s a big debut for a model. On her blog, she also describes doing looks for Reem Acra, shooting a video for Lacoste, and working various photo shoots; again, typical for a successful new face during fashion week. These long hours are just one reason why the CFDA recommends that girls under 16 not work fashion week: the shows last a month, which often has the effect of forcing these girls to make an uncomfortable choice between staying in school and pursuing their careers, and while some underaged models are chaperoned (Hasbrook says her mother traveled with her to New York), many girls — especially the majority of models who come from poorer countries — are not so lucky, and work unsupervised. No organization currently conducts background checks on the adults who work with minors in the fashion industry.
Before discussing this in depth, there are a couple of things that must first be clarified. First, the primary purpose of education is to increase a child’s intellectual capital, and so prepare him or her for work later on. Second, teenagers are perfectly capable of work (just ask this guy). Third, my personal bias is toward child labor, primarily as way to train children to become productive adults. For what it’s worth, I had a paper route at age eight, started mowing lawns for money when I was twelve, started painting when I was fourteen, and had my first “official” job when I was sixteen. I’m very used to working, and I don’t think it all that demanding for children, and more especially teenagers to have jobs that fall within the range of their abilities.
Now, in the first place, it seems obvious that having a job and, more broadly, work experience of some sort is a good thing. This is true even if you’re a young lady working as a fashion model. Remember, the whole point of an education is to prepare you for work. Now, if you’re already working, there isn’t actually that much of a point in going to school, since you already have the benefits of school (i.e. a job). Thus, the tradeoff between work and school is in many ways a false dichotomy because school does not have that much more to offer you if you’re already working as a supermodel.
In the second place, the career trajectory of female models differs quite a bit from their looks-challenged counterparts. As Vox pointed out, there are a decent number of hot young models that have married young and started families, usually at the expense of their career. There does not appear to be any extensive data on whether this is a trend, but the anecdotal evidence seems to bear it out. As such, it is somewhat ludicrous to even suggest that education in general is all that important to girls who go into modeling because it is highly likely that a significant number of them will leverage their looks into marrying a high-status (read: usually wealthy) man. For those who were educated in public school, this means that looks, not education, are the relevant factor for a model’s long-term plans, and so it would be far more beneficial for models to skip school in favor of their careers, as it will help them to widen the pool of potential mates.
Therefore, we can conclude that child labor laws suck, because their general application is actually counterproductive in some cases.* As is seen in this case, the proposed labor regulations would actually be harmful to under-aged models, as it would prevent them from achieving their general goals. Since it is feminists that are proposing these laws (and ugly ones at that), it seems reasonable that this proposed legislation is motivate more by jealousy than actual concern. Of course, once the old hamster starts spinning, it becomes increasingly more difficult to tell the difference between the two.
* Yes, I know that labor don’t apply in this case. However, it is an article calling for legislation/regulation of some sort, and is thus relevant to my broader point regarding labor laws.
By Simon Grey, on March 6th, 2012
The trends in offshoring and international trade that we have described are likely to accelerate. China currently employs around 120 million people in the manufacturing sector and, although some reports indicate that wages are rising in China, those wages are still only a tiny fraction of wages in the United States. Moreover, China is expanding its manufacturing base to low-wage countries across the globe through a series of overseas economic zones. The implication for American workers is that in order to regain ground, they will need to find jobs outside of manufacturing where wages are comparable to those in manufacturing.
I know I’ve harped on this plenty of times before, so I’ll be brief: Given the current regulatory regime in place at the federal and state level in the United States, it makes absolutely no sense to have free trade with China. Given that citizens of the United States are legally prohibited from competing for jobs on price, ad given that employers in the United States are expected to comply with onerous regulations, it is safe to say that there is no free market in the United States. As such, it is equally ludicrous to say that it is possible to mimic the outcomes of the free market by partially freeing up foreign import restrictions, and it is politically foolish (not to mention heartless and unpatriotic) to enact an economic policy that has had a measurable effect on closing part of the labor market to Americans.
By Simon Grey, on March 2nd, 2012
And so began the downward trend in America’s free market in medicine. With fewer medical schools — and thus fewer doctors — wages can be kept higher than would exist in a market dominated by free enterprise and the unobstructed entry into practice. Consumers, who ordinarily determine the success of producers, have lost out as they face higher costs on top of being deemed too ignorant to choose an adequate doctor without the aid of the state. Rent seeking becomes ingrained in an industry that must devote increasing amounts of financial resources to appease public officials.
