Jobism

[futurebird.livejournal.com]

“I’ve never seen anything like this,” said Andrew Sum, an economics professor and director of the Center for Labor Market Studies at Northeastern University in Boston. “Not only did they throw all these people off the payrolls, they also cut back on the hours of the people who stayed on the job.”

As Professor Sum studied the data coming in from the recession, he realized that the carnage that occurred in the workplace was out of proportion to the economic hit that corporations were taking. While no one questions the severity of the downturn — the worst of the entire post-World War II period — the economic data show that workers to a great extent were shamefully exploited.

A Sin and a Shame by Bob Herbert

I don't know if I agree with Bob Herbert that regulations like those in Germany are the answer to this problem, but I do see that the problem is real. I thought we could talk about some of the different ways to address it. In short, companies are not passing on the gains they have made off of better productivity and a recovering economy to workers.

I think it's possible that to some extent companies are still spooked, they don't think the worse is over and they don't want to increase payroll until they are in the clear. The other explanation is simply greed.

So, how, within the confines of a capitalist system, can we provide a market pressure that will lead to hiring and to higher wages?  There has got to be a way to make this happen without involving the government. But what is it?

It is only in the world of Chamber of Commerce propaganda that businesses exist to create jobs. In the real world, businesses exist to create profits for shareholders, not jobs for workers. That's why they call it capitalism, not job-ism. There's no reason to beat up on business owners and executives simply because they're doing what the system encourages them to do. 

Washinton Post, Steven Pearlstein

Do you think that Mr. Pearlstein is right? If so what happens if, even as corporate profits rise unemployment dosn't change? Do we suck it up? Work harder for less?

I'm trying to save and invest money as well as buy land so that income isn't based on someone paying me. But, not all people have the capital to benign such a project.

Comments

[badlydrawnjeff.livejournal.com]

In short, companies are not passing on the gains they have made off of better productivity and a recovering economy to workers.

What gains, exactly? They've been hit with a massive increase in future costs due to health care reform, they have the most hostile President to their interests in a generation in office, and the economic uncertainty - both due to Obama's positions and due to the failure of the stimulus to create real growth - has frozen these companies in place.

If those are gains, I'd hate to see what you think losses look like.

So, how, within the confines of a capitalist system, can we provide a market pressure that will lead to hiring and to higher wages?

Less aggression. Less central control. Fewer taxes, fewer costs being levied on the folks who hire. In short, stop treating big business as an enemy.

Do you think that Mr. Pearlstein is right?

Yes and no. Yes, business is there to create profits. No, they're not there to keep jobs away from people, because they need people to work in order to make those profits. When future profits are at risk due to schizophrenic activity from the government, it's no surprise that hiring freezes up and companies ask for more from their existing workforce - why would you hire 5 new people if you saw a strong possibility that your costs are going up significantly in the future?

Do we suck it up? Work harder for less?

You do what you can to get by, and you work harder to get the people who cause these problems out of the government.

At least that's what I'm doing.

[pastorlenny.livejournal.com]

To be fair, I'd be careful about laying all the problems at the feet of a schizoid government. Wall Street and the financial sector have made some pretty egregious errors in the past 15 years too.

[badlydrawnjeff.livejournal.com]

Sure, I don't think Wall Street has made great choices 100% of the time. But the question at hand is what's keeping the companies from hiring now. Granted, employment is a lagging indicator, but I don't think we can point to the failures of some on Wall Street over the last 10-15 years as to why no one in the private sector appears to want to hire today. There are too many things that the government has done over the last 2 years (and I include Bush in this) that have created more uncertainty than anything else we've seen.

[pastorlenny.livejournal.com]

I dunno. I still think part of what we are dealing with is the short-term, make-the-numbers-for-the-next-shareholder-call-no-matter-what mentality that has taken hold with Baby Boomer managers, analysts and investors.

I mean, this nonsense about reporting where the Dow is every minute throughout the day is pure self-destructive insanity -- and it's not driven by government policy.

[badlydrawnjeff.livejournal.com]

I still think part of what we are dealing with is the short-term, make-the-numbers-for-the-next-shareholder-call-no-matter-what mentality that has taken hold with Baby Boomer managers, analysts and investors.

