The American Dilemma and How We Can Fix It

Posts tagged ‘unemployment’

SO, HOW MUCH DOES HAVING NO JOB PAY PER HOUR?

In just a few short months I will be celebrating my 30th anniversary – of not setting foot inside or eating the food prepared at McDonald’s.  The actual date is December 18th.  While it used to be an off again on again place for me to get something to eat, I really can’t say that I have missed it – in the least.

When I was a college student it was sort of the norm to grab a bite there from time to time.  I never felt that the food was exceptional – or even really good – but it was fast and it was cheap.  I imagine it’s still fast but from the reports I’ve gotten, eating at Mickey D’s. or most of its competitors is now getting rather pricey.

Well, the point of this post is not to critique the value or quality of food at our fast food chain outlets.  Rather, it is to discuss the economics of being in the fast food business.

Ray Kroc was a genius.  He realized that by taking simple products like burgers, fries and shakes and standardizing their preparation, he could teach virtually anyone how to prepare an order for a customer.  The genius that Mr. Kroc had was that he developed a system – and that system could be duplicated, over and over and over again.

There was a part of the system which was essential for the delivery of a fast and inexpensive meal.  That was inexpensive help.  Fortunately, there was no lack of supply of poorly skilled workers available who relished the idea of a job – at any hourly wage – and who flocked through the doors of McDonald’s’ franchisees to apply.

A lot of these early employees were high school students who were looking to save some money for college or for other purchases they had in mind.  But a lot of these fast food employees were people who had so few skills that their work options were limited.  They found a home in various fast food company outlets, flipping burgers, salting fries and pouring drinks.

Perhaps you read that there has been a strike at various McDonald’s in NYC and other locations throughout the country.  The minimum wage workers are demanding an increase in their salaries – in some cases to double what they are presently being paid.

Now I’m not going to bore you with the old economists’ arguments about whether raising the minimum wage actually helps or hurts the employee.   (There is an immediate escalation in income combined with a consequent reduction in the number of workers as companies find ways to automate jobs formerly held by humans).  But let’s look for a moment at the fast food industry and how, should the strikers’ demands be met, management might counter.

The best statistic that I can garner is that there are presently about 160,000 fast food outlets in the country.  These include familiar brands like Wendy’s; Burger King; Starbucks; Taco Bell, ad infinitum.  That’s a lot of real estate and a lot of food.  In fact, according to the industry trade association, one out of six of us visits one of these outlets each and every day.  It’s an industry projected to have revenues approaching 200 Billion dollars this year.

Now you would imagine that a business that cumulatively employs people at 160,000 locations would employ a lot of people – and you would be correct.  But the number of outlets/number of employees is a bit misleading.  You see, quite a few of them are open 24/7 (at least for drive through purchases) and virtually all of them have two shifts of workers per day.

So for sake of discussion, let’s assume that there are 300,000 people who, on a daily basis are engaged in one single activity – taking orders.  (If you’ve been inside a fast food restaurant you know that there are usually several people doing this – plus one dedicated to the drive through window – so this number is ridiculously low).

What, other than saying, “Hello and welcome to X” does this person do that a machine cannot do (with the assistance of a little customer input)?  Absolutely nothing.

We have long been acclimated to using ATM’s for our financial transactions.  It took us a little while to get used to them but we did it.  Now, punching in our PIN and waiting to deposit our check or receive our withdrawal is a normal part of life.  Those machines replaced tens of thousands of tellers across the country.

There is absolutely no reason that the fast food industry could not implement the same sort of ATM-like equipment to accept orders and voìla – 300,000 jobs (again this is an incredibly low estimate) have just disappeared.

Think about the savings.   No payment of FICA, FUTA, health insurance or all the other things that are peripheral costs to the employee’s actual salary.  That machine is never going to file a Worker’s Comp or Unemployment claim.  It’s never going to ask for a day off or expect pay for an earned vacation.

I suspect that the cost of converting this function and purchasing the equipment  could be recovered in one year’s time or less.  And any businessman knows that is a good investment.

So when Jesse Jackson and Al Sharpton and all those minimum wage workers hold their banners high, demanding a hike in their wages, they might want to give some consideration not to the rhetoric but to the possibilities which may lay ahead.

