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Eating our young

By Jim Sack

Fort Wayne Reader

2013-08-15

There is a revolution going on in America, a counter-revolution where high-end Prada stock is up, while Sears, Penney’s and Kohl’s — companies that cater to the vast middle class — are floundering. The question is why?

Here are some observations.

In the 1960s there were nearly 10,000 workers assembling Scouts at the Harvester plant on Bueter Road while today our GM plant produces more with a third the workers.
In the early 1970s GTE employed a couple hundred operators downtown while today there are none.

In the mid-90s a company in a nearby community had 25 people in the front office pushing paper. The boss introduces Microsoft and IBM and 20 were quickly out of work.
Robots have replaced people, lathes run themselves, a farmer navigates by GPS, and an iPhone turns each one of us into a flying office. Technology ended the secretarial pool and has gutted middle-management.

Consider the sea freighter. In the 50s it was a smallish ship where cranes dropped supplies through the deck. Now, container ships carry mountains of freight on decks the size of aircraft carriers with a fraction of the crew per shippage ton.

Consider the movement of money. It was expensive and bureaucratic in the 1970s. Now, the movement of money from one account to another, from the US to China — or the Cayman Islands — is done with a few clicks and many fewer hands.

Consider the McDonald’s effect. Handcrafting was once the norm in every thing from construction of a home, to building a vehicle, to creating a hamburger. Not so, anymore, McDonalds system is designed to be fool proof, meanwhile, 3-D copying machines spit out guns, among other formerly handcrafted items.

Labor has become an expense, not a resource, so factory owners who first fled the north to the poorer south, then to Mexico, the Philippines, China and Vietnam are now scouting sub-Saharan Africa. Equipment and factories are all in abundance. Transportation is cheap and money is cheaper. Employees are a dime a dozen at a dollar a day. This has created a revolution in worker-employer and corporate-community relations. With right-to-work and at-will legislation, with stronger boardrooms and weak labor unions, power has shifted from the employee to distant investors.

American governments and business groups encouraged a flood of migrant labor from Central America, depressing wages in every field from lawn care to insider trading.
Those distant investors have used the scramble for jobs to wring concessions from state and local governments, such as Fort Wayne. With more efficient movement of money, goods, equipment, with unemployed workers pressing for new jobs, communities are increasingly “incentivizing” companies to expand here, not there. Consequently, companies play one community off against another in a race to the bottom.

It has all had an impact on our social fabric. Michelin bought the Woodburn tire factory a few years ago causing a social revolution. Instead of regular and predictable shifts, workers were tossed onto swing-shifts that meant days this week, nights next week and mid-days the following week, or four ten-hour days, followed by three days off, followed by a series of long, long days. You can image what that does to your circadian rhythms, but consider what that does to a Little League schedule, church work, and participation in clubs or organizations, not to mention crisis counselors.

Our job “creation” policy in Allen County hasn’t helped. The most famous example is Vera Bradley, a source of pride for the community that “won” an abatement to create jobs. And they did — some 450 new jobs were created, but to do so they ended contracts with small suppliers that resulted in 600 other people losing their jobs. While council and county commissioners snipped ribbons, you paid for unemployment benefits.

Even worse, your “incentives” help companies buy new technology that puts more people out of work. The technology that likely comes from China or Germany.

Consequently, over the past thirty years the gap between rich and poor has widened, making Prada a better investment than Sears. Over the past decade the United States has slipped to 13th on the list of countries where upward mobility is easiest. Over the past 20 years the number of people on the dole, as Mitt Romney noted, has ballooned as companies, most notably WalMart, pushed their underpaid workers toward food stamps.

A recent national employment report noted generally weak job growth with the only shining star being in low-wage positions. Seems we are becoming a nation of waitresses and burger-flippers, sales clerks and temps.

At least nationally, unemployment has gone down. Locally, it has increased! And, to add humiliation to economic injury, Allen Country’s wage growth has not kept pace with national averages. Not only are we losing jobs, but our income is falling behind the rest of the country, despite all the abatements, incentives and public-private partnerships.
A recent local unemployment profile showed dropouts have a jobless rate around 20%. It is probably higher. At least ten percent of those with high school diplomas are unemployed. The bright spot: fewer than three in 100 college grads are out of work.

But, our “system” is whittling away at that, too. The cost of higher education has greatly outpaced inflation: a credit hour at IPFW was around $30 in 1974; now, it is around $250 per credit hour. Were that 1974-dollar adjusted to inflation it would be around $160. Our governments have made obtaining a college degree and, by extension, a better life, and by extension, a more productive and stable community, nearly twice as hard to achieve.

Finally, all wages in America are falling as a percentage of the growing Gross Domestic Product, meaning productivity is up, profits are up, but companies are not sharing with their workers. Trickle down has become suck up straight to the board rooms and management away from the middle class.

That’s why Prada is up and Sears is down.