We'll always deal with that. But part of the make the numbers is for longer-term prosperity, which is something the government has caused the problem with. Hell, health care, pending tax increases? Those are all short term problems.

I mean, this nonsense about reporting where the Dow is every minute throughout the day is pure self-destructive insanity -- and it's not driven by government policy.

Sure, but it's also not what's driving the hiring freeze. Yeah, a stockholder might worry about how the federal government is handling health care, but the stockholder isn't the one who's considering hiring or not hiring, either. Don't confuse the investor class with the employer class.

[pastorlenny.livejournal.com]

Much of the employer class answers to the investor class -- both in public companies where there is accountability to the analyst/stockhold community and in the private sector where access to capital is contingent upon what your books look like to bankers.

And, no, we won't always deal with that. It's a present generatinal defect in our business culture.

[badlydrawnjeff.livejournal.com]

Much of the employer class answers to the investor class -- both in public companies where there is accountability to the analyst/stockhold community and in the private sector where access to capital is contingent upon what your books look like to bankers.

Not really. The investor class is looking for results, the employer class is looking to provide those results.

[pastorlenny.livejournal.com]

Uh, have you ever worked with the management of a public company?

[badlydrawnjeff.livejournal.com]

Yup.

[pastorlenny.livejournal.com]

And you're going to assert that their decision-making was not to a large degree driven by their need to satisfy the short-term demands of analysts and shareholders?

[badlydrawnjeff.livejournal.com]

Yes, because their responsibilities are different in terms of achieving those goals.

[pastorlenny.livejournal.com]

Huh? yes, they have different responsibilities -- but they are highly beholden to those two constituencies. The demands of those constituencies inform just about everything they do.

How many CEOs and CFOs do you know?

[badlydrawnjeff.livejournal.com]

Huh? yes, they have different responsibilities -- but they are highly beholden to those two constituencies. The demands of those constituencies inform just about everything they do.

They're beholden to them to reach certain goals, yes, but have very different ways of achieving them. Often, that means taking on labor or not depending on business circumstance.

[pastorlenny.livejournal.com]

We seem to be having a disconnect here. Analysts and shareholders don't hire anybody. They withdraw capital from those who do (since doing so drives down quarterly performance), while funding those who don't (since their numbers look better in the near term).

In this manner, the forced submission of corporate decision-makers to a short-sighted shareholder community inhibits healthy long-term investments in people.

[badlydrawnjeff.livejournal.com]

Analysts and shareholders don't hire anybody.

Generally correct.

hey withdraw capital from those who do (since doing so drives down quarterly performance), while funding those who don't (since their numbers look better in the near term).

Not always. Sometimes you have to spend money to make money. Sometimes your short term is better served by having more people on staff to meet demand or enter a market. Etc etc.

Right now, people aren't hiring not because of shareholder/analyst pressure, but pressure on businesses themselves on the fiscal side, and pressure created entirely due to the actions of the government.

[pastorlenny.livejournal.com]

Not always. Sometimes you have to spend money to make money. Sometimes your short term is better served by having more people on staff to meet demand or enter a market. Etc etc.

Yes, that is the proper logic. It's just not the generally operative logic of an investment community that has turned to technical analysis -- which doesn't really look that deeply into the fundamentals of the business.

Right now, people aren't hiring not because of shareholder/analyst pressure, but pressure on businesses themselves on the fiscal side, and pressure created entirely due to the actions of the government.

That's false. Many corporations actually have a lot of cash on hand. Do you not read the WSJ? Did you see Charlie Rose last night?

[badlydrawnjeff.livejournal.com]

c. It's just not the generally operative logic of an investment community that has turned to technical analysis -- which doesn't really look that deeply into the fundamentals of the business.

Because that's not what they exist for. Since they're not doing the hiring and making those decisions, it's moot.

That's false. Many corporations actually have a lot of cash on hand. Do you not read the WSJ? Did you see Charlie Rose last night?

It's not false - they have cash on hand because they have to be prepared for these increased costs and coming uncertainty. If HCR didn't pass, if we had a better President, that money would be invested back into hiring instead of preparing for the worst.

