Saturday, August 31, 2013

Debunking the STEM Crisis Myth

The Stem Skills Myth

You must have seen the warning a thousand times: Too few young people study scientific or technical subjects, businesses can’t find enough workers in those fields, and the country’s competitive edge is threatened.

It pretty much doesn’t matter what country you’re talking about—the United States is facing this crisis, as is Japan, the United Kingdom, Australia, China, Brazil, South Africa, Singapore, India…the list goes on. In many of these countries, the predicted shortfall of STEM (short for science, technology, engineering, and mathematics) workers is supposed to number in the hundreds of thousands or even the millions.

A 2012 report by President Obama’s Council of Advisors on Science and Technology, for instance, stated that over the next decade, 1 million additional STEM graduates will be needed. In the U.K., the Royal Academy of Engineering reported last year that the nation will have to graduate 100 000 STEM majors every year until 2020 just to stay even with demand. Germany, meanwhile, is said to have a shortage of about 210,000 workers in what’s known there as the MINT disciplines—mathematics, computer science, natural sciences, and technology.

The situation is so dismal that governments everywhere are now pouring billions of dollars each year into myriad efforts designed to boost the ranks of STEM workers. President Obama has called for government and industry to train 10 000 new U.S. engineers every year as well as 100 000 additional STEM teachers by 2020. And until those new recruits enter the workforce, tech companies like Facebook, IBM, and Microsoft are lobbying to boost the number of H-1B visas—temporary immigration permits for skilled workers—from 65 000 per year to as many as 180,000. The European Union is similarly introducing the new Blue Card visa to bring in skilled workers from outside the EU. The government of India has said it needs to add 800 new universities, in part to avoid a shortfall of 1.6 million university-educated engineers by the end of the decade.

And yet, alongside such dire projections, you’ll also find reports suggesting just the opposite—that there are more STEM workers than suitable jobs. One study found, for example, that wages for U.S. workers in computer and math fields have largely stagnated since 2000. Even as the Great Recession slowly recedes, STEM workers at every stage of the career pipeline, from freshly minted grads to mid- and late-career Ph.D.s, still struggle to find employment as many companies, including Boeing, IBM, and Symantec, continue to lay off thousands of STEM workers.

There are plenty of Americans with STEM skills.

A Matter of Supply vs. Demand: Every year U.S. schools grant more STEM degrees than there are available jobs. When you factor in H-1B visa holders, existing STEM degree holders, and the like, it’s hard to make a case that there’s a STEM labor shortage.

To parse the simultaneous claims of both a shortage and a surplus of STEM workers, we’ll need to delve into the data behind the debate, how it got going more than a half century ago, and the societal, economic, and nationalistic biases that have perpetuated it. And what that dissection reveals is that there is indeed a STEM crisis—just not the one everyone’s been talking about. The real STEM crisis is one of literacy: the fact that today’s students are not receiving a solid grounding in science, math, and engineering.

In preparing this article, I went through hundreds of reports, articles, and white papers from the past six decades. There were plenty of data, but there was also an extraordinary amount of inconsistency. Who exactly is a STEM worker: somebody with a bachelor’s degree or higher in a STEM discipline? Somebody whose job requires use of a STEM subject? What about someone who manages STEM workers? And which disciplines and industries fall under the STEM umbrella?

Such definitions obviously affect the counts. For example, in the United States, both the National Science Foundation (NSF) and the Department of Commerce track the number of STEM jobs, but using different metrics. According to Commerce, 7.6 million individuals worked in STEM jobs in 2010, or about 5.5 percent of the U.S. workforce. That number includes professional and technical support occupations in the fields of computer science and mathematics, engineering, and life and physical sciences as well as management. The NSF, by contrast, counts 12.4 million science and engineering jobs in the United States, including a number of areas that the Commerce Department excludes, such as health-care workers (4.3 million) and psychologists and social scientists (518,000).

The STEM Crisis Through the Decades

Predictions of an impending shortage of scientists and engineers are nothing new:

"Right now there is a sufficiency of engineers, but one of our greatest industrial organizations, after careful study, predicts the entire absorption of this group by the end of 1936, with a probable shortage of available engineers at that time.” -- Collins P. Bliss, dean of New York University’s College of Engineering, 1934

“With mounting demands for scientists both for teaching and for research, we will enter the postwar period with a serious deficit in our trained scientific personnel.” -- Vannevar Bush, director of the U.S. Office of Scientific Research and Development, 1945

“Our national welfare, our defense, our standard of living could all be jeopardized by the mismanagement of this supply and demand problem in the field of trained creative intelligence.” -- James Killian, president of MIT, 1954

“From 1972 through 1975, the expected demand for engineers will exceed not only the supply coming from American engineering schools, but also the combined supply from the United States and foreign countries, according to the [Engineering Manpower Commission] estimates.” -- John W. Graham Jr., president of Clarkson College of Technology, 1970

“The electronics and information technology industries will be short more than 100 000 electrical and computer science engineers over the next five years.”-- American Electronics Association, 1983

“Already spot shortages exist in some science fields in the United States, and unless dramatic changes are made in the way we educate all of our students, including our most talented, the shortages will increase.” -- U.S. Office of Educational Research and Improvement, 1993

“U.S. companies face a severe shortfall of scientists and engineers with expertise to develop the next generation of breakthroughs.” -- Bill Gates, chairman of Microsoft, 2008

“There is a skills gap in this country. For every unemployed person in the United States, there are two STEM job postings. The gap will only widen if we don’t engage now to address STEM education at the elementary and high school levels.” -- Richard K. Templeton, chairman, president, and CEO of Texas Instruments, 2013

Such inconsistencies don’t just create confusion for numbers junkies like me; they also make rational policy discussions difficult. Depending on your point of view, you can easily cherry-pick data to bolster your argument.

Another surprise was the apparent mismatch between earning a STEM degree and having a STEM job. Of the 7.6 million STEM workers counted by the Commerce Department, only 3.3 million possess STEM degrees. Viewed another way, about 15 million U.S. residents hold at least a bachelor’s degree in a STEM discipline, but three-fourths of them—11.4 million—work outside of STEM.

The departure of STEM graduates to other fields starts early. In 2008, the NSF surveyed STEM graduates who’d earned bachelor’s and master’s degrees in 2006 and 2007. It found that 2 out of 10 were already working in non-STEM fields. And 10 years after receiving a STEM degree, 58 percent of STEM graduates had left the field, according to a 2011 study from Georgetown University.

The takeaway? At least in the United States, you don’t need a STEM degree to get a STEM job, and if you do get a degree, you won’t necessarily work in that field after you graduate. If there is in fact a STEM worker shortage, wouldn’t you expect more people with STEM degrees to be filling those jobs? And if many STEM jobs can be filled by people who don’t have STEM degrees, then why the big push to get more students to pursue STEM?

Now consider the projections that suggest a STEM worker shortfall. One of the most cited in recent U.S. debates comes from the 2011 Georgetown University report mentioned above, by Anthony P. Carnevale, Nicole Smith, and Michelle Melton of the Center on Education and the Workforce. It estimated there will be slightly more than 2.4 million STEM job openings in the United States between 2008 and 2018, with 1.1 million newly created jobs and the rest to replace workers who retire or move to non-STEM fields; they conclude that there will be roughly 277,000 STEM vacancies per year.

But the Georgetown study did not fully account for the Great Recession. It projected a downturn in 2009 but then a steady increase in jobs beginning in 2010 and a return to normal by the year 2018. In fact, though, more than 370 000 science and engineering jobs in the United States were lost in 2011, according to the Bureau of Labor Statistics.

I don’t mean to single out this study for criticism; it just illustrates the difficulty of accurately predicting STEM demand and supply even a year or two out, let alone over a prolonged period. Highly competitive science- and technology-driven industries are volatile, where radical restructurings and boom-and-bust cycles have been the norm for decades. Many STEM jobs today are also targets for outsourcing or replacement by automation.

The nature of STEM work has also changed dramatically in the past several decades. In engineering, for instance, your job is no longer linked to a company but to a funded project. Long-term employment with a single company has been replaced by a series of de facto temporary positions that can quickly end when a project ends or the market shifts. To be sure, engineers in the 1950s were sometimes laid off during recessions, but they expected to be hired back when the economy picked up. That rarely happens today. And unlike in decades past, employers seldom offer generous education and training benefits to engineers to keep them current, so out-of-work engineers find they quickly become technologically obsolete.

