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Down and Out in White-Collar America
XorNand writes "Fortune has a pretty sobering article on the employment situation for white-collar workers. By many accounts, we've never had it harder--the slump in the 80's primarily hit blue-collar workers. While bleak, things might be inching towards the light; as my econ professor says, jobs are the last thing to recover after a recession."
What's the basis of your conclusion? Do you expect an entire economy to make a U-turn in a few months? What would qualify as a "fixing" the economy in your mind?
Life in Orange County
You are completely wrong.
A gaining dollar is not good for the economy - it hurts exports.
This is because for American companies operating overseas, the weaker the dollar, the more dollars they can exchange for their foreign profits.
Because of the above, our companies are more competitive because they can set lower local prices overseas (in, say, yen) while still making the same amount of dollars.
In other words, a weak dollar helps our exports, a strong dollar does the opposite.
In fact, a major concern right now is that if a weak dollar hurts the exports of other countries, they will try to devalue their own currencies.
Of course, currency values are all relative, so if Japan devalues the yen, and we still want a weak dollar, we have to devalue further, prompting them to do the same...and so on.
Things then spiral downward.
For example, from the Fortune article: Klinck earned more than $200,000 a year at MetLife, managed more than 1,000 people, and knows languages and programs ranging from Fortran to PeopleSoft, but cold-calling for jobs has been--well, cold.
I hope that Mr. Klinck reads my post and finds it useful. Klinck's problem or anyone at his high level in the employment food chain is that there are very few companies who could afford him. The "Catch-22" is that even if he says he will take a salary cut in half--$100,000--companies won't believe he will live happily on this relative pittance. He is screwed in corporate America.
Unless he is very lucky and lands a MetLife clone job, his best bet is to hire himself. Mr. Klinck has very little choice other than to become self-employed. He is the only person/company who can afford to hire him.
Harpo Tunnel Syndrome--my wrist feels funny.
What is Sweden's secret? Progressive taxation. Average production workers in Sweden pay no income tax to their central government because the bottom bracket starts about a tenth above the average production worker's salary. The Swedish tax rate is typically about 57% of income earned above that base. Sweden only has two central government tax brackets: 0% and 25%, so their "federal" taxes are actually closer to the "flat tax" than ours are in the U.S. The additional 32% or so varies by local jurisdiction, as does the income bracket at which it takes effect.
The problem in the U.S. is that top-bracket income earners (including corporations, medium-sized businesses, and most of the top 1% rich, excluding some of the prominent top rich in the media spotlight) pay a huge amount of money in order to help elect government officials who will keep the top tax brackets low. This effectivly "saves" them an even larger amount of money, except for the externalities like crime rate, debt, and property values. We used to have regulations providing equal air time for federal candidates, but Reagan's FCC did away with those, so most candidates today, even most nationally prominent Democrats, sure know which side of their bread is buttered on. There are some notable exceptions, however.
Back when I was in highschool (Class '01), I was sold on taking Cisco classes at our Community College for the better part of my day all year. My initial plan was to graduate early, get a job doing whatever, but I went for Cisco instead because 1) It was 13 free college credits and 2) EVERYONE was telling me how I'd be making $30k/yr easy, probably even before I got out of college. Took the classes, got my CCNA in Nov. '01, right about the time the economy officially turned to shit. I worked making collection calls for Ford until 6-02 when I joined the AF, got a medical discharge 6 months ago, and now I can't find a job anywhere. I know my stuff, I'm a CCNA, but I can't get a job. I do mean anywhere to. I never had a problem getting jobs when I was in high school, but now that I have a diploma, some college, a professional cert., and some life experience, I'm having to dig through the my sofa for change for food or gas.
Now, I'm really not trying to sound like I'm bitching, because I'm not, I'm just recounting my experience. I'm also not saying all those people who told me Cisco was great screwed me, but rather, I think they we're just going with the info they knew to be true. Problem is their info was from '99 or so. Now all the IT jobs I can find open want more experience and skills than I think any human could have, and want to pay them something in line with McWages.
All in all, my whole experience has me actually wondering if IT is even going to be a viable career for long. For some reason, I see it going to something of a plumber type occupation. Very few places have a in-house plumber and only call one when they are need for their specialized skills. With computers becoming easier to use and more stable all the time, I can see IT people no longer needed on a day to day basis and instead delegated to being the IT plumbers. Seriously, have you ever seen one of Apple's XServe's? I don't think it can get much easier than that. Maybe I can be a teacher, seems like I'm always hearing about more of them being needed...