[pastorlenny.livejournal.com]

they have cash on hand because they have to be prepared for these increased costs and coming uncertainty.

That's why they are hoarding the cash. it is not the source of the cash tself.

If HCR didn't pass, if we had a better President, that money would be invested back into hiring instead of preparing for the worst.

It seems that uncertain demand is actually a much bigger factor than HCR or the quality of our president.

[badlydrawnjeff.livejournal.com]

That's why they are hoarding the cash. it is not the source of the cash tself.

Right. They have to keep the cash on hand to make sure they can cover what's coming down the road. You call it "hoarding" in an attempt to present preparation for the future as a bad thing - why is that?

It seems that uncertain demand is actually a much bigger factor than HCR or the quality of our president.

Demand persists. If demand is uncertain, it's because, again, people aren't getting jobs because companies are skittish to hire due to obligations levied upon them over the last 2 years.

[pastorlenny.livejournal.com]

You call it "hoarding" in an attempt to present preparation for the future as a bad thing - why is that?

Yeah. BusinessWeek and Pastor Lenny are the enemies of the free market!

If demand is uncertain, it's because, again, people aren't getting jobs because companies are skittish to hire due to obligations levied upon them over the last 2 years.

Can you substantiate the assertion that demand is uncertain because people are getting hired because of levied obligations? This seems to go against everything any of the authoritative market observers are saying. Their opinion seems to be that we had a real estate bubble and a subprime crisis or something.

[badlydrawnjeff.livejournal.com]

Yeah. BusinessWeek and Pastor Lenny are the enemies of the free market!

Well, yes.

Can you substantiate the assertion that demand is uncertain because people are getting hired because of levied obligations?

Aren't getting hired. It's a cycle - demand is down because employment is down. Demand might go up if people were more certain of their futures, but right now we're 5 months away from an across-the-board tax hike along with their medical premiums rising due to HCR. So the people feel the pinch, too. Meanwhile, companies who would usually use the cash they're "hoarding" to hire people and expand their business are not because a) they don't know where demand will end up, b) they don't know what other tricks are up the sleeve of the anti-business administration in place, and c) they don't know how much more they might have to foot the bill for health care next year.

So yeah, it's a bit of a mess.

This seems to go against everything any of the authoritative market observers are saying. Their opinion seems to be that we had a real estate bubble and a subprime crisis or something.

The subprime crisis got us here. The uncertainty is what's keeping us here.

[pastorlenny.livejournal.com]

I'm rather sure I do more for the economy in a year than you will do in your entire lifetime.

[badlydrawnjeff.livejournal.com]

Atheists don't have much use for the life of a clergyman.

[pastorlenny.livejournal.com]

LOL! You should Google me some time. I've worked on three start-ups, one IPOs, three corporate re-orgs and five major product launches this year.

[enders-shadow.livejournal.com]

what an enjoyable thread to read

[pastorlenny.livejournal.com]

Here, try some facts:

http://www.businessweek.com/investor/content/apr2010/pi20100428_208374.htm

[pastorlenny.livejournal.com]

In what capacity?

[mrbogey.livejournal.com]

This is just the new November Criminals.

When the economy continues to nosedive again it'll be because corporations ruined the glorious rebound that Obama gave them.

[il-mio-gufo.livejournal.com]

Less aggression. Less central control. Fewer taxes, fewer costs being levied on the folks who hire. In short, stop treating big business as an enemy.

But when big business provides medical/healthcare to anyone over 65, then they are due payment by The Center for Medicare & Medicaid. It's inevitable that any business receiving such government payments is going to be scrutinized. Isn't it?

[badlydrawnjeff.livejournal.com]

The problem appears to be with Medicare and Medicaid in that situation.

[pastorlenny.livejournal.com]

Pearlstein is proposing a false dichotomy. Capitalism is not profitism. If the people who run a business consistently make the mistake of pursuing short-term operating margins instead of building their human capital, they're not being very smart capitalists.

So, how, within the confines of a capitalist system, can we provide a market pressure that will lead to hiring and to higher wages?