Any of these factors can affect both short-term and longer-term demand for STEM workers, as well as for the particular skills those workers will need. The agencies that track science and engineering employment know this to be true. Buried in Chapter 3 of a 2012 NSF workforce study, for instance, you’ll find this caveat: “Projections of employment growth are plagued by uncertain assumptions and are notoriously difficult to make.”

So is there a shortfall of STEM workers -- or isn’t there?

The Georgetown study estimates that nearly two-thirds of the STEM job openings in the United States, or about 180 000 jobs per year, will require bachelor’s degrees. Now, if you apply the Commerce Department’s definition of STEM to the NSF’s annual count of science and engineering bachelor’s degrees, that means about 252,000 STEM graduates emerged in 2009. So even if all the STEM openings were entry-level positions and even if only new STEM bachelor’s holders could compete for them, that still leaves 70 000 graduates unable to get a job in their chosen field.

Of course, the pool of U.S. STEM workers is much bigger than that: It includes new STEM master’s and Ph.D. graduates (in 2009, around 80 000 and 25 000, respectively), STEM associate degree graduates (about 40,000), H-1B visa holders (more than 50,000), other immigrants and visa holders with STEM degrees, technical certificate holders, and non-STEM degree recipients looking to find STEM-related work. And then there’s the vast number of STEM degree holders who graduated in previous years or decades.

Even in the computer and IT industry, the sector that employs the most STEM workers and is expected to grow the most over the next 5 to 10 years, not everyone who wants a job can find one. A recent study by the Economic Policy Institute (EPI), a liberal-leaning think tank in Washington, D.C., found that more than a third of recent computer science graduates aren’t working in their chosen major; of that group, almost a third say the reason is that there are no jobs available.

Spot shortages for certain STEM specialists do crop up. For instance, the recent explosion in data analytics has sparked demand for data scientists in health care and retail. But the H-1B visa and similar immigrant hiring programs are meant to address such shortages. The problem is that students who are contemplating what field to specialize in can’t assume such shortages will still exist by the time they emerge from the educational pipeline.

What’s perhaps most perplexing about the claim of a STEM worker shortage is that many studies have directly contradicted it, including reports from Duke University, the Rochester Institute of Technology, the Alfred P. Sloan Foundation, and the Rand Corp. A 2004 Rand study, for example, stated that there was no evidence “that such shortages have existed at least since 1990, nor that they are on the horizon.”

That report argued that the best indicator of a shortfall would be a widespread rise in salaries throughout the STEM community. But the price of labor has not risen, as you would expect it to do if STEM workers were scarce. In computing and IT, wages have generally been stagnant for the past decade, according to the EPI and other analyses. And over the past 30 years, according to the Georgetown report, engineers’ and engineering technicians’ wages have grown the least of all STEM wages and also more slowly than those in non-STEM fields; while STEM workers as a group have seen wages rise 33 percent and non-STEM workers’ wages rose by 23 percent, engineering salaries grew by just 18 percent. The situation is even more grim for those who get a Ph.D. in science, math, or engineering. The Georgetown study states it succinctly: “At the highest levels of educational attainment, STEM wages are not competitive.”

Given all of the above, it is difficult to make a case that there has been, is, or will soon be a STEM labor shortage. “If there was really a STEM labor market crisis, you’d be seeing very different behaviors from companies,” notes Ron Hira, an associate professor of public policy at the Rochester Institute of Technology, in New York state. “You wouldn’t see companies cutting their retirement contributions, or hiring new workers and giving them worse benefits packages. Instead you would see signing bonuses, you’d see wage increases. You would see these companies really training their incumbent workers.”

“None of those things are observable,” Hira says. “In fact, they’re operating in the opposite way.”

So why the persistent anxiety that a STEM crisis exists? Michael S. Teitelbaum, a Wertheim Fellow at Harvard Law School and a senior advisor to the Alfred P. Sloan Foundation, has studied the phenomenon, and he says that in the United States the anxiety dates back to World War II. Ever since then it has tended to run in cycles that he calls “alarm, boom, and bust.” He says the cycle usually starts when “someone or some group sounds the alarm that there is a critical crisis of insufficient numbers of scientists, engineers, and mathematicians” and as a result the country “is in jeopardy of either a national security risk or of falling behind economically.” In the 1950s, he notes, Americans worried that the Soviet Union was producing 95,000 scientists and engineers a year while the United States was producing only about 57 000. In the 1980s, it was the perceived Japanese economic juggernaut that was the threat, and now it is China and India.

You’ll hear similar arguments made elsewhere. In India, the director general of the Defense Research and Development Organization, Vijay Kumar Saraswat, recently noted that in his country, “a meagre four persons out of every 1000 are choosing S&T or research, as compared to 110 in Japan, 76 in Germany and Israel, 55 in USA, 46 in Korea and 8 in China.” Leaders in South Africa and Brazil cite similar statistics to show how they are likewise falling behind in the STEM race.

“The government responds either with money [for research] or, more recently, with visas to increase the number of STEM workers,” Teitelbaum says. “This continues for a number of years until the claims of a shortage turn out not to be true and a bust ensues.” Students who graduate during the bust, he says, are shocked to discover that “they can’t find jobs, or they find jobs but not stable ones.”

At the moment, we’re in the alarm-heading-toward-boom part of the cycle. According to a recent report from the Government Accountability Office, the U.S. government spends more than US $3 billion each year on 209 STEM-related initiatives overseen by 13 federal agencies. That’s about $100 for every U.S. student beyond primary school. In addition, major corporations are collectively spending millions to support STEM educational programs. And every U.S. state, along with a host of public and private universities, high schools, middle schools, and even primary schools, has its own STEM initiatives. The result is that many people’s fortunes are now tied to the STEM crisis, real or manufactured.

Clearly, powerful forces must be at work to perpetuate the cycle. One is obvious: the bottom line. Companies would rather not pay STEM professionals high salaries with lavish benefits, offer them training on the job, or guarantee them decades of stable employment. So having an oversupply of workers, whether domestically educated or imported, is to their benefit. It gives employers a larger pool from which they can pick the “best and the brightest,” and it helps keep wages in check. No less an authority than Alan Greenspan, former chairman of the Federal Reserve, said as much when in 2007 he advocated boosting the number of skilled immigrants entering the United States so as to “suppress” the wages of their U.S. counterparts, which he considered too high.

Governments also push the STEM myth because an abundance of scientists and engineers is widely viewed as an important engine for innovation and also for national defense. And the perception of a STEM crisis benefits higher education, says Ron Hira, because as “taxpayers subsidize more STEM education, that works in the interest of the universities” by allowing them to expand their enrollments.

An oversupply of STEM workers may also have a beneficial effect on the economy, says Georgetown’s Nicole Smith, one of the coauthors of the 2011 STEM study. If STEM graduates can’t find traditional STEM jobs, she says, “they will end up in other sectors of the economy and be productive.”

The problem with proclaiming a STEM shortage when one doesn’t exist is that such claims can actually create a shortage down the road, Teitelbaum says. When previous STEM cycles hit their “bust” phase, up-and-coming students took note and steered clear of those fields, as happened in computer science after the dot-com bubble burst in 2001.

Emphasizing STEM at the expense of other disciplines carries other risks. Without a good grounding in the arts, literature, and history, STEM students narrow their worldview—and their career options. In a 2011 op-ed in The Wall Street Journal, Norman Augustine, former chairman and CEO of Lockheed Martin, argued that point. “In my position as CEO of a firm employing over 80,000 engineers, I can testify that most were excellent engineers,” he wrote. “But the factor that most distinguished those who advanced in the organization was the ability to think broadly and read and write clearly.”

A broader view, I and many others would argue, is that everyone needs a solid grounding in science, engineering, and math. In that sense, there is indeed a shortage—a STEM knowledge shortage. To fill that shortage, you don’t necessarily need a college or university degree in a STEM discipline, but you do need to learn those subjects, and learn them well, from childhood until you head off to college or get a job. Improving everyone’s STEM skills would clearly be good for the workforce and for people’s employment prospects, for public policy debates, and for everyday tasks like balancing checkbooks and calculating risks. And, of course, when science, math, and engineering are taught well, they engage students’ intellectual curiosity about the world and how it works.