Request: ECM unit, 1000 km fullerene cable, 1 tactical nuclear weapon. Reason: Birthday party for foreign dignitary.
You are not remembering correctly. During WWII we were spending in excess of 60% of our GDP on the military. For all intents and purposes, it was all we did. The only onther production that really existed was that which was necessary to keep the nation necessary. All industries that could be were converted to the war effort.
Now today, our spending on military is about 3.2% of our GDP. As you say, trivial. What is more interesting is teh comparatvie numbers. In overall spending, as in dollars, we are, by far, the biggest spender. However in terms of % of GDP we are rather low.
IANAE
You got it mostly right. It's easier to look at it the other way: when foreigners want to invest in the US, they need dollars. Thus the demand for dollars increases, and the price level of the dollar will rise. (This is of course in an idealized world where that's the only thing going on at the time--ceteris peribus, as economists would say.) A similar thing happens when people in other countries want to buy American goods and services.
When the "value" (price) of the dollar goes up, it means Americans (who own lots of dollars) can afford to buy more PS2s because it takes fewer dollars to buy a yen than before. Unfortunately, the Japanese can't buy so many, uh, whatever they buy from us because it takes more yen to buy a single dollar. So our imports go up and our exports go down when we have a "strong" (high priced) dollar.
When the factors reverse, we have a weak dollar, and the opposite happens. We export more and import less. (Before you assume this is ideal, think what happens to the prices of consumer goods when competition from overseas is lessened.) As you might guess, the ideal value of the dollar relative to the yen (remember, the dollar might get stronger against the yen but weaker against the euro at the same time) is something the US and Japan might not agree on.
Now, about worker efficiency. Economists have a term for this: productivity. It's not just a buzzword: productivity can be measured in terms of product per man-hour. To find a (somewhat meaningless) national productivity, divide the GDP by the total number of hours worked. For a time in the 90s some economists in the Federal Reserve (which influences the economy, but that's beyond the scope of this post) thought that technology advances were pushing up productivity faster than usual, allowing the "natural rate of growth" of the American economy to increase. (Some even talked about the "end of the [boom-bust] business cycle", in the same way people talked about the "end of history" and other such nonsense.) So instead of aiming to grow GDP at say 3%, they though they could get away with 5%. The result of this was an economy that starting moving faster than the Fed could control it, finally spiraling into a recession. The truth of the matter is there's very little hard data to suggest that overall productivity grew any faster during the last ten years than at any other time in the postwar period.
Finally, consider that there are other major causes for this recession. For example, a collapse in consumer and business confidence. This has been caused partially by the post-9/11 hysteria, fueled by FOX News and color-coded alerts. Also contributing is the government's increasing deficits. Gingrich and his radicals forced Clinton to balance the budget, and that worked great in good times. Now that bad times have hit, the government is going a little crazy with deficit spending--some is good, but it should be targeted spending, not tax cuts to people who already have lots of discretionary income. Government deficits have all sorts of reprecussions in the economy, few of them good. Another cause has been the amount of corporate crime that has recently been revealed (e.g. Enron). Businesses have been getting away with more and more under the last 4 presidents, and it sure doesn't give people confidence to think "my company could be next--where will the food come from if I'm out of work?". So people are saving more, and an economy built on rising amounts of consumer debt is collapsing.
In the long run the current shake-up in the economy is health. That sure isn't comforting to the man on the street, though. If you don't like what's being done about it, remember to vote in 2004. That's the only way you'll get people in power that share your views, whatever they may be, on what should or should not be done for the economy in tough times.
Gates' Law: Every 18 months, the speed of software halves.
http://www.nationalpriorities.org
Try the Interactive Tax Chart.
In that they have a 99% literacy rate, while the U.S. has 97% (what a joke! As a certified literacy tutor, I can personally attest that the U.S. English literacy rate, including undocumented workers, is closer to 85%.)
They spend 2.1% of their GDP on defense.
Their economy is 69% services, whereas the U.S. economy is 80% services. Which do you think is more robust?
Yes, in Germany.
Yes, assuming you think having a child, obtaining a birth certificate, etc., is important.
Yes, many people.
I would be hard pressed to find a single German citizen in a thousand who prefers the U.S. work week and typical vacation schedule. So their taxes are higher, so they get more time off. It's a wash. TANSTAAFL.