View Full Version : Invisible Poor
jimboe7373
06-29-2014, 01:41 PM
Indeed this was the case back then. However, in today's global economy, any major public company that does NOT cater to the 'rich' stockholders and 'hot money' investors, who are expecting x% return on investment, will find itself in financial difficulty in short order. Apple was one of the first tech age companies to realize that modern age financial fact ... and as such paved the path for others to follow by transferring all of their former Apple II US 'production' jobs to subcontractors in China for later products.There are too many variables in play to make such limited assessments. People don't need to cater to "rich stockholders" anymore- crowd-funding, grants from progressive industries and companies and other vehicles make it possible to circumvent the "short-term, maximum profit now no matter what" mentality. Also, as time goes on and innovation and technology advances the old paradigms you refer to will be become more and more obsolete. The very nature of profits and work will experience significant change.
To actually achieve the Henry Ford ideal of offering large numbers of semi-skilled US jobs at high enough pay rates to allow those semi-skilled US workers to become net consumers and net taxpayers, in addition to the initial design and development work, it is then necessary to actually produce a product in the USA, and to actually support that product from the USA. Unfortunately, from a purely economic standpoint, when producing and supporting a product in the USA involves a 32% versus a <10% corporate tax on profits, involves an additional 7.65% employer SSI tax on every dollar of US payroll, involves paying higher prices for gas fired versus coal fired electricity, and a long list of other areas of higher costs, the 'rich' investors are going to demand that those higher US costs be avoided. If we were going to be staying in an industrial revolution paradigm then you would be correct, but that is not where we will be. With the dramatic increases to technology, less and less physical (low and semi-skilled) work will be necessary. Related to those technological improvements energy will become a lot cheaper, accessible and available. These items will completely change the whole paradigm, many people will not even have to work if they don't want to. The current dynamic of a small amount of very large corporations controlling access and setting prices for maximum profit at the expense of efficiency and the best interest of the masses will likely be a thing of the past.
jimboe7373
06-29-2014, 02:37 PM
And even when the smallish scale company founders attempt to pursue an independent course ( recent example Whole Foods ), outside investors will begin to steer their money toward newly created competitor companies who are able to underprice the original smallish scale company because they pay their workers less. Thus, arguably, smallish scale US companies are faced with a limited number of choices ... stay small ... sell out ... or try to pursue an independent course while lower cost competitors spring up around them and slowly drive them into bankruptcy. That is true, but then you also have private companies like Trader Joe's which is growing very rapidly, pays it's employees pretty well and offers fantastic quality and value to it's customers.
1st_samurai
06-29-2014, 03:19 PM
That is true, but then you also have private companies like Trader Joe's which is growing very rapidly, pays it's employees pretty well and offers fantastic quality and value to it's customers. I think private companies are different because they don't have to answer to a large group of public shareholders that want to maximize their return. If one shareholder (such as previous owner Theo Albrecht) wants to give more to his employees, he is certainly free to do so at his own detriment. However, a public company has to answer to pension funds, hedge funds, individual investors, and market analysts that will be asking management why profit margins or comparable sales growth is lagging competitors. Competition in the organic grocery space is heating up, which makes it unlikely for Trader Joe's to grow at historical rates.
I can offer a small example. There was a real estate company owned by an elderly man in his 80s. It was doing relatively well having been built up for many decades. Employees were paid generously with favorable retirement benefits and they generally worked to old age. After he died, the family sold the company. The new owner became much more demanding. He saw that salary was bloated, esp. to old employees that didn't offer much value because they didn't keep pace with technology. Those positions were immediately eliminated. One of those positions was a family member's friend who is a woman in her 60s.
jimboe7373
06-30-2014, 01:10 AM
I think private companies are different because they don't have to answer to a large group of public shareholders that want to maximize their return.Yes, that is exactly my point. Many times what's best for the interests of the company (never mind consumers and the employees) is at odds with short-term profit margins. To me one of the fatal flaws of U.S. style capitalism is the focus many companies have SOLELY with short-term profit. In order for any entity to reach it's full potential, long-term planning and actions often have to be implemented. If all or almost all decisions are based solely on quarterly profit reports maximum efficiency, benefit and sustainability will be difficult to attain.