There is something else I would call to their attention.  The “Emancipation Proclamation” freed the country from the bonds of slavery.  There are no indentured servants or slaves working at our fast food restaurants.  People work there because of their own choice – not because someone is threatening their life or the lives of their families.  If they can find a position at twice their present wages, I would be the first to encourage them to accept that better job.

But to those who are sympathetic to the workers’ plight I would like to offer a suggestion that would help out the person who takes your order and will, at the same time, assuage your conscience.

Leave them a tip as an expression of your concern and gratitude.

WE ARE ALL GREEKS

DATELINE:  Wednesday, November 14, 2012

LOCATION:  Spain, Italy, France, Portugal

UNION WORKERS PROTEST GOVERNMENT AUSTERITY MEASURES

A protestor shout at  the police during a general strike in Madrid, Spain, Wednesday, Nov. 14, 2012. Spain's main trade unions stage a general strike, coinciding with similar work stoppages in Portuga

Photo By Andres Kudacki

People take part in a demonstration by French labour unions against austerity policies in Europe, in Marseille

Photo By JEAN-PAUL PELISSIER/REUTERS

DATELINE:  November 14, 2012

LOCATION:  America

“PEOPLE MAGAZINE” ANNOUNCES SEXIEST MAN ALIVE FOR 2012

If you wonder why we are on the brink of social, economic and political disaster, consult your mirror.

FINGER POINTING

Mother once gave me a lecture on politeness which included the phrase, “It’s very rude to point your finger at someone.”  Apparently, those who are the copy writers for political ads and those candidates who conclude them by saying, “I’m So and So and I approve this message,” never got the same talking to from their own parents.  More’s the pity.

When people brought Barack Obama into the White House in 2008 it was on a theme of “Hope and Change”.  Things were tough.  We knew they were tough.  The newly elected President campaigned on the theme that while things were tough, he was going to fix all that.

Simply put, he didn’t.  In fact, by many metrics, those things that were tough have gotten even tougher.  The current mantra of the President’s ads is that things are actually getting better; that he has a plan which needs time to work; and that we should stick with him for another term.  It is an ad featuring a far less confrontational Obama than we have seen during the last four years.

Much of the hyperbole about why things are tough and it’s going to take longer than he thought to get everything working again, is his predecessor, President George W. Bush.  Apparently, virtually everything that has gone awry in the universe since the Big Bang is the fault of this misanthrope from Texas.  But let’s examine the facts for a moment – that is for those of you who think that facts matter.

Yesterday the Bureau of Labor Statistics provided the Unemployment Report for September.  It showed that from the previous month, the rate of unemployment went from 7.8% to 7.9%.  I have attached the link to this report for you to review.  No matter how we garner our information, I believe that it is essential for the intelligent individual to do her or his own research and make sure that the sources on which they are relying are honest and factual.  That is one of the reasons I seldom listen to the popular media for my news.

http://www.bls.gov/web/laus/lauhsthl.htm

There are two items on the report that leap off the page at me.  The first is then candidate Obama’s claim that he would bring unemployment down to a mere 5.2%.  There is only one state in which that is the case, Iowa which can boast the lowest unemployment rate in the country with only 5.2%.

I guess that there a lot of ways that you can spin this – and which all the President’s men will spin it – if they choose to acknowledge it at all.  But my take on this is that for those residents of 49 of the 50 states, Obama has failed to deliver on this specific promise.  Because I always like to hear alternative views, please feel free to leave a comment should you have a different interpretation.

The second item that appears obvious from this report is that under President Bush’s watch, 35 out of the 50 states enjoyed the lowest levels of unemployment since they started recording these statistics.  Check the list out for yourself to verify this statement.  And what was the average rate of unemployment in those states during those awful years while Bush was in charge?  The answer – 2.91%.  In other words, going from the years in which we enjoyed the lowest unemployment rates under President Bush to the current statistics under President Obama, we have seen a 271% rise in the rate of unemployment.

The President’s most recent kinder gentler ad suggests that his “plan” is working and we should just stick with him.  As does another ad that is narrated by Morgan Freeman that beings, “Every President inherits challenges..”.  Well, back to our old nemesis President Bush.

