Awful Motors has introduced “new, improved” wheel design

Awful Motors has introduced square wheels, a cool new feature on all of its models.  Awful Motors stated in its introduction that round wheels were boring, they just went around and around.

This just in, after thousands of complaints of Awful Motors’ square wheels, the company has announced that by popular demand it will replace the square wheels with octagonal wheels, providing a significantly smoother ride.

Far-fetched?  This is not far from the abrupt changes that so many software designers put into their products.  A feature was working fine for millions of users, and then some designer has a “better idea”.

Some bothersome changes I’ve found recently are Yahoo! Finance’ rework of its pages and the Star Tribune’s changing relatively simple software to move between the print edition and an expanded article to cluttered software that never seems to work as one would wish.  I have no idea how other readers perceive the changes to the Star Tribune, but Yahoo had a page for comments.  These comments were almost all negative.

Google once had a simple way of moving from blog authoring to statistics without signing in again.  Now one has to log in over and over again and there are several clutter pages between authoring, feed analysis, and income review.

Apple, once the computer for the rest of us, has morphed into guess how this cool new feature works.  In the first few years of the Macintosh I was eager for a new version when real advances were made - hard drives, color, drag and drop, and on and on.  Now, I update to a major new release only when I buy a new device.

Often I think these changes are not for the benefit of the uses but the employment prospects of the designers.

Square pegs do fit in round holes

i am reading No Ordinary Disruption by Richard Dobbs, James Manyika, and Jonathan Woetzel.  I am in the middle of the chapter “The Jobs Gap”.

The basic problem is that most work has changed from production or transactional to interactional.  That is, most jobs were making something or providing a direct service, such as a bank teller.  Now many jobs are interactional, such as a doctor or lawyer.  Some of these don’t require much training, such as home health aide; others require years to acquire.

Worse yet, too any employers look for overly specialized skills without looking at the person’s ability to learn.  For example, they want somebody who is proficient in Microsoft Word, but they won’t accept somebody who is proficient in Apple’s Pages. Duh! They are both word processing programs.  The skill of writing should have more weight than the tool of writing.  Maybe the person who knows Word has poor grammar, but the person who knows Pages has excellent grammar.  Who will be the faster learner?  Probably not the person with poor grammar.

Thus, the square person with skill in Pages could probably easily fit into the round hole of Word.  Unfortunately, too many people hire on the basis of what an applicant knows than on the basis of what an applicant can learn.

Advice for the Democrats

Kevin Baker wrote an interesting opinion for the New York Times: “Delusions of the Democrats” subtitled “Demographics will not save them”.

He asserts that more female voters and more non-white voters will not help the Democrats in future election.  He asserts that past successes were built on bottom-up ideas rather than top-down pronouncements.

My own take on the Democrats is that they have too many who focus on identity politics and not enough on issues that affect larger groups of people.  Which is a larger group?  Gay marriage proponents or people looking for good jobs?

His closing remark sums it up:

“Invite us to dream a little. You don’t build an enduring coalition out of who Americans are. You do it out of what we can be.”

Job Skills Done Right

Many companies expect prospective employees to have the right "skill set" on day one and do absolutely nothing about creating prospects with those "skill sets."  "A recent study by the Minnesota Department of Employment and Economic Development found that the shortage of skilled workers is a chief concern among factory managers. But the study also found companies don’t offer competitive wages or train new workers to program today’s computerized high-tech factory machinery."

One company doing it right is E.J. Ajax & Sons Inc. of Fridley, a metal fabrication company.  Erick Ajax works with Dunwoody Institute in Minneapolis to find interns, to sponsor scholarships, and to hire graduates.

See "Fridley family firm E. J. Ajax is a model for training", Dee Depass, Star Tribune, 2013-03-31

You get what you pay for!

Quote of the day: Education - shooting ourselves in both feet

"When we shrink investments in higher education and research, 'we shoot ourselves in both feet,' remarked K.R. Sridhar, founder of Bloom Energy, the Silicon Valley fuel-cell company. 'Our people become less skilled, so you are shooting yourself in one foot. And the smartest people from around the world have less reason to come here for the quality education, so you are shooting yourself in the other foot.'”

"As I've said, nations that don’t invest in the future tend not to do well there."

Both from "Do You Want the Good News First?", Thomas Friedman, New York Times, 2012-05-19.