Many children born today are likely to live to be 100 and to have not just one distinct career but two or three by the time they retire at 80. Rather than spending our scarce resources on ending a mythical STEM shortage, we should figure out how to make all children literate in the sciences, technology, and the arts to give them the best foundation to pursue a career and then transition to new ones. And instead of continuing our current global obsession with STEM shortages, industry and government should focus on creating more STEM jobs that are enduring and satisfying as well.

About the Author

He is an IEEE Spectrum contributing editor and a self-described “risk ecologist” who investigates the impact of risk on technology and society. His interest is both professional and personal: He’s a 33-year member of the IEEE Computer Society and has two daughters who are contemplating STEM careers. “Now I can give better career advice to my daughters,” he says.

Further Research

Science and Engineering Careers in the United States: An Analysis of Markets and Employment
(University of Chicago Press, 2009), edited by Richard B. Freeman and Daniel L. Goroff,provides a highly useful introduction to the forces in the early to mid-2000s that shaped current STEM shortage arguments in the United States.

Chapter 13 of Benoît Godin’s
Measurement and Statistics on Science and Technology: 1920 to the Present
(Routledge Studies in the History of Science, Technology, and Medicine, 2012)shows how the claims of scientist and engineer shortages in the United States and United Kingdom after the Second World War were based on dubious statistics, and notes that the success rate of U.S. government predictions on the supply and demand for scientists and engineers has been about zero.

The National Research Council’s Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future (The National Academies Press, 2007) and Rising Above the Gathering Storm, Revisited: Rapidly Approaching Category 5 (The National Academies Press, 2010)are must reads. The first report triggered the current STEM shortage debate in the United States, and the second one fanned the flames. Written by a select committee of business and academic leaders, the first report concluded that the United States appeared to be “on a losing path” in its ability to innovate and globally compete, because the U.S. school system was failing to prepare the nation’s future STEM workers. The second report concluded that because the first report’s recommendations had not been funded, the situation was now reaching catastrophic proportions. If these reports were the only ones you read on the subject, you too would believe there is a national STEM crisis.

One of the key conclusions of Hal Salzman, Daniel Kuehn, and B. Lindsay Lowell’s “Guestworkers in the High-Skill U.S. Labor Market” (Briefing Paper #359, Economic Policy Institute, 24 April 2013) is that while there is an adequate supply of U.S. STEM workers and potential STEM graduates, this may not be the case in the IT sector, given that guest workers are willing to work “at wages that are too low to induce a significantly increased supply from the domestic workforce.”

In “The Hidden STEM Economy” (Brookings Institution, 2013), Jonathan Rothwell argues that STEM workers include not just those with bachelor’s or higher degrees, but anyone who uses “specialized knowledge” in any STEM discipline, such as plumbers and auto mechanics. Counted this way, there are 26 million STEM jobs in the United States, or about 20 percent of the workforce, as opposed to the 5 million to 6 million jobs counted the traditional way. Many of Rothwell’s arguments echoed those made in a 1964 report from the American Council on Education entitled “Man, Education, and Work: Post Secondary Vocational and Technical Education.”

One oft-cited argument for boosting the number of U.S. STEM graduates is that China and India are each graduating hundreds of thousands of engineers per year. But in their 2007 article “Where the Engineers Are” (Issues in Science and Technology), Vivek Wadhwa of Duke University and his colleagues revealed that the graduation numbers from China and India have been exaggerated; for example, in China, they write, “a motor mechanic or a technician could be considered an engineer.” The authors argued that the United States should still increase its investment in R&D and STEM education, as both India and China would no doubt work to improve the quality of their own STEM graduates.

Ron Hira, a professor at the Rochester Institute of Technology, wrote a series of reports as part of the STEM Workforce Data Project. In “U.S. Policy and the STEM Workforce System” (Commission on Professionals in Science and Technology, 2007), he analyzes why, given STEM’s supposed importance to the nation’s standard of living and national defense, there is so little objective information for making informed policy decisions.

“The Current Model of STEM Graduate Education and Postdocs” [PDF] is a presentation given in November 2007 by Michael S. Teitelbaum, senior advisor to the Alfred P. Sloan Foundation. A world-respected demographer, he looks at the claims of STEM shortages and shortfalls at the graduate level and calls them a “long, embarrassing history.”

“Will the Scientific and Technology Workforce Meet the Requirements of the Federal Government?,” a 2004 report by William Butz and colleagues at the Rand Corp., found no evidence, regardless of what measure was used, “that [STEM] shortages have existed at least since 1990, nor that they are on the horizon.”

Does the U.S. Department of Defense face a STEM worker shortage? No, concludes “Assuring the U.S. Department of Defense a Strong Science, Technology, Engineering, and Mathematics (STEM) Workforce” (National Research Council, 2012), a report from the National Academies. What’s more, the report finds, “DOD representatives state virtually unanimously that they foresee no shortage of STEM workers in the years ahead except in a few specialty fields.” Those specialties include cybersecurity, as well as anthropology, linguistics, and sociology.

Heather B. Gonzalez and Jeffrey J. Kuenzi’s “ Science, Technology, Engineering, and Mathematics (STEM) Education: A Primer” [PDF] (Congressional Research Service, 1 August 2012) clearly and succinctly lays out the major issues involved in the STEM debate.

In 2013 the Australian Industry Group, a nonprofit group representing some 60 000 businesses in Australia, published “Lifting Our Science, Technology, Engineering and Maths (STEM) Skills.” [PDF] It called for “a major re-think by Australian education at all levels and in all sectors” to increase both the number and quality of Australian STEM graduates. In its tone and recommendations, it’s very similar to the U.S. “Gathering Storm” reports.

The U.K. equivalent to the “Gathering Storm” reports is “Jobs and Growth: the Importance of Engineering Skills to the Economy,” [PDF] published in 2012 by the Royal Academy of Engineering. It concluded that the United Kingdom needs an annual minimum of 100 000 STEM graduates, along with another 60 000 technically trained individuals, over the next decade just to maintain the status quo. Unlike in the United States, where engineering salaries have stagnated, the report found “a persistent, sizable wage premium for people holding engineering degrees” in the past 20 years.

The German equivalent to STEM is MINT—mathematics, computer science, natural sciences, and technology. Written in German, “MINT-Frühjahrsreport 2013” (MINT Spring Report 2013), published by the Cologne Institute for Economic Research, analyzes German employment data for MINT workers, from academics to technicians. One useful metric is the comparison of job openings with unemployed workers in different MINT categories and occupations, although there are limits to this approach.

Friday, August 30, 2013

San Francisco Giants Cheats the Batboy

A San Francisco Giants clubhouse manager spends their days rounding up sweaty uniforms, ordering food for the high-priced players and making sure that the bat boys scrape the mud off the players' cleats.

Players and coaches are sometimes expected to add gratuities to the daily "dues" they pay to clubhouse managers at home and on the road. These dues cover the cost of food and drinks, which clubhouse managers pay for out of their own pockets. While there's no set fee for dues, players on several teams said the accepted minimum is about $45 a day for rookies. At home, the high-priced players typically pay their own clubhouse manager and attendants every few weeks, or in a lump sum at the season's end.

But the U.S. Department of Labor investigators found violations of the Fair Labor Standards Act's minimum wage, overtime pay and record-keeping provisions which affected a whole range of the San Francisco Giants employees --- including the clubhouse managers and their assistants.

The baseball team had to pay 74 of their employees $544,715 in back wages and liquidated damages after the Department of Labor investigation determined that the Major League Baseball club failed to properly pay these workers over a three-year period.

The investigation had determined that clubhouse employees were working more hours than were recorded. Under an employment agreement, the club established a flat rate of pay of $55 for working 5.5 hours per day. However, investigators found that the employees actually worked an average of 12 to 15 hours daily for their thankless duties, and the workers received less than the hourly federal minimum wage of $7.25 an hour. The California State minimum wage is $9 an hour and San Francisco has it's own minimum wage of $10.55 an hour. (The Giants' employees were also not paid overtime for hours exceeding 40 in a week.)