There is no question that President Bush’s policies gave rise to a substantial increase in the National Debt.  Part of that was financing wars which he deemed in our “national interest” and part of that was accompanying those with tax reductions, best known as the “Bush tax cuts”.  Every householder knows that if you reduce your income and spend more than you take in, eventually you’ll run out of money.  And we have.

Sadly, President Bush was a mere novice in delivering a message of under-earning and overspending which is why under President Obama we have seen an increase in the official National Debt of $6 Trillion, a 60% increase in a mere four years to a record $16 Trillion.  Part of that increase is certainly due to the tax cuts that were put in place in 2001/2003 and which are set to expire on December 31st of this year.

Did you notice the dates when those decreases were enacted?  They became effective eleven years ago.  Mitt Romney has argued in favor of continuing them as they currently stand on the books – at least until such the time that the economy really begins humming.  This is his plan to “benefit the rich by slashing their taxes $200,000 per year” of which he is accused in almost every Obama ad.  We have been living with this plan for over a decade – so I hardly think that Gov. Romney deserves either credit or opprobrium for thinking it up.

But there is a further point that I would like to make.  Those who have been employed during the past decade, as a result of the Bush tax cuts, received an average additional amount of take home income of about $50 per week.

The first time your paycheck reflected this increase, do you recall either saying yourself or hearing a co-worker say, “You know, I’m kind of worried.  If we keep spending more than we’re taking in, we might run into trouble six or seven years down the road.”  Or did you happily accept the increase, take your wife out for a nice dinner, buy a couple of new electronic gizmos and trade up to a newer model car?

“Give the people what they want.”  It’s an old political saying.  And Americans want and believe we’re entitled to a lot – perhaps more than we truly deserve.  It’s really a pity that when it comes to electing people who are going either to run the country or run it into the ground, we have expectations that are far lower.

And I guess that if I have to point a finger at anyone, (sorry Mom) it would be at those of us who think this is an acceptable way to run a country – or anything else.

THE HYPOCRISY SURROUNDING OUTSOURCING

When I first moved to Las Vegas I learned some things.

The first was that without having to drive twenty minutes to get to the Strip should I want to risk a few dollars on a game of chance, I had several options which were far more convenient.  These were casinos that were more interested in attracting the regular business of “locals” rather than the mob of weekend visitors this city sees every Friday night and who go home on Sunday.

When I first started coming to town as one of those “weekend warriors” back in the ‘70’s I was bedazzled by what was then the Vegas scene.  As I drove down the Strip, billboard after billboard headlined the star who was appearing at that hotel.  The biggest people in show business were always in town, and if I planned the trip right I could see several of my favorites.  Even the real Elvis.

And as you walked in any of the casinos you could view the vast array of table games that were going to allow the gambler the opportunity to part with some of the hard-earned money he had brought with him.  All this excitement, and always in the background was the sound of coins spilling into the trays of the slot and video poker machines which held, at that time, a far smaller share of each casino’s space than did the craps and blackjack and baccarat tables.

Over several trips and a number of years I began to notice something different happening in Sin City.  The number of table games began shrinking and the number of slots began increasing.  And several years after I moved here I noticed yet another change.

The machines which vended the lucky winner his coins were slowly but surely being replaced by newer models which attempted to emulate the sound of coins clanking in the metal trays with synthetic replication, and which, rather than giving the winner his payout in quarters or dimes or nickels, handed him a printed ticket for the money he had won (or still had left).

From the slot player’s standpoint, this was a nice improvement.  No longer did the player have to scoop up his money and put it in one of the plastic containers that the casinos provided.  No longer did he have to look for a moist towelette to clean up after collecting his coins which inevitably left his hands filthy.  No longer did he have to stand in line at the Casino Cashier in order to have them run those coins through their counting machine and pay him off.  Now he merely had a ticket which he could insert in any of the ATM-like machines which would read its value and dispense the amount he was due quickly and conveniently.

This was progress – this was improvement – unless you were Mary or Bill.

Who are they?  Well Mary was a “change girl” at one of the local casinos and Bill had worked at the same casino for 14 years as a blackjack dealer.  They both lost their jobs – Mary because of the new technology and Bill because the casinos were downsizing the number of table games that they ran and eliminated some of their staff.

If you think about it from the casinos’ perspective, this transition makes a great deal of financial sense.  Although there is always a house edge built into any game of chance, baccarat, craps, blackjack or roulette, there is always the possibility that someone can get lucky (or as in the case of blackjack become an expert card counter – which is why it is NV state law that card counting is “illegal”) and seriously hurt the house with a good run of luck and skill.