Melonie
06-30-2014, 09:44 AM
Jimboe, I'm actually in agreement with you in terms of general principles. However, I don't have anywhere near as much 'hope' as you do in regard to crowd-funding superseding hedge funds / venture capital lenders, in regard to energy prices getting lower, and in regard to large multinational corporations losing influence / market share to smaller, more closely held companies who aren't as beholden to 'public' investors and/or 'hot money' investors who expect an immediate return on their investment.
I DO agree with you that technology will continue to reduce the need for / number of available jobs for unskilled and semi-skilled American workers. Indeed, the 'hottest' R & D area now being worked on is the ability to 'wirelessly, connect' one lead semi truck with a human driver, to several more driverless 'robot' trucks which can automatically follow behind the lead truck. If successful, this will allow trucking companies to lay off 3/4ths of their drivers. See Another 'hot' R & D area is automatic harvesting equipment for particular fruits and vegetables with irregular shapes, which will allow growers to stop hiring seasonal agricultural workers. Both are obviously being driven by the fact that, between prevailing US hourly pay rates ( and increasing minimum wage ) and mandated employee benefit costs, employers can now afford to make even larger capital investments in automation to replace / eliminate US employees.
I also agree with you that, at some future point, there will be very little need for unskilled and semi-skilled US workers. The question of course is that if said workers are not needed by the future US economy ( i.e. permanently unemployed / unemployable ), who pays to continue to maintain their standard of living ???
And before you say those short term focused, profit driven, greedy US international corporations should pay, keep in mind that in the real world every action has an opposite reaction. As you probably know, US international corporations are already 'front running' the issue by attempting to become non-US international corporations. US drugmaker Pfizer just offered UK drugmaker AstraZeneca a tidy $118 billion to buy them out ... and in the process move the headquarters of the new 'merged' company out of the US to the UK !!! At the moment, AstraZeneca is holding out for a higher offer.
But as long as the US corporate tax rate is 30%+ and the UK effective tax rate is <10% there will be strong motivation for large investor owned US international companies to officially 'shed' their US corporate ties. Recent moves by US companies include MedTronics ( see ) , Actavis ( see ) , Walgreens ( see ) etc. And once those former US companies move their 'tax home', much of their corporate income moves beyond the reach of the IRS.
Eric Stoner
07-01-2014, 08:28 AM
I gave the definition of "poor" that the authors of the two well known studies I referenced used i.e. the Federal Poverty Line for a family of four. Of course the income level varies from state to state. Sometimes there are even huge differences i.e. N.Y. and California vs. Mississippi and Arkansas.
Granted, the very definition of "poor" and "poverty" can be somewhat slippery and nebulous. There are several definitions out there. I think we can all agree that "poor" is not something that anyone wants to be.
Likewise, neither the authors of the aforementioned studies nor I sought to blame the poor for being poor ( even though they and I have been accused by a few of doing so ) BUT there are documented behaviors that dramatically increase the odds of being poor.
Having a child out of wedlock is a prime cause of poverty. It's in the stats. The overwhelmingly majority of poor families in the U.S. is headed by a single parent.
Having a child as a teenager just makes things worse. The stats also show that getting married before turning 21 dramatically increases the chances of a lifetime of poverty.
It's simple common sense - a couple in their late teens or early 20's who had to buy baby food , baby clothes , Pampers , pay for doctors etc. is giving themselves a serious handicap when it comes to things like saving ; investing; paying for school. Not to mention having less time to attend training , work overtime etc. it certainly doesn't mean that everyone who got married fresh out of high school will be poor. Just that that they are running a much higher risk of being poor compared to those who wait until they turn at least 21.
