In a post that was an answer to Mark Kleiman’s question about the “jobless recovery” last week (scroll down to Wed, March 10), I wrote this:
It boils down to this: Owners don’t like having employees. Owners see us as pains-in-the-butt: we want days off to take care of sick kids, we rebel against 80-hr work-weeks, we want health care, some vacation time, managers that don’t abuse us, etc etc etc–and this all costs them money. They don’t give a damn about creating a middle class because, like most people who only accept reality when it hits them upside the head, they don’t see the connection between a healthy middle class and their profits.This is a psychological reality and has been for well over a century, Henry Ford notwithstanding. 20 years ago I worked for a company that spent more than $150,000 developing a machine that would replace 2 workers making less than half that much. The machine worked but had to be repaired constantly and replaced every year or so. Even tho in this particular case real people would have been more cost-efficient, the company continued to throw between $70 + 80,000/yr at this machine rather than give the job back to actual people.
Charlie Cook apparently agrees with me. This is a paragraph from his last newsletter:
In December, the CEO of a California-based high tech firm told me that “there is no amount of overtime that we will not pay, there is no level of temporary services that we will not use, there is no level of outsourcing or offshoring that we will not do, in order to prevent us from having to hire one new, permanent worker in the U.S.” As I travel around the country, meeting with business leaders, I hear similar, though less succinct thoughts in almost every sector and every part of the country. U.S. wages, health care, and other benefit costs have gotten so high — and the press by investors for high stock prices is so great — that the premium is on wringing every last bit of work out of as few employees as possible, to do anything but incur the costs of adding permanent employees. (emphasis added)
Charlie’s speculation of cause is incorrect. though. He, like Kleiman, writes as if this is something new, a response to investor pressure that has racheted up in the last few years. It isn’t. It’s exactly the same attitude it has always been, and for exactly the same reasons.