San Francisco is a beautiful place to live, but the cost of living in this grand city is 69 percent above the national average. Susana Blanco, director of the San Francisco District Office of the Wage and Hour Division at the U.S. Department of Labor, said this case underscores the importance of wage protections: "It was disappointing to learn that clubhouse workers providing services to high-paid sports stars weren't making enough to meet the basic requirements of minimum-wage law."

And who's responsible for these meager wages? Until last year, Bill Neukom was the CEO of the San Francisco Giants, and has a net worth of $850 million. He accumulated his wealth through his 17-year career at Microsoft, where he was the Chief Legal officer and general counsel.

But Neukom had been asked to step aside by the Giants Executive Committee because of a series of financial disagreements during Neukom's three-year stewardship of the team. He had been accused of abusing his fiduciary duties, spending money as he saw fit, such as spending millions to scoop up baseball players without even consulting with the Executive Committee.

The San Francisco Giants ownership structure features 32 people known as "principal partners." The true power, however, lies with the 10-member Executive Committee, consisting of owners with the most monetary investment in the team. The committee appoints the Giants' CEO, who is the frontman for the franchise and has authority over day-to-day franchise activities. Charles Johnson is one of the 100 wealthiest people in America and is the Giants top partner.

The San Francisco Giants new president and chief operating officer is Larry Baer. Last month President Obama was flanked by team members as the Giants' manager presented him with a signed bat and ball. House Minority Leader Nancy Pelosi was also in attendance at the ceremony, where the Giants' CEO congratulated Obama on his own "second victory" last November, noting he was re-elected just days after the Giants had clinched the teams' second World Series in Detroit.

Last month the rich and famous (the top 1%) had casually hobnobbed with the President of the United States on the White House lawn and in the East Room, congratulating each other, while all that time the San Francisco Giants batboy was being paid below the federal legal minimum wage in one of the most expensive cities in the world to live.

The San Francisco Giants is valued at $786 million. The average ticket price is $28 (not accounting for food or other expenses).

Single and Alone in a Bad Economy

If you live alone, you're not alone. From 1970 to 2012 the share of people living alone in the U.S. rose from 10 percent to 27 percent.

According to an August 2013 analysis by the Census Bureau, nonfamily households numbered 39 million and represented almost one-third of all households in the United States. Of these nonfamily households, 32 million consisted of one person living alone. Of those, 12 million were 65 or older.

"Over the last half-century, the trend in the U.S. has been toward smaller households, fewer family and married-couple households with children, and more people living alone," said Jonathan Vespa, with the Fertility and Family Statistics Branch and one of the report's co-authors.

Single and Living Alone: Those who have never married, are divorced, or who are widowed.

Living alone, especially in cities, tends to be more expensive than sharing housing with a partner or friend. In addition to housing costs, solo-livers generally pay more for utilities, telephone service, groceries and taxes.

The Treasury Department and IRS announced today that legally married same-sex couples will be treated as married couples for federal tax purposes. Single people pay higher tax rates.

CNN ran a story on living well on $40,000 a year, featuring a teacher who supported his family of four on that relatively modest salary. Many people who commented on the article argued that living on $40,000 a year was hardly an impressive feat.

"I could live like a king on $40,000 a year. Try living on $22,000 a year and see how far that goes for you," said Joyce of Maine. At the Washington Post there's a story about a writer living a nomadic life-style on $20,000 a year --- which isn't too difficult to believe when you consider that 50% of all U.S. wage earners earned $27,000 a year or LESS after taxes. That's why so many Americans now need food stamps and Medicaid to survive on because wages haven't kept up with the cost-of-living.

Does the desire to live alone override the cost? If you can't afford it, you can't afford it, but that doesn't mean single people don't want to find a partner or be in relationships --- but people don't want to be locked into the wrong relationship either. If they make enough money, they don't need to be. That's true for older "middle-aged" adults who are living alone as well.

The elderly and their families are paying enormous premiums for senior citizens to live in assisted-living facilities. It gives these seniors the experience of "going solo" while also being connected to a world of service providers and companions. Many families literally move themselves close to bankruptcy to make sure their older relatives have the luxury of living alone (or just to get rid of them) for as long as they can. That's a huge change from 100 years ago, where the majority of widows and widowers lived with family.

But if one is not only single and living alone, but is also "alone" (meaning, very few or no friends and family), especially for senior people, it can be a terrifying experience trying to keep up with the cost of living if all they have is a monthly Social Security benefit of $1,224 to pay for rent and food.

On the other hand, if one were lucky enough to be wealthy (no matter what age) and living alone, a single person might own a beachfront home in Malibu, California AND also have penthouse apartment in Manhattan. They can enjoy the mobility and expense of visiting with friends and family, meeting at restaurants or a nightclubs (or the country club and gold course) whenever they feel the need for a little company. And even if they are "alone" and have no friends or family at all, because of their wealth, they still have the benefit of many other options to help occupy their time while living their lonely existence.

Whereas, on the other end of the spectrum, it can be next to impossible (and equally terrifying) for older unemployed people ages 50 to 62 if they are not only living alone but are alone --- and who can't get re-hired and are also too young for an early Social Security benefit. They might have already lost their car and have been living on food stamps in the suburbs, or in some destitute rural area, where little public transportation is available --- making a simple task like buying groceries a major chore --- especially if they have a pending Social Security disability claim and experiencing bad health. The poor souls could be stuck living all alone in a daily Limbo of terror for years while waiting for a monthly benefit of $1,129 (and that's only if they are ever eventually awarded on their claim).

But unlike wealthier single people living alone, these long-term unemployed single people living alone might only have an old TV and an obsolete computer to occupy all their lonely time when they're not thinking about their miserable state of affairs.

Other highlights from the latest Census report

"During the recession, the economic well-being worsened for families with children," said Jamie Lewis, a demographer in the Census Bureau's Fertility and Family Statistics Branch and one of the report's co-authors. "Home ownership among families declined, while food stamp recipients and parental unemployment increased. Even after the recession officially ended in 2009, these measures remained worse than before it began."

  • A higher percentage of young adults age 25 to 34 lived in their parent's home in 2012 than in the early 2000s.
  • Sixty-six percent of households in 2012 were family households, compared with 81 percent in 1970.
  • The share of households that consisted of married couples with children shrunk by half between 1970 and 2012.
  • The percentage of households consisting of a person living alone climbed from 17 percent to 27 percent.
  • The recession also saw more mothers enter the work force and an increasing dependence on food stamps*.
  • The number of households with an unemployed parent soared by 148 percent in Nevada (Nevada has the highest unemployment rate, still at 9.5 percent.)
  • Nine percent of married families were living below the poverty line and receiving food stamps.
  • The share of men younger than 64 living alone rose to 34 percent from 23 percent in 1970.

* SNAP Benefits Will Be Cut for All Participants in November 2013

NOTES:

*A nonfamily household can be either a person living alone or a householder who shares the housing unit only with nonrelatives (for example, boarders or roommates)

Total householders living alone: 38,907,719 (never married, divorced, or widowed)

  • Single Male householder - 18,030,888
  • Single Female householder - 20,876,831

*A householder is not a house owner, but one who occupies any type of home (house or apartment). And a nonfamily household may contain only one person --- the householder -- or additional persons who are not relatives of the householder. Nonfamily households may be classified as either female nonfamily or male nonfamily households.

Thursday, August 29, 2013

The Looming Death of Windows XP

NOTE: In an update below are some suggestions as to what you can do after Microsoft stops offering support for XP and if you have to reformat or replace your hard drive after XP updates are no longer available.

by Jerry Lobdill, a retired physicist

If you're a Windows XP user who has delayed the dreaded Microsoft OS "upgrades" because they are frequently bombs, you are facing an excruciating torture session in April, 2014, when Microsoft will declare XP officially dead. Here's what this milestone means to Microsoft's captive audience.

In 1Q13, Windows XP's market share of the OS market was 38.31 percent, following Windows 7 which commanded 44.72 percent. The usage of Windows XP has dropped to some degree over the past year, but not as much as Microsoft would probably like. In June 2012, the platform owned 43.61 percent of the market, and by December it still retained 39.08 percent. That said, Microsoft has a long way to go before Windows XP is completely out of the picture.