No such chance exists with a slot machine where the ultimate house rake is pre-determined by an internal chip that exactly calculates the house’s percentage based on the money that is run through it.  And unlike a blackjack game which requires a dedicated person to staff it or a craps table which requires four employees, one hundred machines can be overseen by one technician in the event of a rare mechanical breakdown.

That’s why Bill lost his job.

And Mary, well she got replaced by more modern technology.  While there are still change people who help the slot players in the event of a jackpot win which requires the completion of a 1099 form, their number has diminished because the same machines which payout the winning tickets also break down larger bills into smaller ones.  Technology marches on and unfortunately for Mary and many like her, it marched her out of a job.

It’s interesting to me that the many people I know who talk about the evils of “outsourcing” never seem to feel quite as passionate about those who worked in casinos whose jobs were not outsourced but eliminated.  The reason I happened to write this post is that I had just listened to one of them go on at length about how we are shipping jobs overseas and the tragedy of it all.  This same person spends a few hours almost every day entertaining herself in a casino.  So I mentioned Mary and Bill to her and how they had lost their positions.

Her response was, “Well that’s progress for you.”  She displayed no remorse for them and I am certain that is because she doesn’t play table games and because she finds this new arrangement, not having to deal with coins, as a big improvement, far outweighing the human toll of Mary and others who no longer have jobs.

I thought it was inconsistent for her to be so empathic to nameless, faceless people whom she has never met and were outsourced, when she was so cold-hearted about now unemployed Mary (whom she knew).  While I do not believe it is right to make judgments about others, unless their actions affect me, still this acquaintance’s attitude is not uncommon.  At least that is my empirical observation based on a lot of anecdotal evidence.

So many are willing to descry the unfairness of the loss of American jobs to foreign workers, yet they continue to buy the same products those foreign workers produce in greater and greater numbers, thus supporting those companies which outsource and validating their policy.  Is the company which outsources or the consumer who purchases the outsourced products really at fault?  I would lay this squarely at the feet of those who make those purchases – for without their patronage, these companies would have no sales.

I believe in the reality of a global economy and I realize that the financial capital needed to produce a manufactured product will always find a home where it is best treated.  And that home is not currently in the United States.  That is not China or Bangladesh’s fault.

That is the fault of the Congress and the President for imposing onerous rules which add to the cost of every product manufactured in America and for continuing the policy of assessing the highest tax rate of any nation in the civilized world on its corporations – again further adding to the cost of producing goods here.

But to get to the heart of the matter, even if you accept my scenario that without the consumer’s co-operation, outsourcing simply wouldn’t happen – there is someone who bears an even greater share of the responsibility.  That person is the voter who empowers these bureaucrats with another return to office so that they may continue the same policies which got us here in the first place.

It’s time for a new, fresh and realistic approach.  It’s time that we set aside all the rhetoric about “Saving General Motors”.  It’s time we really took stock of those whom we elect to serve us – and to rid ourselves of those who believe that their election proves we were meant to serve them.  It’s time – no it’s way past the time – that each of us cut through all the hype and got down to the bare bones and the truth.

It’s time for the American people to vote intelligently.

BILL CLINTON SPEAKS

As the second most elder statesman of the Democratic Party (Jimmy Carter holding the place of honor at the top), former President Bill Clinton has made an ad for President Obama.  I suspect that you might have seen it as it has been aired a great deal.

I will say that the ad is a substantial improvement over other ads of the Obama campaign.  There is no mention of Bain Capital (which Clinton told Obama to leave alone), no mention of Mitt Romney causing people’s death by denying them health insurance benefits, just a generally positive and, on the surface reasoned ad why the former President feels we should entrust our vote to giving the incumbent another four years in the White House.  At least that’s how it starts out.

The ad begins with Clinton saying, “To me this election about who is most likely to get us back to full employment.”  My ears perked up the first time I heard this opening line.  Had Clinton gone over to the Romney camp?

Well, that’s about as much as the former President has to say about why he supports an Obama second term until the end where he talks about “Obama’s plan – rebuilding America from the ground up and investing in education and innovation.”  For some reason, when I heard that line an image of Nuremberg, Germany after the British bombing came to mind.  In order to build it “from the ground up” you have first to destroy what is already there.