Friedman didn't write it explicitly, but I find it ironic that some businesses complain they can't find enough qualified employees and complain about taxes.  Duh, do they think that hundreds of thousands are going to be able to afford to pay for all their training, especially when so many companies want narrowly defined "skills"?

Gloom and doom or bloom and boom?

Even among well-off people one hears talk of the bad economy.  Yes, there are too many people without jobs or too many people that are earning far less than they would like.  This is not good.  But not all people are without jobs and not all people are earning less than they would like.  These are not only the one percent.

As I read about manufacturing increasing, about companies not finding enough skilled employees, about all the new brew pubs being opened, seeing so many apps for iPhones being produced, and so, so many people with cell phones, lap tops, and tablets, the economy can't be that bad.

Of course it's bad if you've been kicked out of your house and lost all your equity.  But there are many others still in their houses.

Daniel Gross wrote "Good News for Jobs: Rising Demand", Yahoo Finance, 2012-03-28, giving numbers for increased housing starts, increased remodeling permits, and increased sit-down restaurant business.

As more people are working, more people are spending money, which puts more people to work.

Did Bush's or Obama's stimulus packages lead to this improvement?  Probably not.  Well, stabilization of a bad situation helped, and once things are stable they can improve.  Did high taxes hinder this improvement or low taxes encourage this improvement?  Probably not.  Many economic ups and downs happen independently of the tax situation.

I've often said that the government shouldn't be providing tax breaks for certain industries or subsidizing others.  These often have limited impact and often backfire.  What it should do is increase and target its buying.  Replace vehicles and computers more frequently.  Want higher gas mileage nationally, increase the fuel economy requirement for government cars.  Want to promote alternative energy; put alternative energy sources on government property, even if they are only supplements.  Alternative energy was set way back when Reagan took Carter's solar panels from the White House.

I think the problem is that we expect Presidents to micro-manage, not govern.  That is, favor this group or that group instead of providing a broad, stable framework for people to make decisions.

Are fewer manufacturing jobs always a bad thing?

Dick Palmer picked a poor example about the decline of manufacturing when he mentioned Rochester, New York, home of Eastman Kodak.  How many rolls of film has he been buying recently?  Few people use film anymore; most cameras are now digital and can take many more pictures than film cameras.  In fact, it is difficult to even sell a film camera on eBay. "State exports may be up but nation still hurting", Dick Palmer, Duluth Budgeteer, 2011-01-06.

Technological changes have led to many more job changes, but I'll come back to these in a bit.

Another contributor to job changes for over two hundred years has been low cost manufacturing, whether by low-cost labor or high productivity.  Weavers in England and India were put out of business by power looms in England.  Instead of high-skilled weavers, children could and did operate the machines.

New Englanders stole some of the designs and set looms up in Massachusetts.  They hired hundreds of young women to operate the machines.  Feeling exploited, workers organized into unions to push for more rewards for their labor.

Then the textile mills lowered their costs by moving to the South where unions were not tolerated. Even then, people found opportunity for better paying jobs and to attract labor, the companies had to raise wages.

Then shipping became cheaper, and textile companies found even lower cost labor in Asia and Central America.  And as labor becomes more expensive in those countries, the companies move on to other countries.

Higher productivity means fewer people are needed to manufacture the same amount of goods.  Higher productivity comes from more and more mechanization and now computerization.  Even in the 80s, Ford could produce cars for less than GM because it used more mechanization and fewer workers.  Fewer highly skilled machinists are needed thanks to numerically-controlled machine tools.  Write a little program to make the cuts, put the code into the machine, and have a cup of coffee.

My father was a well-regarded dental prosthetic technician specializing in crowns.  I have a folder of letters from dentists praising his work.  When I got a crown last year, the dentist waved a wand over my teeth, an image appeared on the computer screen, he rotated the image and made some adjustments, he clicked OK, and a machine in the basement proceeded to make the crown.  We chatted awhile, and then he went downstairs to get the crown.  He put it in my mouth, pulled it out, made some adjustments with his drill, put it back in again, had me grind my teeth, and so on.  In two hours, I had a new crown in my mouth, not a temporary to be replaced in three weeks and several visits later.

What is manufactured has changed dramatically in the last few decades.