"Just staying out of jail , just finishing high school , just staying childless unless married , not marrying before turning 21 - is a virtual guarantee of not being poor ???? ". Really Eric ? Umm , YEAH ! That's what the stats say. I didn't write them. They are there for all to read in Census data , recipient profiles , Dept. of HHS and Dept. of Labor stats and the studies I referenced. Which btw , are just two of several that have looked at the same issue and came to the same conclusions. Do those four things and you have a 98% chance of NOT being poor. Please note; the data used was ALL PRE -2008. I don't have the latest numbers but I doubt it is a stretch that the poverty rate among chaste high school graduates with no criminal record who did not marry until age 21 has probably gone up since. Simple common sense in light of current events and Dept. of Labor stats over the last 6 years says there is probably less than a 98 % probability of staying off the poverty rolls NOW as opposed to before 2008. But I doubt very much that it has gone down by more than few percentage points.
High school grads who avoid the other listed behaviors still have an excellent chance of not being poor. They might not be nuclear scientists BUT they can work on Wall Street in various back office capacities , be mechanics , plumbers, do HVAC , serve in the military , be police , fire , sanitation , construction etc. etc. Staying out of jail is a BIG help in getting those type of jobs.
Again, these are not my stats. They are out there in Census and Dept. of Labor data. Staying out of jail dramatically increases employability. I've hesitated to post this but it is highly illustrative : In 1960 the rates of incarceration for black males and white males was virtually the same. Today the rate for black males is far higher than that for whites.
Please look at the respective employment and unemployment rates for black males and white males today and THEN try to tell us that there is no connection. ( N.B. Please , PLEASE , if I can resist stating a few obvious points that unfortunately are just too "political" , so can everybody else. Djoser has been very indulgent by even leaving this thread open so let's not abuse the latitude we've all been granted . )
I never said ( and neither did anyone else ) that ALL single mothers are poor , will be poor and that their children are guaranteed to be poor. Only that the chances of enduring poverty , often for a full lifetime are greater for single mothers and their families
Melonie- I understand what you are trying to show with the value of various benefits available to the American poor. All true but just one side of the coin. I respectfully suggest you take a road trip through Appalachia , the Deep South and parts of the Southwest and THEN try to tell me that we don't have MANY pockets of 3rd World type poverty. Even your own charts and numbers show glaring disparities between various states and the level of benefits they provide. More importantly, your data shows the level of spending in some cases and NOT the total sum going into the hands of real living , breathing poor people. For the most part, poor people in N.Y. are NOT getting $40,000 worth of benefits. Twer it only true. If only.
Maybe you can explain why the number of food banks and feeding programs in the U.S. has exploded.
One or two posters tried to pooh pooh the stats and instead tried to blame poverty on "Bad Luck " i.e. somebody getting killed ; or getting sick ; or getting injured ; or getting laid off etc. etc. True enough up to point but NEVER coming close to accounting for some 41 MILLION poor people. Btw , some estimates say the REAL number is closer to 50 million. Misfortune of various kinds certainly explains some poverty. No doubt. But nothing close to that caused or traceable to the unwise CONTROLLABLE behaviors that I listed.
Eric Stoner
07-01-2014, 08:34 AM
Again I don't want to come off as cold and uncompassionate, but from a factual standpoint any well meaning women and beloved children who are in fact starving in America are doing so because they are not citizens or 'legal' immigrants ... and as such are not eligible for SNAP, WIC, 'free' school breakfasts and lunches, various state run programs like CACFP, etc. And even for those US residents who are not 'legally' eligible for these various gov't run 'free' food programs, there are also a host of privately run 'free' food sources available ... although they may require the recipients to sit through an 'earful' while eating their free dinners.
from http://www.realclearscience.com/blog/2013/08/how-can-americans-be-both-obese-and-starving.html
(snip)"The truth of the matter is Americans are fat and getting fatter. As late as 1990, not a single U.S. state had an obesity rate above 15%*. In 2010, merely 20 years later, a dozen states have an obesity rate over 30%. And most shockingly, 69.2% of Americans age 20 or over are obese or overweight.
So that leads to a rather obvious contradiction: How can Americans be both obese and on the verge of starvation?
The answer is simple: Very few, if any, Americans are literally starving. Instead, a considerable number of Americans live in "food insecure households." And progressive activists like Mr. Berg dishonestly use the word "starvation" to refer to what would happen to these people if there were no food stamps.
What is a food insecure household? The USDA determines if a household is "food insecure" based on the responses to a survey (PDF, page 3) which asks questions like:
"We worried whether our food would run out before we got money to buy more." Was that often, sometimes, or never true for you in the last 12 months?