NurnbergBombDamage[1]

President Obama is well on his way to accomplishing the destructive part during his first term in office.  Perhaps President Clinton has more faith in his “plan”  to accomplish the second part if given another four years than the evidence would suggest.

The body of the ad contains an assertion that attacks, although more subtly than other Obama ads, Gov. Romney’s “plan” to ease the tax burden on the wealthy than is now the case and to do so at the expense of the middle class.  Of course, that statement is simply untruthful.

Governor Romney’s plan is merely to leave tax rates unchanged for ALL taxpayers.  Those rates, commonly known as the Bush tax cuts, have been extended several times by both Democrat and Republican majorities in Congress and signed into law.

The truth is that President Obama’s tax plan is merely to increase taxes on our wealthiest tax payers without any consequent reduction in taxes on the middle class or anyone else.  And as everyone knows, this is a great campaign point but it serves to accomplish nothing in terms of actually balancing the Federal budget.

If you were to confiscate 100% of the income of the wealthiest tax payers representing the top 10% of all personal income reported, it would be insufficient to balance the budget.  And even Obama hasn’t come up with that proposal – yet.

Additional tax revenues would help balance the budget.  A growing, rather than the stagnant Obomaconomy which we have had delivered to us by the man in the White House would naturally increase the amount of revenue the Federal government received – whatever the rate at which it would be taxed.

But at the same time, we have to make cuts to the money that we spend – deep cuts – in order to get back to a place of fiscal order and responsibility.  It amazes me that with every economist from the far left to the far right in agreement on this point, it seems to escape President Obama’s attention and the attention of Democrat legislators in general.

Sadly, government has a very bad habit.  No matter how much money it receives it finds a way to spend more.  That can work for awhile, but eventually you run out of people who are willing to lend you money.  Check out modern Greece for an example from current events.

I do appreciate the fact that this ad is, as I have said, more subtle in its attack approach than the previous efforts from team Obama.  The President has apparently come to the realization that as Dinesh D’Souza points out in his movie, “2016, Obama’s America,” that the greatest asset he has is that he is likeable and that people want to help him.

I’d like to help him too – by allowing him to find a new job for which he is better qualified.  The removal of his meandering and indecisive policies would be the biggest shot in the arm that America could receive.

THE PRINCESS AND THE PEA

There is a wonderful Hans Christian Andersen story entitled, “The Princess and the Pea,” (brought to Broadway starring Carol Burnett with the title, “Once Upon A Mattress.”)  This children’s story was published in 1835.

The story concerns a prince who wants to be sure that he marries a real princess.  He is unsure of the royal background of those who have come forward as his possible consort.  So he devises a test based on physical sensitivity.

One stormy night a young woman comes to the castle and claims to be a princess.  The prince’s mother, suspicious of this dripping wet “pretender” places a pea under twenty mattresses which are then covered with twenty featherbeds.  In the morning the young woman complains that she spent a restless night.  There was something hard in her bed which prevented her from getting a good night’s sleep.

The prince realizes that only a true princess could possibly possess this sensitivity and so he makes her his wife.

As I watched the Democratic National Convention, somehow this story came to mind.  I hadn’t thought about it for years – since I saw Ms. Burnett give her extraordinary performance on stage.  But the similarity between this story, the financial and social condition of the country and the response by the speakers at the convention was rather startling.

Of course, it would have been a surprise if anyone had anything bad to say about how President Obama has mishandled the economic “recovery.”  Many of those who spoke have been part and parcel of enacting the policies which led to today’s very disappointing August jobs number of 96,000 which is less than half that would have to be created monthly for a three year period if we were to get back to an unemployment rate of 6%.  The following link allows you to do your own job creation calculations, courtesy of the Federal Reserve Bank of Atlanta:

http://www.frbatlanta.org/chcs/calculator/index.cfm

In addition to the disappointing news for last month, July’s number was revised down to 141,000 from 163,000 and June’s number was revised down to 45,000 from 64,000.  It is hard to disagree with President Obama’s statement that there “Is a long road to travel” before this country returns to prosperity  – a longer one thanks to the policies he and his fellow party members have implemented.