When I worked at Univac programming mainframes mainframes in the 1960s, dozens of people would thread wires through little iron donuts for the main memory.  When I started, a large memory had less than 400,000 characters, each character represented by six donuts.  When I left nearly twenty years later, a large memory had about six million characters on an array of integrated circuits on several sets of large circuit boards.  Now I carry eight billion characters of memory in my shirt pocket.

The miles of film that Eastman Kodak spewed out and put in little boxes have been replaced by memory cards the size of the end of one of those boxes.  On a 1991 trip to Japan I shot nine rolls of film; my cost was over one hundred dollars for film and processing.  On a 2007 trip to Japan I shot almost forty percent more pictures on a single memory card that cost less than fifty dollars, and I used the card over and over again for many hundreds of pictures more.  My cost of processing was my time to download the pictures to my computer.

What is considered manufacturing has changed even more dramatically.  We don't consider software on a disk or downloaded from a website as a manufactured product, but it is.  It's just that the balance between design and physical rendering has moved dramatically to the design side.  I haven't checked, but I assume that Apple Computer has more employees today than IBM and the "Seven Dwarves" of mainframes had thirty years ago.  Apple definitely has more customers spending a lot more money than the mainframe manufacturers did.

The problem is not the decline of an economic sector, but the rate of change of the economy.  I think few people, whether individuals or people in government, business, and education, have sufficient understanding of the change.  Too many people are judging tomorrow by what happened a decade ago.  And too many people are assuming that solutions that seemed to work twenty years ago are going to work today.

Abraham Lincoln said it 165 years ago, "As our case is new, so must we think anew."

To his credit, Dick Palmer has started to think anew.  He does end his column with and elaboration on "The secret ingredient to success today is education…"

Weak economy with record profits?

I've long thought that blaming government policies for the "weak economy" has been so much hooey and that blaming the Democrats alone for all the "bad" government polices has been even more hooey.

Morgan Heusel looks at all the factors in "Why Corporate America Isn't Hiring".  He has a long list of factors including that many companies have learned they are getting just as much work from fewer employees and that older employees are staying longer.

I also note that the Star Tribune has been reporting many Minnesota MANUFACTURING companies have seen increased business, especially exports, and profits.  And so many letter writers complain, "We don't make anything in America anymore."  Hooey!

Heusel concludes with "we have a jobs crisis not because of a lack of demand, but because we're suffering from a mental recession of fear and uncertainty."

Losing money by avoiding taxes

On NPR's "All Things Considered" we heard an interview with a businessman who said he was reluctant to hire any new employees because of the uncertainty of the tax rate changes.  I immediately thought, "What do tax rates have to do with hiring?  Either the costs are covered by sales or not.  Taxes will be on the net income, not costs.  Doesn't this guy know accounting?"  So, I made up a scenario and ran the numbers.

Suppose a new employee would be paid $20,000 a year.  Payroll taxes, health insurance, and so forth could be $10,000 a year.  Materials for the employee to do his or her work might cost $10,000 a year.  The employer would then have to have $40,000 a year in additional sales to break even.  Taxes would not be an issue.

Suppose that the employer makes $44,000 in additional sales a year because of hiring the new employee.  That gives $4,000 additional net income.  If the company is an S corporation, then the $4,000 passes on to the employer's income, not the $44,000 in additional sales.

If the marginal rate for the employer's personal income tax was 30%, then his or her additional tax would be $1,200 leaving $2,800 extra income.  If the rate was 35%, then the additional tax would be $1,400, leaving $2,600.

So, this employer would give up over $2,000 in extra income to avoid paying $200 more in taxes in his "worst case" scenario.

I ran this scenario by my daughter who is a partner in and president of her own company.  The only thing she said was that most companies would want to have a 200% return in sales per each new employee rather than a 110% return.  That is, if a new employee cost $40,000 per year, then sales should increase $80,000, rather than $44,000 I propose.  If so, that is lot of extra income to throw away to avoid paying additional taxes.

"A Grand Unified Theory of the Jobless Recovery"

The Atlantic Monthly published an article with the above title by Derek Thompson on 2010-07-26.

He gave some explanations that I was only vaguely aware of.  One of course was high executive salaries, fewer employees, more money for the honchos.  Thompson added that the pay in stock options increases the executive incentive to keep the price of the stock high, the less money going out to employees the happier stock traders will be (my spin about stock traders).

Quite a discussion follows.