In 2011 400 million PCs were sold. Let's say, just for talking purposes, that at termination of XP there will be 400x10^6x0.3831 = 153,240,000 units that must upgrade to Windows 7 or 8. (The actual number of XP machines out there is far greater, but this crude estimate will do to make my point.)

 My computer repair guy says that it would take a smart user 2 weeks of training to get facile enough with the new OS to the extent that he could be writing his book, building his spreadsheets, etc. without the distraction and frustration of having to learn how to do things using the new OS. Assume that he doesn't spend time or money reinstalling current apps and installing new ones needed because of the "upgrade". So...we've got 153,240,000x80 = 12.259200 billion man-hours that must be used and paid for to get everyone now using XP back to their previous productivity level.  At, say, $20/man hour that's a cost of $245.184 billion--all borne by the employer, who used to employ secretaries to turn out reports, proposals, etc. How's that lookin' to ya, Mr. CEO?

What if, instead, all "upgrades" were expected to be worthy of the name, providing enhanced worker efficiency--no lemon versions? And suppose the upgrades were expected to be downward compatible, so that no apps would die because of the "upgrade". There was a time when this was an option for Microsoft and Apple. Apple took the option (at least in the beginning), and Microsoft did not. Instead, Microsoft dreamed of a captive market with no options for customers regardless of consumer cost (Microsoft's profit). They decided that software would be designed by hackers (not degreed software engineers) who had no use for elegant code, stability of code, maintainable code, documented, modular code. They just pasted their new code over the old, left the old command structure in place, adding new controls to accommodate the new functionality being added, and shoved the "upgrade" versions of their Microsoft applications out the door as quickly and cheaply as possible using paying customers' complaints to serve beta version needs.

In other words, Microsoft figured their best strategy was to concentrate on locking in the client base as prisoners and milking them for all they could while maximizing profits. To hell with reliability, stability, longevity, sturdiness, efficiency of code, etc.. Make 'em pay every day if possible. To hell with users and their needs.

As a result we have planned obsolescence and shitty products. If a new Windows version is a crappy "upgrade" its crappiness will only create a better market for the next "upgrade". Let Microsoft Office grow in size. No problem. Disk space is no limiting factor.

This is a prison we're living in, folks, not a well-functioning free market with all its touted benefits.

* Originally posted at Op-Ed News

QUESTION --- Posted by the editor of this blog: What if one cannot afford (or does not want) an "upgrade" by April, 2014 --- and has to reformat their hard drive (because of a virus or for whatever other reason) --- how does one obtain all the service packs, security updates, patches, and other programs needed to run their operating system on a computer that has already used an OEM version of Windows XP Pro? I previously had to buy new Windows CD because the original was lost, and I cannot buy a later version of Windows to work on my computer. Does this mean I will also be forced to buy another computer if I have to replace or reformat my hard drive again? I am long-unemployed and NEED a functioning computer!

UPDATE: In response to my XP question, I was informed that I do not need to upgrade after April 2014, but if I do not, I will not have the latest security patches and bug fixes provided by Micro$oft. Here's what they say:

You can either go one of two routes:

1) Stick with XP and not have any upgrades. An advantage to this is that you will not have to change around your settings, files, etc. The disadvantages are that new, future software will probably not be usable on XP, and your computer will be more susceptible to viruses, Trojans, backdoors, etc.

2) You can reformat your machine and install a Linux distribution. The advantages are numerous. Most are free, developed by skilled coders in their free time, and since they are not Micro$oft, viruses are generally not designed for Linux, as there are so many to design for. In essence, Linux is very secure compared to Windows. The disadvantage is that there is a little bit of a learning curve. Thankfully, there are so many different distributions, with several geared toward new converts, that will more than meet you needs. In addition, most Linux distros runs on very old hardware, so your older PC is not obsolete. Plus, there are Linux versions of many popular Windows Apps such as Firefox, Chrome, etc. 

A good site to learn more is: www.distrowatch.com

If you decide to go the Linux route, several of them have a "Live CD" mode were you can boot them up in your CD drive and no changes are made to the underlying Windows file system. This allows you to test the distribution to see if it is something you actually want to install, at the cost of a CD. If you do decide to install it though, make sure you back up your data first to an external source.

How are you connected to the Internet? Do you use a cable modem or DSL that you have to sign on with an account or if your computer boots, are you already connected? If the former, you may have some
problems running Linux as most of that is Windows based. If that later, you should be okay. I would test a LiveCD out first to see if you have Internet, just to be safe.

If the hard drive dies, you can still run a Linux LiveCD to access the Internet if you have a cable modem, especially if it's wired to your PC directly and not wireless and is one of the "always on" Internet connections that you do not need to log into, so Linux should detect your Internet just fine without any configuring, whether installed or LiveCD.

Another option is, you can partition a portion of your hard drive and do a dual boot. One partition is Windows and the other would be Linux. The problem with that is that it is somewhat advanced and I do not recommend doing it unless you have everything backed up and are comfortable with the overall process if
something goes wrong.

I would download and burn a copy of a distro now, just in case your system does die; more of a "be prepared" approach. Several distros have a LiveCD mode where you can test them out. Also, if your HDD does die, you can boot up into the LiveCD mode (choose the Boot option "CD ROM" during your boot process) and at least access the internet and websites. Nothing in that mode will save, however, as it is running in memory, unless you back it up to an external source.

I would start with an easy one with a lot of support, such as an Ubuntu based distribution. I use Xubuntu at www.xubuntu.org as it has a nice desktop environment called XFCE which I find visually appealing and
quite usable. There are so many different kinds of desktop environments though, so really it is your choice.

A good tutorial on installing Xubuntu that I found on YouTube is here: www.youtube.com/watch?v=E1aIsKO29SM

The same gentleman shows how to use various programs in a follow up to the above here: www.youtube.com/watch?v=FDZeIFkefOs

Another distribution that runs on very old equipment and uses the same
software repositories as Ubuntu is AntiX at http://antix.mepis.org

If your computer is very old and Xubuntu does not run well on it, AntiX is definitely a good option as it has very little hardware requirements. However, it is not as user friendly as Ubuntu or it's derivatives such as Xubuntu above.

If you need it, good, free burning software for windows is ImgBurn: www.imgburn.com.

Also, XP and Linux are different operating systems entirely. Here is a good breakdown of the differences: www.computerhope.com/issues/ch000575.htm
 
If you want to run some of your old XP programs on Linux, you can use a program called WINE: www.winehq.org

However, there are alternate programs in Linux that are free that are comparable to what you may be using now. A good list of Windows to Linux comparable programs is here: www.linuxalt.com. For instance, if you are looking for an alternate Office suite that is compatible with M$ Office, there is LibreOffice: www.libreoffice.org

Millions of Unemployed not Counted

Binyamin Appelbaum on the unemployment rate: "It has declined because people stopped looking [for work], not because they started working." Robert Oak at the Economic Populist agrees with this assessment, as well as many other economists.

That is what the government says, that "discouraged workers" stopped looking for work, and so therefore, millions are no longer counted in the unemployment rate. These are human beings who were swept under the rug and are no longer a statistic. That's pretty pathetic, when someone isn't even counted as a lousy number anymore.

The government is essentially saying that (only) 11.5 million unemployed Americans are STILL looking for 3.8 million jobs --- jobs that may, or may not, be within driving distance of their home --- as though an unemployed engineer is supposed to abandon his underwater home in LA and move to NYC to take a job at Walmart. And if he doesn't, he's either accused of being lazy, lacking jobs skills, being a drug addict or an alcoholic, or wanting to be on the government dole.

Many ill-informed (but otherwise, gainfully employed) Americans still believe that several million Americans had no good reason to stop looking for a job after being rejected over and over again over the course of 2, 3 or 4 years (and sometimes longer). Even if after these "lazy loafers" had already applied everywhere they possibly could, sometimes re-applying at the same places ten times over, only to be rejected over and over again.

Did you ever see the Human Resource people staring at you like you were crazy for even trying (if you had applied in person)? Or have them pathetically smile at you and wish you luck when they knew damn well you never had a chance in hell?

