Tuesday, April 26, 2011

The Truth About Jobs

Despite all of the hair pulling over "job-killing legislation" and blame-throwing about sending jobs overseas in our national discourse lately, you'll notice that no one has any real plan for getting people back to work. I suspect the reason for this is that unemployment these days has less to do with tax codes or trade agreements than it does with something we tend to like - Innovation.

The thing about innovation is that it is driven by a desire on the part of the innovator to Do Less Work. To be fair, it is also driven by a desire to improve safety and efficiency, but the pressure to come up with new ways to do more with less is ancient. Whoever built the first water-driven mill wanted to save time and strength previously devoted to grinding grain by hand, feed more people, and make more money. It worked. Mills grew into elaborate (and often dangerous) enterprises used in all kinds of manufacturing during the Age of Industrialization, and pressures from labor costs and safety measures drive the need to replace human workers with machinery. That pressure has increasingly driven the story of the past century or two, and isn't going away any time soon.

I'm not here to tell you that the continued and accelerating mechanization and automation of our world is "good" or "bad" - just that it's inevitable. And these are just a few of the obvious ways it's going to change in the next decade or two:

Truck Driving - I've talked with my friends about the Google Car, and how I think that within 5 years of hitting the open market, it will become unreasonably expensive for a human to afford the insurance needed to operate their own vehicle. Many people are skeptical that these self-driving cars are even possible, or that independence-minded Americans would "go for that" - but the technology has been growing up around us for at least a decade (sponsored by DARPA) and Americans have proven time and again that they'll buy anything if you convince them it's "safer" than what they have.

And while driving jobs won't go away overnight (there are nearly 1.5 million Teamsters Union members who will fight it), when it comes down to time, safety, and fuel costs, they won't be able to compete with the progeny of a Roomba and a TomTom in a Peterbilt. My guess is that long-haul cargo trucks will go automatic first, and local Fed-Ex or UPS delivery folks will hold out longest. And somewhere in there Zipcar will launch the first Johnny Cab.

Manufacturing - We've already gotten used to the idea of factory jobs disappearing; it's cheaper to pay a machine that doesn't worry about health insurance and retirement benefits to make stuff, after all. But a relatively simple innovation in 3D Printing is set to take even that away - or decentralize it and put manufacturing into every home. I guess it depends on your point of view.

This is one of those ideas that no one seems to see coming. Applications in food design and medical techniques have begun to creep into the public eye, first; and since plastic is already pretty easy to work with, it's likely that the marketing angle that hooks most of us is that you'll never need to run out to the dollar store to pick up little plastic doodads - just download them on the web, and print them out here. There's even a Makerbot on the market already.

Soldiering Surely this is a profession that will ALWAYS need people, right? Or have you been paying attention? Surely, you don't think the "future" isn't already here?

Just don't tell the U.S. military in Iraq... or the mercenary manufacturers. If that doesn't make you feel safe and secure, remember that they'll always need pilots to remotely guide these robots in the battlefield... oh, wait. Forgot about the Google Car.

Sales - Yeah, you might tell me that the ship has sailed on this one. The whole "Internet will replace stores" thing was debunked in a 1995 Newsweek article, wasn't it? (So, Mr. Stoll, what do you say these days about Amazon, eBay, and PayPal?)

But buying is just the end point of sales; won't we always need people to explain products to people and convince them to buy? Probably not. If anything, the runaway success that Google and Facebook have had in just the last five years ought to make you reconsider that career in retail. Some will still be able to make a living scripting and filming the adverts, but the sales floor will be your house, and when you click the PayPal button your new product will either print out on your 3D printer, or catch the next Johnny Cab to your door.

So what will we be able to do? Are there any jobs left? Are we going to let the robots take over? What will we do?

Small-scale, specialty farming is already a hobby in many places - perhaps more people will do things like this Garden Pool in their yard? Energy generation will likely continue to be profitable; getting decentralized, small-scale solar, wind, and geo-thermal will not only run your fridge and game systems, but provide you with income. Of course, maintaining those things is work, and it wouldn't surprise me to find that most people would rather leave that to machines, too, eventually.

So what's left? Reading, writing, music, gaming; we seem to have an endless capacity for entertaining ourselves. Will all of this mechanization and free time finally provide for everyone and tame our conflicts? Will we start taking serious steps into space? Or will we devolve into one of the many dystopian possibilities?

I don't know. I hope for the brighter visions. But in the meantime, I'm going to enjoy what I do.

Update: If you read this far, you really need to check out this post from Casaubon's Book: Efficiency, Substitution and Innovation isn't All It is Cracked Up to Be.

Tuesday, April 19, 2011

Is Welfare Fair?

Talking to a friend last night, he said something that captures what most regular Americans are really upset about. All of the talk of politics - the Dems vs. the GOP, the liberals vs. conservatives, the Hayek vs. Keynes - all of it boils down to what people think is "fair" at a visceral level.

And this slight paraphrase is what really bothers most average people: "We're where we are because of those people who don't want to work collecting their welfare check every month."

My friend stopped short of saying who "those people" were, so I won't speculate who he meant. But when you talk about welfare, chances are you're referring to what most would think of as "poor people." At the same time, though, most of us seem unaware of the widespread corporate welfare that goes on.