Another example question:
In the last 12 months, did you ever eat less than you felt you should because there wasn't enough money for food? (Yes/No)
Using this method, the USDA determined that 17.9 million households (14.9%) were food insecure in 2011. So, that's how Mr. Berg comes up with the claim that mass starvation would occur if there were no food stamps.
Of course, this absurd conclusion ignores two very relevant points: First, Americans are very generous people, possibly the most generous in the world. It is very difficult to imagine an America where churches and charities ignore starving people in the streets. Second, just because a household is "food insecure" doesn't mean that it struggles to buy food every day. In fact, households classified as having "very low food security" have trouble buying food a few times per month for 7 months out of the year. In other words, they're eating most of the time.
Nobody wants to see a person, particularly a child, go hungry -- even for a day. But, to characterize this as potential "mass starvation" is really inconsiderate of the millions of people in the world who are actually starving. Hyperbole only serves to downplay the seriousness of global poverty and starvation in the developing world. (snip)
Down here way south of the border, there are in fact some REAL starvation situations in neighboring countries. However, even then, the true causes have little to do with actual food shortages. I can't really elaborate due to the politics ban.
Respectfully while related to the original topic this is really an entirely different issue. It involves government , agri-business , the food industry and bunch of other stuff.
We can and ought to start a different thread : "The Invisible Malnourished " ? For now, suffice to say that we have plenty of people who eat "calorie rich and nutrient poor" .
Eric Stoner
07-01-2014, 08:52 AM
You point this out but ignore the fact Sweden has extremely low rates of poverty. They have a high min wage, alot of employment regulation and unions, strong family medical leave laws, and universal healthcare to name a few. Sweden also has a much higher rate of economic mobility (links in my previous post) aka people who start poor but work their way up the ladder to greater success. It is easier to make wise choices when you are educated and empowered. Sweden has a robust economy as well.
But instead of copying Europe's model we degenerate the poor instead of empowering them.
The other cause of poverty in this country is corporate welfare. There is nothing like this in Europe. We pay companies to keep wages and benefits low. This is a pdf that goes into great detail how Walmart makes money off of welfare recipients. Both as employees and customers. It also has links to all of the sources.
This is just one example. Why raise your wages when you get paid not to and then you wont have to pay their health care either? This is not free market forces. These are the types of subsidies we need to stop in this country. The taxpayer is paying for Walmart's work force and their tax bill, which is roughly billion a year, in addition to paying for welfare. How in the hell does that make sense?
People are not poor because they are lazy and stupid. People are poor because they dont have options.
"Walmart recieves and estimated .2 billion annually in mostly federal taxpayer subsides. The reason: Walmart pays its employees so little that many of them rely on food stamps and taxpayer funded programs.The study found that a single Walmart Supercenter cost taxpayrs between 4,542 and </body>.75 million per year"
http://www.americansfortaxfairness.org/files/Walmart-on-Tax-Day-Americans-for-Tax-Fairness-1.pdf
There is truth in this BUT : While the U.S. has fallen behind in upward mobility that is primarily a function of the negative behaviors we've been talking about ; plus lousy education ; plus a stagnant economy for the last 12 to 15 years and several other factors.
Nobody , N O B O D Y ! has argued against crony capitalism and corporate welfare more than Melonie and I ! BUT , there are policies that we really can't discuss that DO encourage some of the corporate behavior you describe.
I have parted company with Melonie and support a moderate , reasonable increase in the minimum wage BUT increasing the minimum wage alone will not put a dent into the poverty stats. The object ought to be to help people get out of minimum wage jobs and many people do. Even Walmart employees.
Sweden has a relatively small , homogenous population compared to ours with almost no immigrants. They've also been neutral since Napoleon and haven't had anything resembling our defense budgets. They've also had decades of confiscatory taxation and a stagnant economy.