Why do many hard-working Americans still believe that millions of other honest and hard-working unemployed Americans (who are now economically desperate) just threw their hands up in the air and gave up (quit the labor force) for no good reason at all? Why do they still believe that ordinary people had preferred to go on the government dole instead? (Or that not-so-ordinary people are robbing banks just to get health care).

Could it because of multi-millionaires like Bill O'Reilly on Fox News?

And what are those 3.8 million jobs being offered to those 11.5 million (counted) unemployed Americans?

The job market has been increasingly polarized, with high-paid and low-paid occupations growing quickly, while middle-class jobs have been disappearing. And on top of that, median wages have stagnated over the past decade. Industries with low pay have grown significantly while mid-range industries have withered --- mainly driven by the steep decline in U.S. manufacturing.

Why have the number of middle-class occupations continued to decline? One reason is that labor-saving technological change has, over time, replaced a number of “routine” middle-class jobs like manufacturing, while leaving low-end service jobs and high-end positions largely untouched.

Also, institutional factors like the eroding value of the minimum wage as a labor standard and eroding protections for willing workers that want to form a union have also been important drivers of inequality and disappointing middle-class living standards over the past generation.

And the offshoring of millions of domestic jobs to low-wage countries has also been a very huge factor, as well as the H-1B visa and other guest-worker programs.

But the unemployment rate is lower now because the government doesn't count those who can no longer find a job (not necessarily because the unemployed stopped looking for non-existent jobs); but mostly because no matter what political party is in power, it's a failure for them to publicly admit that they (Congress, the President, and the Fed) are doing a shitty job of creating enough shitty jobs (let alone, creating decent jobs).

So maybe it is THEY (government executives who are on the government dole) who are the lazy ones or lacking jobs skills --- and/or are the drug addicts and alcoholics. Hmmmmmmmmmmmm?

* Regulators overseeing the nation’s largest financial institutions are distrustful of their bosses and afraid to speak out. A survey of roughly 400 Fed employees showed a workforce that is demoralized, an institution where teamwork is nonexistent, where innovation and creativity are discouraged, and where employees feel underutilized. The shaky morale is a legacy of Alan Greenspan’s 19-year term as Fed chairman. Now we have Larry Summers to look forward to --- for no improvement at all. (The White House is not yet vetting Janet Yellen for the Fed Chair.)

A Few of My Own (maybe Naive) Recommendations

1) Going back to the beginning of the Great Recession (December 2007), using data from the Social Security Administration and the Internal Revenue Service, have the Bureau of Labor Statistics create a new "U-7" unemployment rate to included all those who are no longer counted in the "U-6" unemployment rate. This would not include those who were forced to take an early Social Security retirement at age 62 or those who were granted a Social Security disability award --- but would include those who no longer report an income through wages to the SSA, or file a federal tax return to the IRS (unless of course, they have since passed away).

2) Raise the minimum wage to $15 an hour (indexed to inflation) on all companies (domestic and foreign owned) with more than 1,000 domestic employees (or have $500 million in GROSS domestic revenues), while simultaneously, making it mandatory that all offshored jobs are being performed by foreign workers who also earn the same prevailing wage --- or impose a heavy tariff on their imports back to the U.S. (This will help save the taxpayers on the cost of food stamps).

3) Ensure that all H-1B and other guest-worker employees are paid at least the prevailing "median" wage scales that are currently being paid in the U.S. to American workers --- but only allow such visas if it can be proven beyond any reasonable doubt that these visas are actually needed, and that these foreign guest-workers actually have certain skills that American workers supposedly don't have.

4) Impose a life-time ban on any government worker (including all military officers and politicians) from becoming a corporate lobbyist after leaving government employment.

5) Impose stiffer penalties on "union busters" and fully enforce the law, including criminal charges if company executives and managers are proven to be complicit in any way (meaning actual jail time).

6) Change Obamacare to include all part-time employees for all companies (domestic and foreign owned) with more than 1,000 domestic employees (or have $500 million in GROSS domestic revenues). This will help save the taxpayers on the cost of Medicaid.

7) Find a much better way to nominate directors for the Fed...like maybe a simple public online poll.

* The above list is not all inclusive, nor is it complete --- but it's a good place to start.

Wednesday, August 28, 2013

American Made Movie: A Documentary on Offshoring

A new documentary titled American Made Movie describes the decline in American manufacturing and points to a possible path to its revival. The 82-minute film debuts this month and opens with a baseball metaphor, showing how this all-American game works through the use of hundreds of foreign-made gear and clothing (just like in the NFL).

* American Made Movie is opening in theaters this Friday, August 30th beginning in Chicago and Atlanta prior to several other cities.

The film describes, with data and expert interviews, how U.S. manufacturing declined in the last 40 years and how technology, globalization and the search for low-wage countries had greatly contributed. Much of this information has been well known for decades, but the film comes alive with the personal stories of the companies, their executives and the workers.

The leading businessman in the film is Mark Andol, who owned General Welding and Fabricating in upstate New York. He gradually saw overseas competitors take away his business and sell almost identical products to his former customers. Overseas shipping costs, even for heavy goods, no longer are a hindrance to outsourcing, as North Carolina furniture manufacturers also have learned. The end of Andol's story celebrates the 2010 opening of his first Made in America store, selling only products completely made in the U.S.

The Louisville Slugger story in this film involves outsourcing across the Kentucky state line to Indiana. After years of manufacturing bats in New Albany, Indiana, the company brought manufacturing back to the Louisville plant, where everyone felt it always belonged.

The film proposes a more balanced relationship between production and consumption. The filmmakers ask consumers to seek out locally made and American-made goods, rather than shopping at "big-box stores" like Walmart who emphasizes low prices on products that are manufactured overseas.

Walmart claims, "We work directly with manufacturers, eliminating costly markups." Charles Fishman, the business reporter who wrote The Walmart Effect asks, "What is the high cost of these low prices?"

Walmart's market power is such that many of its suppliers face a stark choice: take dictation from Walmart, or lose half or more of their business. To survive in the face of Walmart's pricing demands, makers of everything from bras to bicycles to blue jeans have had to lay off employees and close U.S. plants in favor of outsourcing products from overseas.

Just ask Steve Dobbins, CEO of 75-year old Carolina Mills, a company that supplies thread and yarn to textile manufacturers --- half of whom supply Walmart. His company grew steadily until 2000. Then his customers (with Walmart's gun to their heads) began a hemorrhage of offshoring in order to find the dirt cheap labor necessary to meet Walmart's low price demands. Carolina Mills shrank from 17 factories to 7 within three years. The way Walmart "works with" its suppliers has been disastrous for American workers.

Now it's no longer Wall Street versus Main Street. The basis pointers like Walmart have gone global. No continent is immune (Africa is next). No community can escape. No one's job is safe.

American Made Movie (Trailer)

The irony of ironies is that the basis pointers revel in Creative Destruction, a concept borrowed from Karl Marx and popularized by Joseph Schumpeter after WWII. In Capitalism, Socialism and Democracy, Schumpeter wrote that "the same process of industrial mutation...that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism."

The cycle of destruction is endless. Walmart buys so much product that they dictate pricing to suppliers, driving down the suppliers' profits, and putting other suppliers out of business. All along their supply chain, workers end up out on the street...over a few basis points difference in unit costs.

Now we have "Electrify Africa" --- another one of Obama's great ideas for more globalization, in that, it uses U.S. taxpayers dollars to build an infrastructure that U.S. businesses can use to outsource more American jobs --- as well as enable a new "emerging market" for their products. As it is now, millions of U.S. taxpayer dollars are already being used to ensure that foreign countries comply with labor laws in the "free trade agreements" so that U.S. businesses can legally offshore more American jobs to other countries.

While the documentary American Made Movie is based on old news (that manufacturing is in decline and that we should buy American), the individual stories make for compelling viewing. Unfortunately, most Americans are unable to "buy American" because most families who shop at big-box stories like Walmart can't afford to buy the more expensive locally produced goods --- because employers in America refuse to pay their workers living wages.

Walmart, the most stingy company on the planet Earth (in the entire solar system) is owned by one family. Remember, this is the same company that refuses to increase pay and benefits for its employees --- and fires those who try to change that. Christy Walton alone rakes in over $1.2 million EVERY SINGLE DAY from Walmart dividends.