Again, I think there may be a false dichotomy here. Regulated capitalism is still capitalism. Perhaps you meant someting more like "within the confines of what some people think constitutes 'true free-market capitalism'" or something. But there's nothing about capitalism that inherently prevents the government from taking some appropriate measures to safeguard the public interest. The setting of a minimum wage, for example, is not something other than capitalism.

[il-mio-gufo.livejournal.com]

If the people who run a business consistently make the mistake of pursuing short-term operating margins instead of building their human capital, they're not being very smart capitalists.

Depends on the type of product they carry, the servie they offer, etc. Some employees may come a dime a dozen.

[korean-guy-01.livejournal.com]

In short, companies are not passing on the gains they have made off of better productivity and a recovering economy to workers.

It's rather foolish to look at it one dimensionally. You need to consider where they are losing in other areas. January 20, 2009 to now would be a good timeline for your analysis.

[root-fu.livejournal.com]

None of you know what you're talking about. d:

[dwer.livejournal.com]

I'm working MORE hours, but I'm salaried, so there's no increase in pay.

[il-mio-gufo.livejournal.com]

so goes the territory.

[dwer.livejournal.com]

I'm not complaining -- it's a good job, if for the Man, and it pays well enough. But I am working a lot more for the same money.

[policraticus.livejournal.com]

It seems to me that Herbert is saying companies laid off unproductive employees and retained more productive employees. Ummm... I do that all the time. Why is that bad, again?

[pastorlenny.livejournal.com]

Of course at some point, if every company makes "leanness" its ultimate priority and sheds every worker below some threshold of "productivity" (which typically also means offshoring for greater bang-for-the-labor-buck), we're going to havea lot of zero-productivity folk out there on the dole.

So at the macro level, there is possibly a social good to having less-than-awesomely-productive workers employed -- rather than unemployed.

[policraticus.livejournal.com]

Keeping an unproductive person employed, and here I mean unproductive in a technical sense, without attaching any particular stigma to the individual, keeps them out of other more productive work and makes it harder for a business to adapt to changing markets. If I pay excess payroll costs that money can't flow to other areas of my business and that labor is cut off from other markets that might be able to use it more productively. Unless I am hedging my bets against an imminent influx of work, it is better for all concerned if supply and demand are balanced.

Real world example: Every summer I front load my labor costs in the Spring. I am way over hired in May and June and run a nightmare producing labor cost. This is because I know that the money I spend in May, I'll save in August. Once September comes it becomes my job to prune hours as much as possible, since the salad days are 9 months in the future. I don't have to fire people, technically, since my staff is smart enough to be on their way south to Florida or West to Colorado, but the result is the same... labor costs stay in line with sales.

[policraticus.livejournal.com]

Seasonal.

[pastorlenny.livejournal.com]

Sure that makes some theoretical sense if there is low unemployment and relatively easy physical access to jobs. But if someone who is currently, say, only a mediocre call center worker and would be much better suited to be a UPS driver, the chances aren't that great that such a person is just going to chance upon a local opening for the driving job after they lose their job at the call center. Who's to say they won't wind up in a job for which they are even more poorly suited? And what if they can take the bus to the call center job -- but there's no public transport to the UPS terminal?

[policraticus.livejournal.com]

For any given call center worker, you are correct. But it seems to me you need to look at aggregates, not one specific case. Life is hard, it takes hard work and perseverance to succeed, it takes a little bit of luck to succeed at a job you enjoy. People have to chart their own course and do the best they can.

[il-mio-gufo.livejournal.com]

A very concise article. In fact, I think I've seen this phenomenon first handedly. I tend to agree that laying off individuals perpetuates California's state crisis. Rather than reducing an employee to part-time, cutting pay, issuing a raise freeze, companies would rather throw the individual to the State for care....or so it seems.

I think that, at large, people are hard working in general and will do whatever it takes to maintain housing regardless of pay. Folks are eager to work and willing to take whatever may come, again regardless of pay. However, there are those often stubborn individuals who refuse to work for certain wages below their expectation. For these individuals I bet we could get them back into the workforce quickly by correcting the cost-of-living in a given area.