Tag: labor saving devices

Redefining Recession

There just isn’t enough 40-hours a week work to go around.

The Wall Street Journal quoted the Fed Chairman today:

Federal Reserve Chairman Ben Bernanke said Tuesday that the recession was “very likely over,” as consumers showed some of the first tangible signs of spending again.

Ben–not here. Not that I can see.

There is a great disconnect between the conventional standards for judging economic conditions and our current economic condition. What Bernanke said might be true, but it’s meaningless. We need to change what we measure. GDP misses today’s America.

We also need to come to grips with the new reality–in many cases machines are cheaper than and better able to perform jobs than people. It’s happening in my business. We’re not alone.

There are jobs people did when I was growing up that just don’t exist anymore, or don’t exist at the same level of pay.

Sadly, the benefits of labor saving devices have mainly been reaped by business owners who happily do more with less. Maybe it’s time to redefine our thoughts on what a full work week is and re-align our tax structure to discourage businesses that produce profit without producing a product.

Wikipedia: The eight-hour day movement or 40-hour week movement, also known as the short-time movement, had its origins in the Industrial Revolution in Britain, where industrial production in large factories transformed working life and imposed long hours and poor working conditions. With working conditions unregulated, the health, welfare and morale of working people suffered. The use of child labour was common. The working day could range from 10 to 16 hours for six days a week.

Here in the U.S. the 40-hour week didn’t gain any traction until the mid-1800s. Then, as now, more modern processes and tools had greatly increased productivity. It happened before. It can happen again.

There just isn’t enough 40-hours a week work to go around. I can’t see how there ever will be again.

Working

The 20th Century, it can be argued, was the worker’s shining moment. Not so the 21st! Our notions about hard work and a good life have disconnected.

I worry about the economy. Will our lost jobs come back? Probably not.

The bad economy is one reason jobs have left–but it’s not the only reason. There just aren’t as many reasons to employ people when you can get machines or even the customer himself to do the work for you.

Look at all the jobs that used to exist but no longer do. There are the obvious customer service agents replaced by voice prompts and recognition. Checkouts at the supermarket and hardware store now self serve. The gas station too. Monday, my co-worker Ann Nyberg showed me a photo of a ‘helpless’ Dunkin’ Donuts inside a grocery store.

No one wants employees if they can avoid them us. We are a pain in the ass. We are expensive, temperamental and prone to break down. We form unions. We kvetch. We need to be managed.

Businesses like Google where the cashflow overwhelms the staffing requirements are the goal.

When was the last time you heard an entrepreneur with a business model that was labor intensive? It’s been a long time.

What was a department store is now Wal*Mart, Target or BJs. There’s a fraction of the staff. And we’re only seeing the front of the store. Every economy of scale is a reason for fewer people.

The 20th Century might have been the century of the employee, a time when the worker did well. The 20th Century, it can be argued, was the worker’s shining moment.

Not so the 21st! Our notions about hard work and a good life have disconnected.

In the past as labor saving devices came on line workers and their bosses benefited. Now only companies benefit from increased productivity. And, the job market is so unbalanced there is no leverage for most workers. It’s tough to see the playing field evened for a long time to come.

The Economy

Like him, I really am worried about the economy – and not just the stuff that’s been mishandled, like subprime mortgages, and other monetary slights of hand. We have seen a fundamental shift in the way of the world. We are no longer only competing against other ‘first world’ nations.

I walked into a local business today. It was a place I hadn’t been in before, but the owner knew me from TV.

I didn’t prompt him. He just looked at me and said, “I’ve never seen the economy this bad before.” Then he began to talk about business.

Like him, I really am worried about the economy – and not just the stuff that’s been mishandled, like subprime mortgages, and other monetary slights of hand. We have seen a fundamental shift in the way of the world. We are no longer only competing against other ‘first world’ nations.

If you live in Kansas and answer phones for a living, it’s impossible to compete with someone in Bangalore who will work for 20% of your pay. The same goes for manufacturing and agriculture and nearly everything else.

JetBlue has airplane maintenance performed in Central America. Reuters has financial reporters look at US companies from India. The list is endless. There’s little you can think of that can’t be done cheaper elsewhere.

Then there are the box stores. When they replace 10, 15, 20 local business, they also displace the workers from those businesses. This ‘little guy’ I spoke with, a baker, was very worried about Wal*Mart, Costco and especially supermarkets.

What is the economic impact if his handful of employees is replaced by one or two in a big store?

In the past, labor saving devices made lives better for employees. After all, the forty hour week is a relatively recent arrival. Today, labor saving devices produce higher productivity for employers and if jobs can be cut, so be it.

My bosses, bosses, boss has a legal duty to protect the financial interest of his shareholders. If he puts me first, he’s violating the law!

Globally, we are on shaky ground trying to defend our standard of living to the Indians and Chinese who are taking our jobs. Look where we are. Look where they are.

I have been through recessions before, and we’ve always recovered. I have always been pessimistic going in, but once the economy was properly repriced, growth returned. My pessimism was misplaced.

This time, I am petrified our economic engine will have to be revalued against a world that can do what we do, only cheaper (and in many countries like China, with less kvetching from the workers). It’s a very scary scenario.

Right now, I have no answers, only questions.