At first, the problem was presumably that doctors weren’t getting paid as much as they truly deserved because they had to compete with hacks. Therefore, the government had to step in to ensure that doctors got paid the proper amount of money. This led, unsurprisingly, to increasing health care costs, and so the government was asked to step in again to reduce the costs of medical care, this time in the form of subsidy. And so the government obliged.
The lesson to be learned from this is that once the government interferes in the market, it must continue and increase its interference in the market so as to preserve equity. What’s interesting, though, is that governmental interference, when all is said and done, is only intended to produce a minor tweak. That is, the result of governmental interference is only supposed to lead to a result that is only slightly different from the market result. What actually happens is that the government’s result is different by an order of magnitude, which leads to more and increasing “corrections.”
At some point, though, it has to be asked of whether the slight market modification is worth the massive cost, for government interference has a tendency to spiral out of control and become very costly. As the costs of modifying the market increase while the benefits for doing so remain small, it becomes increasingly reasonable to ask whether it is better to accept the market’s perceived imperfections so as to save money and scarce resources, especially since the market is self-adjusting and will likely solve the problem more equitably anyway.
By Simon Grey, on February 21st, 2012
From the CBO Director’s blog:
Many factors are responsible for the rise in unemployment in general and in long-term unemployment:
-Weak demand for goods and services, as a result of the recession and its aftermath, which results in weak demand for workers;
The better question is: what is causing weak demand? Could it be that people are realizing that it’s fiscally unhealthy to spend lots of many that they don’t technically have? Could it be that the extend-and-pretend games of the last thirty years are starting to catch up to us? Could it be that, having pulled demand forward for so long, the future is now finally catching up to us?
-Mismatches between would-be employers’ needs and the skills or location of the unemployed;
This is actually a valid point, although it’s probably helpful to look at a couple of points that contribute to this situation. The declining value of an American education certainly contributes to mismatched needs and abilities. Interestingly, the sheer vapidity of modern American education is mostly due to Boomer tinkering. Also interesting is that Boomers are now in charge of major businesses, just in time to find out how terribly awry their experiments in education have gone. Furthermore, their arrogance and blind trust in their educational model prevented them from doing the one thing that would currently save their companies: hiring bright kids out of high school and training them on the job instead of waiting for them to get a college diploma. (Of course, it probably didn’t help that Boomers made employment testing illegal.)
Regarding location, I think there are three reasons people refuse to move for work. First, government benefits currently make staying in the same place to wait for a new job feasible. Second, I would theorize that most of the once-employed are intelligent to suspect that government benefits may not be around forever, and therefore it is best to stay where one is, since one will have more social capital at one’s current location than at a new location. Finally, the increasingly transient nature of jobs discourages employees from traveling, particularly in light of government benefits. Why endure moving a thousand miles away only to lose your job after a year? Especially when, after moving costs and loss of social capital are accounted for, you’re fiscally worse off than if you’d been on government benefits?
-Incentives for people to stay in the labor force and continue searching for work that result from extensions of unemployment insurance benefits; and
This is more of a technical point, as unemployment statistics are calculated by dividing the number of unemployed workers by the total labor force. The issue is defining the labor force (if memory serves me correctly, the government has six or seven definitions). Some metrics only consider adults that are currently looking for work as part of the labor force, and so the claim being made by the CBO is that rates are artificially (or, more accurately, tautologically) high because there are some who are looking for work instead of just giving up.
-The erosion of unemployed workers’ skills and the belief of some employers that people who have been unemployed for a long time would be low-quality workers (a phenomenon sometimes called stigma).
This is pretty much the same as above. As the social stigma that comes with long-term unemployment wears off, more of those workers who were at one time out of the labor force will come back into the labor force (by seeking jobs) and tautologically drive up the unemployment rate.
In all, the CBO is blaming increased unemployment rates on the fact that Americans are finally realizing that man cannot live by debt alone and on an increasing number of people who have the gall to seek employment again. In essence, the CBO would prefer that people continue to spend money they do not have and just go back to being lazy and unproductive. And that’s how the government plans on reducing unemployment.
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