One point was that "Reaganomics fostered the entrepreneurial activity that made the technology revolutions of the PC, cell phone, and internet happen."  Let's see, Steve Jobs and Steve Wozniak established Apple Computer on 1976-04-01 before Jimmy Carter was even elected.  A whole bunch of other computer manufacturers sprung up about the same time.  The IBM PC was introduced on 1981-08-12, about seven months after Ronald Reagan was inaugurated.  That probably means that the plan to create and sell the IBM PC was well underway before Reagan was elected.  Maybe we should credit Jimmy Carter with the IBM PC:)

What people who credit a president with the success or lack of success of the economy fail to recognize is that many creative people are going to go ahead with their ideas regardless of who is president and what the "economy" is like.  Look at the success of the iPad and iPhone in this "slow economy".

Have good-paying jobs really been exported?

The mantra of "good-paying manufacturing jobs going overseas" never seems to be questioned.  But I wonder if this "common wisdom" is really true.

There's no question that many hire-and-train jobs are now done in other countries.  Simple assembly, clothes manufacture, operation of simple automatic machines, and on and on.  But have all the jobs of skilled machinists gone overseas, have all the jobs of process designers gone overseas.

I think not.  What has happened is that the skills required for these jobs have become more demanding and the productivity of people performing these jobs has skyrocketed.  Higher productivity leads to a lot fewer people needed to produce the same number of goods.

My father's grandfather was a machinist and my mother's uncle was a machinist.  I doubt that either could get a machinist job now with the skills they had then.  It takes a good eye and a steady hand to produce parts exact to the thousandths of an inch.  But now manufacturers have numerically-controlled tools that can do the same thing time after time.  The operator sets the job up and may be free to work on something else.

Once upon a time a teen-ager with a tool box could be an auto mechanic.  Now auto mechanics use a wide array of electronic gadgets to check and adjust many systems in a car.

My father was a dental prosthetic technician with his own business specializing in crowns.  He could afford a lot of big boy toys, bowling, golfing, and betting on the ponies.  I have a folder full of testimonials from dentists praising the skill and timeliness of his work.  Now dentists design a crown while you watch, push a button, chat with you for a few minutes, go downstairs to pick up the crown, and put it in your mouth with a nearly perfect fit.

And even if these old style jobs were still available, would anybody hire a kid off the street, train him in the basics, give him some simple jobs, and guide him in the development of a higher skill level.  I doubt it.  Many companies want new employees with experience.  And often quite specific experience.  If you know all about the model 21 machine, but a company has model 22 machines, fuhgedaboudit!

If any state or national government wants to solve the "jobs" problem, they should stop trying to create the unneeded jobs and start training people for the needed jobs.  And even if they do that, will the needed jobs of today become the unneeded jobs of tomorrow?

Did jobs ever return?

Did jobs ever return?
No, they never returned
And their fate is still unlearn'd
They may ride forever
'neath the halls of Congress
They're the jobs that never returned.

Actually, the fate of many jobs has been learned, but not by those in Washington who think their posturing and speeches are going to bring them back.

Changing technology keeps changing the jobs needed.  The railroads put lots of cart drivers out of business.  More powerful locomotives with more safety features moved more freight with fewer and smaller crews.  Computers reduced the need for typists and all kinds of other office help.  The Internet reduced the need for printing, sales people, and order processors.  I think most of us over 50 can make, in less than an hour, a list of 100 jobs that no longer exist or whose need is greatly reduced.

Politicians think that tax cuts or business incentives are going to bring jobs back.  But the hiring of the unemployed is going to be minimal.  More than likely the target businesses are going to hire people from other firms with the required "experience" or "skills".

That is another factor that makes creating jobs so difficult.  Once upon a time, companies hired workers with some general knowledge about the work and trained them on the job for the needed specifics.  Nowadays, if you don't have the required "skill set", fuhgedaboutit!  Some of these skill sets are so detailed that it is a wonder that companies find anybody.

See "The New Poor: In Job Market Shift, Some Workers Are Left Behind", Catherine Rampell, New York Times, 2010-05-12, "Dentistry and the economy", "Forget jobs, create opportunities",  and "Where have all the jobs gone?"

