Incomes drop most in 20 years

[gatorman_07732]

Originally Posted by mdgator05

You are right about corporations setting up globally to remain competitive, since we have designed the economy with free capital markets. However, workers do not have the same option, as there has been nowhere near the push for making free labor markets, through the end of immigration and emigration controls.

As it stands right now, on the low end of the scale, there just aren't enough jobs for all the people who are low skilled that are stuck in the US due to immigration/emigration law and cultural/language barriers. That is why you have a massive structural unemployment.

The Dot-Com bubble was not all semi-skilled labor (there were some definite semi-skilled manufacturing positions that accompanied the boom, but those were not the majority of jobs). I never claimed it was. The recovery from the crash involved forming a semi-skilled and unskilled labor-based bubble in housing. The Dot-Com crash just resulted in reallocation within the same industry, as the successful companies of the Dot-Com boom period consolidated the market (Google, Amazon, eBay, etc.).

However, a former textile worker with a high school education and the skill set of an unskilled laborer, has no such option. While on an individual level we can train some of them, we don't have enough skilled jobs to allow everybody to do this. In addition, some of the people in these positions are not particularly well suited for this form of labor.

You're premise of the dot com bust is completely wrong. Hence dot com bust, it was a complete bust of the technology sector and as a result semi-skilled workers got hurt. It was a collection of high tech sectors that lead the way in the shrinking of jobs. Crap ran down hill. I was there and lived it and had 300 employees gone at the drop of a hat and shut down my Tampa office. I do know one of my clients Motorola shipped their production to Spain, but those type of things were a small part of what happened as it filtered down.

[mdgator05]

Originally Posted by gatorman_07732

You're premise of the dot com bust is completely wrong. Hence dot com bust, it was a complete bust of the technology sector and as a result semi-skilled workers got hurt. It was a collection of high tech sectors that lead the way in the shrinking of jobs. Crap ran down hill. I was there and lived it and had 300 employees gone at the drop of a hat and shut down my Tampa office. I do know one of my clients Motorola shipped their production to Spain, but those type of things were a small part of what happened as it filtered down.

Yes some semi-skilled workers got hurt. And then the housing market bubble started, and much of the damage was dissipated for semi-skilled workers.

And much of the technology sector shifted their semi-skilled work overseas. Phone companies, computer manufacturers, etc. It wasn't a huge problem when the housing bubble started, allowing many semi-skilled workers to switch sectors. However, short of starting another bubble in an industry that can't be outsourced, such as the housing market, there is relatively little reason for most firms to setup production in the US, as labor costs for easily substitutable labor are too high here. However, due to government intervention in the labor markets, preventing labor from reallocating efficiently regardless of the country in which the laborers were born, you end up with a structural deficiency in work for certain people when you expand the capital markets into international capital markets.

It is fairly standard classical econ. Government intervention in a market causes structural issues with that market.

[rivergator]

Corporations are doing great, their employees not so much:

As a percentage of national income, corporate profits stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950, while the portion of income that went to employees was 61.7 percent, near its lowest point since 1966. In recent years, the shift has accelerated during the slow recovery that followed the financial crisis and ensuing recession of 2008 and 2009, said Dean Maki, chief United States economist at Barclays.

Corporate earnings have risen at an annualized rate of 20.1 percent since the end of 2008, he said, but disposable income inched ahead by 1.4 percent annually over the same period, after adjusting for inflation.

“There hasn’t been a period in the last 50 years where these trends have been so pronounced,” Mr. Maki said.

At 218,300 employees, United Technologies’ work force is virtually unchanged from seven years ago, even though annual revenue soared to $57.7 billion in 2012 from $42.7 billion in 2005.

The relentless focus on maintaining margins continues, even though profit and revenue have never been higher; four days after the company’s shares soared past $90 to a record high last month, United Technologies confirmed it would eliminate an additional 3,000 workers this year, on top of 4,000 let go in 2012 as part a broader restructuring effort.

link

[mdgator05]

Originally Posted by rivergator

Corporations are doing great, their employees not so much:



link

Yep and that should continue. A corporation is allowed to sell internationally and produce internationally. So they can produce goods for very cheap rates while selling to the widest audience possible.

Workers do not have the same capability. If people truly believe in the free market, they should be screaming loudly for an opening up of the labor markets, so that workers can get in on the advantages of free markets internationally. Having a tariff system for labor, which is essentially what immigration controls are, is probably the largest control the government exerts on the free markets right now.

If somebody truly believes the cultural and language barriers are too much for the free market to overcome in these situations: we could either move back to a control economy on an international level, so that in order to sell in the US, you really need to produce in the US or you could deal with the damage caused to workers by having free international capital movement with highly restricted international labor movement.

Of course, the problem, which can even be seen in this thread, is that this causes both parties' ideology to implode in on themselves. Many Republicans say they want free markets but also have a strong nationalistic bent that tends to forbid them from even discussing a topic like free immigration and emigration. Add on that redistributive programs are a non-starter, and you end up with an ideology unable to deal with this problem. Instead, they hide behind the idea that somehow if you could lower taxes, you can overcome differences in labor costs on the order of 3-10x magnitude, depending on the country. It is a safer idea and keeps them from having to examine their own ideology too deeply.

The Democratic Party is strong in areas making the most money off of the current system, like New York City, Coastal California, Chicago, Seattle, Boston, etc. and in areas like Cleveland and Detroit that have been decimated by this system. I will say that they are closer to being able to talk about it because the status quo system of allowing firms to make huge profits but then redistributing to those that they hurt to maintain that system is not against a central ideological tenant of the Democratic Party. However, Democrats do try to distance themselves from that position in many cases due to the fact that it sounds awful in a political commercial (redistribution is bad, huge corporate profits with no money to workers is bad, maintaining a system with structural unemployment for poorer workers is bad, etc.), which somewhat restricts their ability to talk about the problem. Basically, you are pitting the prosperous liberal areas against the poor liberal areas, which results in the maintenance of the status quo, but with limited redistribution due to Republican positions on that issue.

[gatorman_07732]

Yeah, its a big ole conspiracy. Perhaps they should be owned by the government

[mdgator05]

Originally Posted by gatorman_07732

Yeah, its a big ole conspiracy. Perhaps they should be owned by the government

I am not sure you know what a conspiracy is if you took what I said as a conspiracy. Conspiracies require people to...conspire. Nobody needs to conspire about this. The unwillingness to talk about this is very individual. It is a bunch of people in government acting in an individually optimal manner based on the behavioral motivation to avoid any issues that cut across their constituencies. It isn't a conspiracy...it is basic behavioral econ with a major macroeconomic and labor market consequence.

[corpgator]

MD, you're wasting your time.