You may have seen the Guide to Corporate Freeloaders that has been circling the liberal blogosphere; it's a list of the Top Ten American corporations that either paid no federal taxes, received a tax refund, and/or received bailout money from the Federal government. I thought about what my friend had said, and decided to try to figure out who is taking more from the Feds and, by extension, the rest of us.

It wasn't easy.

First, let's figure out who we're talking about, and how to compare them. I needed to figure out a) how many people were "on welfare" and b) how much they got. I got some numbers for 2009 from a USA Today article dated January 2010. They broke out three different numbers:

* 4 million on welfare (TANF)
* 37 million on food stamps (SNAP)
* 9.1 million on unemployment

It's fairly easy to look up the budgets for Temporary Assistance for Needy Families (HHS), Supplemental Nutrition Assistance Program (USDA), and Unemployment Insurance administered by the Department of Labor using my favorite tax/budget site, WhatWePayFor.com - it's a little trickier to figure out where there might be overlap between people who fall into more than one of the three. And for me, it's always hard just doing arithmetic! The first two were pretty straightforward:

Taking the amount for TANF ($17.1B)/number of people on TANF (4M): $4,275 per person for 2009

Taking the amount of SNAP for 2009 ($59.1B)/number of people on SNAP (37M): $1,597 per person for 2009

Unemployment Insurance (Dept of Labor) is harder to pin down. There are a lot of numbers involved (all numbers for 2009; M = "Mandatory" spending, D = "Discretionary" for those tracking that happy meme):

M - Unemployment Trust fund - 116.8B
M - Payments to the Unemployment Trust Fund - $17.2B
M - Federal Additional Unemployment Compensation Program, Recovery - $6.7B
D - Unemployment Trust Fund - $3.5B
M - Federal Unemployment Benefits and Allowances - $273M
D - Unemployment Trust Fund - $1.5B
M - Federal Unemployment Benefits and Allowances - $686M

So - taking the Total amount from the above 2009 numbers for Unemployment related expenses ($146.659B)/number of people on unemployment (9.1M): $16,116 per person for 2009.

That's just the poor/unemployed/etc. - the unfortunate, or the lazy depending on your bias. I'll leave it to your own determination whether they "deserve" any of that money, or whether the Government should be involved in judging them worthy or propping them up. MY task is to figure out how to compare what these people are getting to what our Corporate Freeloaders are getting.

I wanted to try to compare on a per person basis. I decided just to look at the Top Ten from Sen. Sanders's chart, because trying to figure out how many companies there are doing business in America and how much each one does/doesn't pay in taxes is too hard. I found some Census data from 2000, but couldn't think of a quick or trustworthy way to compare it to what I know from 2009. (You're free to try!)

It's important to note that even among this Top Ten list, there are companies that are paying taxes, just like you and me. There are thousands of companies doing business here, and if they're all *better* than these, I have to feel a twinge of guilt for perpetuating the "freeloaders" meme; it's probably no more accurate to assume ALL U.S. companies are as bad as this any more than it is to assume that everyone taking welfare is a freeloader who "doesn't want to work." So don't read too much into these comparisons - just recognize that we don't just pay welfare to the unemployed.

Regardless, here's what I learned from looking at the numbers I got from that Top Ten Freeloaders chart and Wikipedia (for number of employees).

Not counting the bailouts some companies received, the IRS paid a total of $6.76B to the Top Ten companies - who employed a combined 1,264,113 people in 2010. That works out to an average of $5347.62 per employee. That's a little more than what the 4 million TANF welfare recipients got. ($4,275 per person)

Here's a breakdown of each of the "Top Ten Corporate Freeloaders" - how much we taxpayers paid them per person in 2010:

Exxon - received $156M refund; Employees: 83,600 = $1866 per employee

Bank of America - received $1.9B refund; Employees: 288,000 = $6597 per employee
(remember, we're NOT counting their $1T bailout)

General Electric - received $4.1B; Employees: 287,000 = $14285 per employee

Chevron - received $19M; Employees: 62,000 = $306 per employee

Boeing - $124M refund; Employees: 160,500 = $772 per employee

Valero Energy - $157M refund; Employees: 20,313 = $7729 per employee

Goldman Sachs - paid ~$25.3M (1.1% of reported profit); Employees: 35,700 = PAID $708 per employee
(again, we're not counting the fact that they recieved an $800B bailout)

Citigroup - paid $0; Employees: 260,000 = $0 per employee
(received $2.5 Trillion bailout)

ConocoPhillips - received $451M in tax breaks; Employees: 29,700 = $15185 per employee

Carnival Cruise Lines - paid $121M (1.1% of reported profit); Employees: 37300 (3,800 - Shoreside, 33,500 - Shipboard) = PAID $3244 per employee

All things considered, I would rather see people paid to work than see them paid NOT to work; but that is hardly fair to say when people actually can't find jobs. I would rather see companies keep their jobs here than send them overseas - but it's hardly fair to claim to support a free market and then cut off competition. And it's hardly fair to talk about cutting off welfare for the unemployed when we could easily recoup these comparable amounts from the give-aways being paid to these companies - many of which were so poorly managed that we ALSO had to pay trillions in bailouts to keep them off the TANF, SNAP, and UI books.

I just wonder, is it useful to compare all of the "freeloaders" this way? Is it accurate to describe them this way? I don't know, really; I just know that everyone has a prejudice - and everyone feels like someone else is getting more of a break than they are.