Eric Stoner
07-01-2014, 08:57 AM
If having children out of wedlock means laying with the neighborhood thug/drug dealer/recidivist prisoner, then of course that would have a profound effect on a single mother and her child's poverty. Sure, if chicks want to lay with the likes of grand theft auto master Jeremy Meeks, they get what they deserve.
http://www.nydailynews.com/news/crime/sexy-calif-felon-claims-longer-gang-article-1.1837659
When it's an out of wedlock with someone well-to-do, single mothers and her children are not in circumstances of poverty, the children do okay.
For example, children of Irvine Company Donald Bren's son Donald Bren went to Boston University. Daughter Christine Bren went to NYU.
Elder Bren said, ""I felt an education at the university level, at the graduate level is perhaps the best gift a parent can give a child."
Illegitimate son of Karl Malone, Demetress Bell, is doing ok for himself too as a pro football player.
http://en.wikipedia.org/wiki/Demetress_Bell
Did you know Apple founder Steve Jobs and Oracle Founder Larry Ellison are both illegitimate children? Really, its parental circumstances and values have more affect on poverty, not simply the fact that a child is born out of wedlock.
http://en.wikipedia.org/wiki/Legitimacy_(law)
These are not isolated examples.
Isolated examples of what ? I HOPE you mean that children born out of wedlock to wealthy parents are doing well. At least from a material standpoint. Not that most children born out of wedlock are by and large doing just fine.
Eric Stoner
07-01-2014, 09:06 AM
Great post Djoser. I came across this article a few days ago and thought it summed up the increasing wealth/income disparity nicely. I perceive it as being an economic article, but if it's felt it violates the political ban, please feel free to delete it.
"The model for us rich guys here should be Henry Ford, who realized that all his autoworkers in Michigan weren’t only cheap labor to be exploited; they were consumers, too. Ford figured that if he raised their wages, to a then-exorbitant $5 a day, they’d be able to afford his Model Ts.
What a great idea. My suggestion to you is: Let’s do it all over again. We’ve got to try something. These idiotic trickle-down policies are destroying my customer base. And yours too.
....I wanted to try to change the conversation with ideas—by advancing what my co-author, Eric Liu, and I call “middle-out” economics. It’s the long-overdue rebuttal to the trickle-down economics worldview that has become economic orthodoxy across party lines—and has so screwed the American middle class and our economy generally. Middle-out economics rejects the old misconception that an economy is a perfectly efficient, mechanistic system and embraces the much more accurate idea of an economy as a complex ecosystem made up of real people who are dependent on one another.
Which is why the fundamental law of capitalism must be: If workers have more money, businesses have more customers. Which makes middle-class consumers, not rich businesspeople like us, the true job creators. Which means a thriving middle class is the source of American prosperity, not a consequence of it. The middle class creates us rich people, not the other way around."
http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014.html#.U7AiqPldWSq
This is one of those times where I lean toward one of our resident "progressives". I think it is VERY short sighted to underpay workers. Inter alia , paying a living wage enables them to BUY the stuff they and others produce. BUT there ought to be some relation between wages and value added. And it is not the wages paid that got GM and Chrysler into trouble as much as it was paying people NOT to work and the overly generous benefits they used to provide.
I think MOST of us would be happy and satisfied with a return to Reagan -Clinton type policies that gave us 20 years of broad based prosperity.
As Melonie points out , American corporations have about $1 trillion sitting overseas that they keep off shore to avoid the 35 % corporate tax rate. ( Boy are we digressing ! Lol )
Melonie
07-14-2014, 12:54 PM
I think it is VERY short sighted to underpay workers. Inter alia , paying a living wage enables them to BUY the stuff they and others produce
^^^ the latest trend appears to clearly contradict this ... i.e. paying near zero interest on borrowed money to purchase automation / robots, paying 'good' wages to a comparative handful of highly skilled technical employees who program and maintain the automation / robots, and paying zero to the former unskilled and semi-skilled human workers whose jobs are permanently eliminated ...
from
(snip)"The worst kept secret of Apple and its Taiwanese manufacturer Foxconn isn't their poor labor conditions. It isn't even the fact that they use robots to help bring together all the pieces that make up an iPhone. It's that their robots are now performing more and more human-like functions.
In the past, it's always been people that put the finishing touches on the popular devices. Well, that's all about to change.