Robbing Banks for Health Care

Epic fail or strange success? When it comes to a recent (and bizarre) alleged bank robbery, it all depends on whom you ask.

Clackamas County sheriff's deputies, for example, might be more inclined to classify Timothy Dean Alsip's alleged robbery attempt last Friday a failure. Alsip's arrest at a Bank of America branch outside Portland, Ore, was especially easy because the suspect remained at the scene of the crime, according to CBS Seattle.

Speaking with members of the media, Clackamas County Sheriff's Office spokesman Deputy Mark Nikolai described the strange chain of events, beginning a little after 10 a.m. on Aug. 23.

"[Alsip] handed over a note saying, 'This is a hold up. Give me a dollar,'" Nikolai said of the events inside the bank, according to local media reports.

Rather than flee with his ill-gotten bill, however, Alsip reportedly took a seat in the lobby and quietly waited for police to arrest him, according to CBS Seattle.

Originally charged with both second-degree robbery and third-degree theft, Alsip saw his robbery charge dismissed, according to the Sheriff's Office website. Alsip remains in jail, having failed to pay a $40,000 bail on the theft charge.

According to The Oregonian, Alsip told officers he had robbed the bank in order to receive medical care in jail. Although he had no previous criminal record, Alsip had apparently been acting strangely in the days before the robbery. The 50-year-old homeless man asked random people for help and even called 911 on himself to "complain of various imaginary problems," reported The Oregonian.

Whether or not Alsip's health problems are legitimate, his plan to seek jailhouse healthcare may have been inspired by a similar robbery in North Carolina two years ago. At the time, James Verone told reporters that he asked the teller at a Gastonia, N.C., bank for $1 in an effort to get himself arrested, according to Mother Jones. The 59-year-old reportedly hoped to stay in jail just long enough to get free medical care for a host of conditions and then qualify for Social Security when he got out.

Tuesday, August 27, 2013

Obama's War on the Middle-Class

There has been another glitch in the President’s charm offensive with the middle class --- his name is Larry Summers.

After the Securities and Exchange Commission with Wall Street’s lawyers, putting a man of dubious financial dealings, Jack Lew, in charge of the U.S. Treasury, the President finally (finally) outraged his fellow Democrats with the leaked rumor that he was considering Larry Summers for the most important monetary position in the world --- the Chairmanship of the Federal Reserve Board of Governors.

On July 26 of this year, 19 Democrats and one independent sent an unprecedented letter to the President, urging him to nominate Federal Reserve Vice Chair, Janet Yellen, to lead the Fed when Ben Bernanke’s term ends early next year.

Summers has the notorious reputation as being part of the bullying gang that included the former Fed Chair, Alan Greenspan, and former Treasury Secretary, Robert Rubin, who triple-teamed Brooksley Born, Chair of the Commodity Futures Trading Commission in the late 90s when she tried to regulate derivatives. Their bullying succeeded, leading to unregulated derivatives being at the center of how Wall Street blew up the U.S. economy from 2008 to 2010. 

Summers was also part of the same team when it came to repealing the depression-era consumer protection legislation known as the Glass-Steagall Act. Once Glass-Steagall was repealed, Wall Street was free once again to merge its speculating casino units with banks holding FDIC insured deposits, leading to the 2008 taxpayer bailout of the too-big-to-fail banks. 

In an interview with Bloomberg News, Oregon Senator Jeff Merkley, a Democrat who signed the July 26 letter to President Obama, had this to say of Summers: “I start from a position of being extraordinarily skeptical that his background is appropriate for the role of the head of the Fed. If you nominate someone who is a life-committed deregulator to be in a regulatory position and if you believe regulation is necessary to prevent fraud, abuse, manipulation and so forth, then there’s a lot of questions to be asked: Why is this person appropriate?”

George Melloan penned an opinion piece for the Wall Street Journal making the claim that the big banks aren’t doing anything more egregious than they have done in the past, and the growing charges of fraud are the product of overly zealous regulators, “encouraged by the Obama administration” to blame the nation’s economic ills “on the rich, Wall Street, moneybags bankers, deal makers like Mitt Romney or almost anyone else who still wears a suit to work.”

Melloan worked for the Wall Street Journal as both a writer and editor for 54 years, retiring in 2006. Surely, after more than half a century working for the Wall Street Journal, he is actually reading the investigative reporting in the paper and not just the right-wing editorials.

Melloan’s evidentiary support for the premise that Wall Street simply can’t be any more corrupt than it was in the past is built around the Alan Greenspan theory (now debunked by everyone including Alan Greenspan) that bankers have a vested interest to self-regulate. (Wall Street bankers, both today and throughout history, have had an overriding interest to make as much money as they personally can.)

Melloan writes: “Have bankers all gone rogue? Populists would have you think so, and apparently a sizable majority of Americans hold that view as well, judging from opinion polls. But this is not plausible. Bankers are more likely to exercise extreme discretion in an era when they are being constantly reviled by leftist politicians, writers and placard-carriers in the streets.”

For Melloan’s first witness, he calls up Jamie Dimon, Chairman and CEO of JPMorgan Chase, the poor mistreated figure who is “paying dearly” at the hands of those populist regulators for no greater crime than simply calling parts of the Dodd-Frank financial reform legislation “idiotic.”

Melloan’s position on Dimon is a rude slap across the face to the investigative reporters who unearthed the London Whale derivatives fraud at JPMorgan; to the Justice Department prosecutors who just brought a criminal indictment against two of the traders involved in that matter; to Senator Carl Levin and the Senate’s Permanent Subcommittee on Investigations which thoroughly reviewed the case and unearthed the emails showing how JPMorgan’s books were being cooked to make losses from the trades appear manageable.

Melloan’s opinion piece is also an unwarranted distraction, if not outright intimidation, at a time when the news section of the paper is reporting seven open investigations of JPMorgan by the U.S. Justice Department.

The critical aspect of today’s crimes on Wall Street that Melloan fails to grasp is that thanks to the repeal of the Glass-Steagall Act in 1999, Wall Street traders are no longer gambling with just the firm’s capital. Today, they are using the FDIC insured deposits of the mom and pop accounts held in the main street banks they are misguidedly allowed to own. When JPMorgan lost $6.2 billion in wild, reckless trading of derivatives – the so called London Whale matter – it wasn’t betting with its own capital. Unbeknownst at the time to its regulators and the savings depositors of Chase, its commercial bank, it was gambling with the bank’s deposits.

From selling rigged interest rate swaps to municipalities, rigging the interest rate benchmark, Libor, in London, securing triple-A ratings on bogus subprime mortgages, betting against investments designed to fail while selling them to customers as good deals, to fraudulently foreclosing on desperate families, Wall Street has earned every bit of its abysmal reputation. No amount of Melloan fantasizing is going to change that.

The crimes on Wall Street today are exponentially greater and more deserving of prosecution because insured deposits are being used in ways that violate safety and soundness requirements of insured bank depositories. And, those deposits have been concentrated into trillion dollar holdings at a handful of Wall Street firms. This has no comparison in the history of Wall Street: it’s dangerous, it’s frightening, and it deserves to be of the utmost concern to the public and prosecutors.

Gene Sperling, the director of the National Economic Council, is telling people he may soon leave the post as one of President Obama's top economic advisers. These same people say that high on the short list of replacements is Jeffrey Zients, who has close ties to former Clinton Treasury Secretary and Citigroup executive Robert Rubin. He has also earned income as an adviser to the big investment bank Goldman Sachs, and has received speaking fees from various financial firms. More Obama cronyism.

But for all his "talk" about the middle-class, it appears that President Obama (by considering Larry Summers) is just begging for more of the same --- a war on the middle-class.

Low Wages equals Less Spending, Less Jobs, Less Profits

The very basics of capitalism...supply and demand (although the "demand" should be before the "supply"). So what have so many of the economists been missing?

It’s tough finding a job these days. It’s even tougher to find one that’s full-time. More than four years after the recession ended, nearly a fifth of American workers are part-timers, well above normal levels. More than 8 million people are working part-time because they can’t find full-time jobs. That’s given rise to fears of deep, structural shifts in the U.S. labor market due to technology and globalization (or perhaps the new health care law, which will require companies to provide health insurance to full-time employees.)

