Stay Curious My Friends

After hearing all the blah blah blah about the Bush tax cuts I’d like to propose that anyone with a salary above $500,000 be hit with a 2% to 5% tax that goes solely to retraining the bottom of the work force. As per the previous post we need some massive educational effort to really move people who were in construction, real estate, the car industry, heavy industry in general, and other segments of the economy that have gotten hit so hard to new segments that will actually exist and grow over the next decade. And mostly this means towards green energy, computer fields, and service based industries.

Or we go with plan B, we legalize weed and tax the living hell out of it. I’ve seen estimates that claim California alone could reap 1.4 billion a year from that, let’s dump that all into retraining our work force (and possibly buying them delicious Doritos).

Over the last 50 years the USA hasn’t had to worry about training too much, globalization was still a distant worry and our economy was doing well. Now we are being forced to evolve and remember what it’s like to have a little competition in what is becoming a more equal playing field with graduates from India, China, Brazil and other countries being able to compete for jobs that were once out of their reach. So, if your job is not very hard to do, and with modern technology we can outsource it for half the pay and a 10% increase in management cost, guess where your job is going?

Just look at cashiers at grocery stores, they are slowly being replaced with computers that enable consumers to do the checkout process, in five to ten years with RFID the computer might just read what is in your cart. There will always be some cashiers but that is not a job market that is going to grow, and that is certainly not one that is going to see their pay raise over the next ten years. Similarly a lot of low paying jobs will probably always exist but technology is going to allow us to reduce those work forces, and unless the government gets involved those will not be much more then whatever the minimum wage is at. This kinda sucks but reality does suck sometimes.

So how to retrain people? That is a hard question and one I have a lot of ideas on but I’m not sure if there is a right answer besides spending a lot of money and try a lot of different things…

The US job market is a much different beast then previous downturns and we need to change our strategy for attacking it. When the housing bubble crashed it leveled the construction industry as well as manufacturing. This rippled over and a lot of small businesses that were inefficient or didn’t have the means to survive for the 5 to 6 months when consumer spending contracted didn’t survive. The people left jobless can’t get jobs in their former industries because those sectors are dead in the water or growing very slowly. And they lack the training to move to industries where open positions are available because those generally require skills that take time and schooling to develop.

In an interview, Mr. Burtless called the argument that the U.S. is suffering from a skills mismatch “nonsensical” because employment in most industries has declined over the last couple of years, suggesting there is little work to be had – period. It’s possible that some specific occupations are understaffed, but if there’s a broad misalignment between available jobs and available workers, Mr. Burtless insists it doesn’t show up in the labour statistics.

I’ve seen similar in the hosting industry over the last few years. When we hire someone we have to train them ourselves or hire them from a company that trained them. Right now we have six open positions we are trying to fill and the number of US applicants who are qualified is very low. The people coming in from retail, construction, and manufacturing lack the drive to learn new skills. And I can’t blame them as most of the available jobs are asking them to learn computer skills that they have no experience with they can’t muster the passion for. Starting pay for a level 1 chat, phone, or ticket support position in web hosting is $10 dollars and they are faced with making about the same or less plus having to start on the ground floor of an entirely new industry.

This isn’t just something the US is facing, India has problems too but they are able to do a lot better because their labor is so cheap that the manual labor market is still exploding as they grow their infrastructure. And with the income gap in that country you still have the middle class hiring people for housekeeping and other activities that are non existent in the USA.

I think the money the USA is spending currently  should be split between two things to combat this:

First, we need to start a national program to rebuild our power infrastructure. The improvements made over the last few years to our highway system our great but we need to shift this over as it has more benefits. Our power grid needs to be redone to be smarter and we need to start work on new nuclear plants, new solar fields, and new wind farms. This has the added benefit of training people in those industries which are going to grow over the next decade.

Second, we need to start a national program to cover 90% of the tuition or other training costs in fields that have high job growth. For fields like engineering, computer science, programming, teaching, etc we need to provide a financial incentive for people to learn those. And this doesn’t mean only college, technical schools and others can often train people faster and better in some fields.

I think if we work on those two things over time our unemployment rate will fall and the country will be posed to capitalize on the long term changes of the global economy.