There was some good news in the jobs report.  Unemployment declined from 8.3% to 8.1%.  That, on the surface, would seem to be encouraging.  But if we look at the facts they tell a different story.

Beginning in the 1970’s the number of participants joining the labor market increased substantially as more women entered the work force.  This trend continued for over 30 years.  Beginning with the start of the Recession in 2007, there has been a dramatic decline in those counted in the unemployment statistics, either because they have retired early or just given up looking for a job.

If we were to measure “true unemployment” based on the percentage of eligible people who could be seeking a job, the actual rate of unemployment would be 11.6% and the number of jobs we would have to create monthly for three years to get to a 6% unemployment rate would be 334,000 which is a number that has never been achieved in the history of the United States.

Notwithstanding these rather dismal statistics, I applaud the sensitivity of the speakers at the DNC in being able to put a positive spin on the President and their record over the last four years.

Our “leaders” have acted as though they are aristocracy for a very long time.  What I didn’t realize is that they could each of them have passed the prince’s test and detected the pea under all those mattresses and featherbeds.  Perhaps they are what they believe they are – the new American royalty – and Prince Obama is leading the charge.

ON CULTS

When all else fails, my good liberal friends seem to have an unending arsenal of epithets and insults they want to thrust into what should be a serious debate about who has the capability of becoming the next President of the United States and leading us out of the morass we currently are experiencing.  The most recent arrow from the quiver is the word, “cult” in reference to Presidential nominee Romney.

When we use “cult” in common parlance, we generally are employing it in a pejorative way to a member of a particular religious group or the group itself.  This is actually one definition of the term as it is defined in “Webster’s Unabridged Dictionary – 2nd Edition.”  However, this is only the sixth definition of the term to be found.

One of my good friends recently went on about the “Cult of Mormonism.”  So I thought I would take a moment to put this in perspective.  Before embarking on this, I want to say that I do not know the entire theology of the LDS and I am not serving as an apologist for that religious body.  There is no need for me to do so as we do have the First Amendment to the Constitution which more than adequately addresses the issue.  (I’ve always found it interesting that my liberal friends hold the Constitution in great veneration – but only when it seems to speak positively to their objectives).

In Judaeo-Christian history, the ancient Egyptians viewed Moses and his band of Hebrews as a cult and did all they could to erase them from the face of the Earth.  Then, along came Jesus and the Jews and Romans viewed him and his followers as members of a cult and attempted the same solution.  Obviously, both of those efforts failed.

Christianity had no better luck attempting the same outcome when Mohammed came along.  The Crusades ultimately were an utter failure.  And then mainstream Christianity, having not learned any historical lessons, made the same attempt to eliminate the Mormons.  They were driven west and ultimately south which is the reason that Governor Romney’s father, George was born in Mexico.  They were attempting to survive religious persecution – their First Amendment rights and protections notwithstanding.

It should be apparent that given enough time, today’s “cult” can evolve into a respected mainstream religion.

Returning to Webster’s definition of “cult” let’s turn our attention to the second definition which is given:

“An instance of great veneration, of a person, ideal, or thing, especially as manifested by a body of admirers.”

I would argue that definition very accurately describes the attitude that the President enjoys among his supporters.  Yes, I realize that there are those holding overpaid government positions or who are charter members of the welfare wagon who feel threatened that a responsible economic policy might threaten their way of life.  I appreciate their concern.

To me they are making a rational selection in their choice for President – although it is a short term one as we simply cannot continue on this path for much longer before the whole system will collapse, making the banking crisis look like a Sunday school picnic.

It is not to them I speak as they haven’t ears or the desire to listen.  It is to those who are willing to look honestly at the history of the four years of the Obama White House and who ask themselves, did the President deliver on his election promises; did he cut the deficit in half as he promised; did he bring about the full employment he told us he would put in effect; did he improve the lot of minorities throughout this country as he said he would; did he do anything that he promised which was why we voted for him in the first place – hoping not just for a change but a change for the better?

If you can honestly answer yes to those questions then I can certainly understand why you would continue to support him in office.  I would also like the name of your local drug pusher so that I can get a supply of whatever you’re on.  I would like to live in a euphoric Never-Never Land too.

If not, I wonder if this qualifies you as a member of a cult.  The final meeting may be convened on November 6, 2012.

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