Netflix busts Blockbuster, or the Changing Economy

As part of my notion that we don't have a weak economy but a changing economy, I've been thinking about a blog entry about how Netflix is reducing the need for video stores and their employees. Today the Star Tribune had a story about Blockbuster – "Shares of Blockbuster tumble after warning it may need to file for bankruptcy protection". The article states that one of the causes is competition from Netflix. "The company has had to close about 1,300 stores and wants to shut down hundreds more." Shutting stores means letting employees go. Think of all the other video stores in the same predicament. Think of all the other businesses whose reason to be has changed.

All the employees let go by video stores won't be able to get jobs at Netflix or at any other similar service. Think of the idealized Netflix operation. A customer signs up online and is accepted or rejected automatically. A customer places an order online. The computer orders a robot in the warehouse to fetch the DVD, put it in an envelope, print the shipping address on the envelope, and place it in a bin to go to the Post Office. Now humans get involved with a postal employee picking up the bins and driving them to a sorting center. The sorting center is mostly automated and the sorted packages are delivered in another truck or series of trucks. A mail carrier picks up the packages at the destination post office and delivers them to the customers.

Even the postal workers will be cut out of this system. As internet bandwidth gets larger and more people have faster computers, the customers will order movies to be sent directly to their computers ("streaming").

This scenario is being replicated across industry after industry. People not needed. And guess who demands this: people who want lots of goods for the least money and hassle.

I'll stop here and get off my soapbox about the trends too many of us aren't considering.

Forget jobs, create opportunities

I've wanted to write an entry like this for many weeks. Today an article in Yahoo Finance gave me an added impetus. It was on Kodak stopping production of Kodachrome, one of its signature films for over seventy years. See "Sorry, Paul Simon, Kodak's Taking Kodachrome Away".

Quite some time ago I read about somebody complaining about the job situation in Rochester, New York. He said that one used to be able to go to the Kodak factory and get a job right out of high school. I believe he also blamed the lack of jobs on foreign competition.

It was not foreign competition that reduced the jobs for making film; it was technical competition. The rise of digital photography led to less and less use of film cameras and thus fewer and fewer sales of film. Film cameras that cost over two hundred dollars new now sell on eBay for prices that don't justify the shipping costs. I have two working Minolta SRTs with an extra 70-185 zoom lens and an extra 35 mm lens. I hope I shoot the last roll before the sole processor of Kodachrome stops doing so. But it is so much easier to use the little digital camera that I have on my belt that I doubt I'll finish the roll in time.

I fault Obama's stimulus package for focusing on creating jobs for existing skills, thus prolonging the need for those skills. For example, the stimulus package "creates" thousands of construction jobs. We will always need construction workers, but will we need so many? What happens when all these "shovel-ready" projects are completed?

Wouldn't it be better to plan an infra-structure that helps states and communities develop a flexible work force that creates its own opportunities. In other words, we need more entrepreneurs and fewer employees.

It will be a long, slow process to shift our focus. Too many people want the supposed security of benefits rather than the security of adaptability. As long as health insurance is tied to jobs, we will have too many people who want jobs instead of becoming, even on a small scale, an entrepreneur like Steve Jobs.

No one is really hiring?

This was a headline in today's Duluth News Tribune as a declarative statement.

"Come on!" thought I; somebody has to be hiring for a variety of reasons. I checked the Help Wanted section and there were several jobs listed. The appeal of them varied as well as the pay. Even the beleaguered school district was hiring.

I stopped at a Radio Shack for a dock for my iPod. I asked the sales representative if Radio Shack was hiring. He paused and said, "I think we have an opening."

As I'm writing this, I'm waiting for service on my truck. I chatted with the service manager on a variety of issues and asked him about hiring. As expected for the auto industry, his answer was negative. On the other hand, I overheard a customer saying that the repair bill on his out-of-warranty truck was going to be three to ten thousand dollars. He must have enough business to justify paying that kind of money to stay in business. And both of us are helping the service part of the auto industry keep going.

Whose entitlement?

Business Week, Oct. 15, has a feedback section on a previous article on overtime.

Several of the respondents complain of a litiginous society with an entitlement mentality. One thing often overlooked in these kind of arguments is that more suits are filed company against company than individual against company. On entitlements, who are those feeling entitled: employees requesting just payment for their time or employers demanding more time than they are willing to pay for?

One business administration professor wrote about letting the "market work". She forgets that a truly free market consists of willing buyers and sellers with complete information on the transaction, the ability to quickly enter and leave the market, and no consequences affecting other than the buyer and seller. Employment is not easily entered or left, especially quickly.