But a new paper from the Federal Reserve Bank of San Francisco argues there’s a simpler explanation for the rise of part-time work --- the weak economy.

And another new paper from the Economic Policy Institute provides both diagnosis and prescription of what is arguably the fundamental problem of the United States economy in recent years --- wage stagnation. Findings from the report:

  • Between 2002 and 2012, wages were stagnant or declined for the entire bottom 70 percent of the wage distribution.
  • For the entire period since 1979 (with the exception of the late 1990s), wage growth for most workers has been weak. The median worker saw an increase of just 5 percent between 1979 and 2012, despite productivity growth of 74.5 percent.

And it hasn't only been real wages that have lagged far behind productivity (or barely outpaced inflation), it’s average compensation (wages plus benefits) as well. Jared Bernstein:

Income is redistributed from paychecks to profits. That’s a characteristic of growing inequality and flows quite simply from the observation that the economy’s growth has to be going somewhere. If it’s not flowing much to wages and benefits, it must be flowing to profits (this is the point of another new report from the institute). Why is this happening? Economists typically cite globalization and technological change, both of which increase the earnings prospects of skilled workers relative to the less skilled. But that’s far from the whole story. The E.P.I. report shows that the real wages of college-educated workers have also been flat over the last decade as well (although workers with advanced degrees have done better).

From the New York Times: How Technology Wrecks the Middle Class - "Computerization has fostered a polarization of employment, with job growth concentrated in both the highest- and lowest-paid occupations, while jobs in the middle have declined." (This is known as job polarization.)

Four years into the economic recovery, U.S. workers' pay still isn't even keeping up with inflation. The average hourly pay for a non-government, non-supervisory worker, adjusted for price increases, declined to $8.77 last month from $8.85 at the end of the recession in June 2009, Labor Department data show. Stagnant wages erode the spending power of consumers. That means it is harder for them to make purchases ranging from refrigerators to restaurant meals that account for most of the nation's economic growth.

With more and more people working less hours and being paid less, they don't have the money to spend (creating "demand") so employers have no need to ramp up production (providing a "supply") and therefore have no need to hire additional people. It's been a downward spiral.

And when an employer sees any demand at all, whenever possible they produce with automation or cheaper labor abroad to increase profits because of CEO "incentive pay". If the government were to cap CEO pay, maybe they'd have less of an incentive to outsource or automate --- and instead, the employers can start rewarding their workers for their increased productivity by paying them betters wages...which would enable them to buy more (create "demand") and maybe employers will need to hire more people to keep up with the "supply" side of the capitalistic equation.

We can start with the minimum wage, which was much higher in 1968 than it is today. The minimum wage should be $16.54 today.

In 1963 when John Kennedy was in the White House, the minimum wage, when adjusted for inflation, was $8.37 --- a dollar and 12 cents higher than today's rate of $7.25.

Sylvia A. Allegretto and Steven C. Pitts lay out the math in a paper for the Economic Policy Institute. At its highest point (in inflation-adjusted dollars) the minimum wage was $9.44 in 1968. It's 23 percent lower now. And despite those who claim that a higher minimum wage leads to greater unemployment, the official unemployment figure in August of that year was 3.5 percent, less than half the current rate of 7.4 percent.

Productivity has risen - but working people have seen none of the resulting wealth. As Lawrence Mishel and Heidi Shierholz, also of the Economic Policy Institute, note: "During the Great Recession and its aftermath (i.e., between 2007 and 2012), wages fell for the entire bottom 70 percent of the wage distribution, despite productivity growth of 7.7 percent."

In fact, as Dean Baker and Will Kimball point out, "If the minimum wage had kept pace with productivity growth it would be $16.54 in 2012 dollars" - and that's using a conservative estimate of that growth.

Instead all of the resulting wealth has flowed to the wealthiest 1 percent in this country. That's no accident. It's the result of decisions made in corporate boardrooms, in the corridors of power, and in those corrupted places where those two settings merge into one.

Recently Obama has been asking for more teachers to teach STEM skills to our students, but he should already have known that there are many unemployed engineers. In fact, the U.S. Census had put the number at 1.8 million. And in a study by the Economic Policy Institute, they found that the United States has more than a sufficient supply of workers available to work in STEM occupations.

There are many older workers experiencing long-term unemployment who already have STEM skills and higher educations. But if American CEOs are going to constantly offshore those jobs to foreigner workers (or use H-1B visas to import foreign workers) who have the same exact skills (but will work for less), then what's the point of training more? And the same can be said for those with manufacturing or other skills.

Maybe the CEOs should be more focused on long-term growth (and boosting the domestic economy) instead of always using whatever means possible (like stock buy-backs) to acquire the quickest short-term gains.

Billionaire Larry Ellison of Oracle (who raked in over $92 million last year) once claimed the title for the world’s longest super yacht with his 454-foot Rising Sun. Maybe if these CEOs didn't feel the need to buy a bigger yacht every year, maybe more people could buy yachts too (and hire more DOMESTIC yacht builders.

Minimum Wage was $9.44 in 1968

The minimum wage should be $16.54 today.

In 1963 when John Kennedy was in the White House, the minimum wage, when adjusted for inflation, was $8.37 --- a dollar and 12 cents higher than today's rate of $7.25.

Sylvia A. Allegretto and Steven C. Pitts lay out the math in a paper for the Economic Policy Institute. At its highest point (in inflation-adjusted dollars) the minimum wage was $9.44 in 1968. It's 23 percent lower now. And despite those who claim that a higher minimum wage leads to greater unemployment, the official unemployment figure in August of that year was 3.5 percent, less than half the current rate of 7.4 percent.

Productivity has risen - but working people have seen none of the resulting wealth. As Lawrence Mishel and Heidi Shierholz, also of the Economic Policy Institute, note: "During the Great Recession and its aftermath (i.e., between 2007 and 2012), wages fell for the entire bottom 70 percent of the wage distribution, despite productivity growth of 7.7 percent."

In fact, as Dean Baker and Will Kimball point out, "If the minimum wage had kept pace with productivity growth it would be $16.54 in 2012 dollars" - and that's using a conservative estimate of that growth.

Instead all of the resulting wealth has flowed to the wealthiest 1 percent in this country. That's no accident. It's the result of decisions made in corporate boardrooms, in the corridors of power, and in those corrupted places where those two settings merge into one.

Monday, August 26, 2013

Senator Ted Cruz is an Ass

(* Editor's Note: This post is about American workers' job skills, but we just wanted to call Ted Cruz an ass...because he is...like most in the Tea Party.)

Ted Cruz, a Republican from Texas (seen giving a speech on C-SPAN last night) said Obamacare was forcing businesses to offshore their manufacturing to China (although this has been happening since the 1970s); and a pundit on MSNBC said today that manufacturing workers who had lost their jobs to offshoring had failed to acquire new skills --- like those in the tech industry --- even though those jobs were also offshored. (These are the same people who our running our country and reporting on the economy!)

Howard Foster writes, "President Obama was once asked by the wife of an unemployed engineer why the U.S. allows H-1B visas for engineers and other high-tech workers when so many are unemployed. The president seemed remarkably ill-informed in responding. He said, without citing any statistics, that businesses tell him they cannot find enough engineers."

But this kind of anecdotal evidence is usually misleading. Obama should have known that there are many unemployed engineers. In fact, the U.S. Census had put the number at 1.8 million.

The editorial board of the New York Times writes, "There is a durable belief that much of today’s unemployment is rooted in a skills gap, in which good jobs go unfilled for lack of qualified applicants. This is mostly a corporate fiction, based in part on self-interest and a misreading of government data."

It seems that many media pundits, bloggers, radio hosts, lobbyists and politicians are trying to convince the general public that over the course of 19 months (during the Great Recession, from December 2007 to June 2009) 8.7 million workers suddenly lost their jobs skills.

But many of them (especially if they are over 50 years old) have PLENTY of job skills --- a LIFETIME of jobs skills. The simple truth is, Americans don't lack job skills, they lack jobs --- and it's not because they lack job skills: "We need an economy that matches the needs of the population, not economic elites that ridicule the American population for not fitting into the dystopia that they engineered."

(Read: H-1B Guest Worker Fraud and the "Lacking Skills" Scam)