Foxconn parent company Hon Hai is set to deploy an army of 10,000 assembly-line robots to help meet the demands of producing the highly anticipated iPhone 6. Hon Hai CEO Terry Gou revealed in a recent shareholder meeting that Apple would be the very first customer of Foxconn's latest robots. ***
Some analysts see this trend toward robotics transforming labor markets globally. Marshall Brain, founder of How Stuff Works and author of Robotic Nation, says the push towards automation is happening much faster than people realize. "Within a couple of decades," said Brain in an interview, "there won't be a single job that robots can't do better than humans."
But phasing out human labor altogether is easier said than done. Foxconn's original commitment to implement one million robots by 2014 has hit its fair share of roadblocks. By 2011, the company had reportedly rolled out 10,000 robots to work in their Jincheng, Shanxi Province factory, but several production line workers complained that the machines were incapable of doing the most basic human tasks.
Known as "Foxbots," the machines were part of a larger effort to help offset increasing labor costs. Hon Hai's 2013 financial report stated, in part, "To remain cost competitive, we have been continuously controlling manufacturing overhead to attain better operating leverage and improving efficiency and yield rate through automation using robot arms and industrial engineering methods like production cell management."
The shift to automation will undoubtedly lead to substantial productivity gains for companies, but as that happens, jobs will be increasingly at risk.
"We have been dealing with robots on manufacturing lines for almost 50 years, said Bajarin. "The fact that they are getting faster, smarter, and able to do more intricate tasks is a concern in the sense — as it was 50 years ago — that it impacts job creation."
Larry Summers, former U.S. Treasury secretary during the Clinton Administration and former head of Obama's National Economic Council, predicts technology will have a profound effect on the average employee. "We are seeing less and less opportunity for what average people — people lacking in certain skills — are going to be able to do," said Summers in May at the Conference on Inclusive Capitalism.
"It is not true that innovation always makes more employment…There is nothing in the logic of the market or human experience to suggest that it must necessarily be so that there will be jobs for all at acceptable wages, no matter how technology evolves."
Job-killing technology is hardly new. From 2000 to 2010, over a million secretary jobs were eliminated from the U.S. labor market as answering machines and computers replaced them at lower costs. But robots could put the trend into overdrive. Now, people may not have to worry about their job going to someone overseas, but to someTHING right down the street.
"Right now, there's a big process of automating all of the warehouses in the United States. It used to be you had people running around picking stuff out of warehouses and putting them in warehouses," said Brain in an interview. "That whole process is going to be pretty much completely automated within the next couple of years. No one really pays attention to it because warehouses aren't in places we normally go. But that's going to happen."
Producing some of Apple's products is already an almost completely automated system. In 2013, the company began producing its Mac Pro at the Flextronics Americas factory in Northwest Austin. They may get to engrave "Made in USA" on their products, but some argue it does more harm than good. "It's located in Texas, which makes everybody feel good," said Brain, "but it's not providing any jobs."
It makes geography, and the debate about outsourcing jobs, almost entirely insignificant. "If robots are taking more and more of the manufacturing jobs," said Bajarin, "it actually doesn't matter whether it's here or in Asia."
Brain predicts the trend is heading in this direction globally — and beyond low-skill factory work.(snip)
So it would appear that Apple's new 'insourced' production facility in Austin, TX will be paying respectable wages to a comparative handful of technical workers, but paying very few humans to perform unskilled and semi-skilled production work !!!
And this also speaks to the larger question raised by the author i.e. if it is now less costly for manufacturers to invest in automation versus worker salaries and benefits in CHINA, where is that going to leave the 'bottom 90%' of the US population economically speaking ??? How are those 'bottom 90%' of US consumers ... who don't have the capital to invest in automated / robotic companies, nor the education or technical ability to program and maintain said automation / robots ... going to be able to afford to purchase I-Phone 6's ??? Student loans that will never be repaid ? Food stamps sold for cash ?
And, more relevant, how are those 'bottom 90%' of US consumers ... who don't have the capital to invest in automated / robotic companies, nor the education or technical ability to program and maintain said automation / robots ... going to be able to afford to purchase lap dances ???