As mentioned in an earlier blog, the Middle Class in the United States achieved an historic wage earning level after WWII because the US had the only manufacturing capability on the planet unscathed from the War. Today, about 20 million Americans, mostly in the Middle Class, are out of work or working part time. It is worse than these numbers show because most of these people have skills that no longer meet the current global and digital market needs.
This shows up in the numbers. The most recent jobs report states that last month about a half a million potential workers stopped looking for work, and as a consequence, the jobless rate dropped. Based on this math, one would assume that the answer is to have all who can’t find work to stop looking. This would drive the unemployed percent to zero. Then we could forget all about the problem!
Or could we? Those in the Middle Class that stop looking for work altogether will just end up in another group, namely those classified as disabled and are thus obtaining Social Security or those who are considered poor and are obtaining food stamps and all the rest of government handouts. Obama claims that these unemployed are being exploited. Nevertheless, he does nothing tangible about their plight except to preach that they can “pull themselves up by their boot straps, if only the rich will provide the boots”. Can we stand to have the Middle Class be dependent upon the government? Worse, can we afford to have them drop out? Of course not!
Those who have been reading my blogs know that I believe we have our priorities all wrong. Contrary to what the environmental enthusiasts tell us, our lifestyle will not cause the world to collapse within our lifetime, but I can assure you that if the problem of how to help our Middle Class is not seriously addressed and soon, the cost of supporting them and their children and their children’s children will permanently harm the lifestyle we have all come to love.
As an historic fact, jobs for the under skilled have been shrinking during the past 100 years. Farm labor, for example has dropped from 33% of the total labor force to less than 2 % today. By contrast professional and skilled labor has increased to 70 % of the total work force. Because of the digital revolution and the robotization it brings with it, we can expect the skilled class to increase to about 75 to 80% while non-skilled labor shrinks to about 20-25% of the total work force.
Interestingly, jobs that require high skills are increasing faster than we are graduating those with the skills in science, technology, engineering and mathematics (STEM) which are required for the jobs. The number of these jobs is expanding rapidly because the digital revolution is now upon us in full force. A new factor in this equation is that manufacturing jobs that moved overseas are beginning to return to the US. It turns out that manufacturing is most efficient when located in the same proximity as design, engineering and marketing. Also, the cost of overseas labor is rising, and the cost of shipping is also rising due to rising oil prices.
Another factor affecting high tech jobs is the extremely low cost of ethane. This is a component of natural gas and a major building block for chemicals and polymers. Consequently, major chemical manufacturers are lured to build plants in the US. The group includes Dow and Shell, major US companies, but it also includes BASF, a German company, which is the world’s largest chemical manufacturer. As an aside, let me mention that these plants will hire many chemical engineers at starting salaries above $100,000 per annum.
In a sentence, we have a dilemma: We have a shortage of jobs for the unskilled workers, and a shortage of workers for the skilled jobs. This has happened so swiftly that the economy and the Middle Class have been unable to adjust to it.
The fact is we are experiencing a paradigm shift in the type of skills required to meet the market needs as the chart graphically illustrates.
PERCENT OF US LABOR MARKET.
1910 2010
Unskilled, or Low Skilled
Farm Labor 33 2
Other Labor 15 8
Operators, Foremen, Craftsmen 25 20
Sub-Total 73 30
Professional, Managerial, Clerical, Marketing 27 70
Source: Occupational changes during the twentieth century
Ian D. Wyatt and Daniel E. Hecker
Looking at these data tells us that we have been moving from a society that functioned very well with low skilled labor to one where modern technology and even robots require highly skilled workers. In the early part of the 20th century, a one-room school six or eight grade education was all that was needed to get a decent job. But in the 21st century, a High School education may not be enough. A Trade School, Junior College and in many cases, even a College degree is required to obtain a job of “American Dream” quality..
You do not have to be an Einstein to know what is in the immediate future. Just look in your child’s hand and you will find a device that seems to be affixed to as though from birth. This amazing device reminds us old folks of the radio wrist watch of Dick Tracy days. In a way the Smart Phone is in fact a kind of two-way radio. But it is infinitely more than that! It permits the owner, even a child, to access the entire world’s knowledge on any subject in a matter of seconds. Contrast this to what the the kid had access to in the one-room school with one teacher teaching 8 grades. But the wonderment of it is that it is predicted that these so-called “phones, a mere five years old, will be in the hands of five billion earth dwellers within the next ten years. What else do we need to know to realize where this is heading at mach speed?
So, what in the face of this dramatic change in the workplace can be done to help the Middle Class to get back to work right now? Fortuitously, we have the opportunity and the need for a large amount of such under-skilled labor because of the discovery of the huge quantities of natural gas and oil right here in our back yard. To get this low cost product to market requires massive amounts of infrastructure that does not exist.. This includes piping the products to users such as the chemical and electricity producers and to export markets. Piping is also needed to get the gas to locations where it can be used for automotive fuel. This fuel, called compressed natural gas CNG, is already being used in trucks and busses, but the shortage of infrastructure to create the CNG and get the refueling facilities in place is slowing the adoption of this low-cost, environmentally friendly automotive fuel. And as the March 23rd article in the Olean Times explains, the shortage of infrastructure is showing up right here.
“The biggest drawback to the use of compressed natural gas (CNG) is that while there is an estimated 10,000 vehicles in the State of New York capable of using CNG -10% of the vehicles in the Nation- there are only about 100 CNG refueling stations in the State, and one-third of those are public”
The work to build this infrastructure does not require a college degree. Mostly it requires know-how that the jobless already have. Therefore this group of workers could begin work at once.
To increase the number of persons who are skilled in STEM is another matter. Two actions are required.
• Find a way to convince females who represent half of college graduates to take and graduate with majors in STEM. Currently, the percentage is only about 5%
• Change the immigration policy so that foreign students who major in STEM can stay and work in the United States.
As stated at the beginning of this blog, our priorities are out of whack. The idea that our infrastructure of roads and schools must be fixed as a priority is silly. We have had one major bridge collapse in the last ten years with minimal damage to human life. And we do not see traffic backed up because the roads are crumbling and therefore impassable. Another silly idea is that we have to spend billions on new pre-school programs. We know from Head Start that the kids who are not in that program reach equality with those who are in about 1-3 years. We have always known what to do to improve our schools and the Bill and Melinda Gates Foundation’s study has confirmed it! The schools need two things, namely, a good teacher and a good parent. The way the Foundation determined who was a good teacher was to ask the students. As a former student, I am shocked, shocked to just now learn that students know which teachers are good and which were not!
Now, you would think that the US Government would leap at this once in a lifetime opportunity to do something special to help the Middle Class. Unfortunately however, based on the way our governmental leaders talk and act and the low priority they have given this problem, one has to assume that they have no clue what is going on and what has to be done about it. Maybe we should give them Dick Tracy watches.
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