A Tale Of Two Jobs

The New York Times published an interesting story over the weekend that compared two jobs, and in the process provided some insight into how the economy is changing and what it means for workers trying to get ahead.

The two jobs were janitorial jobs:  one held by a woman working at Kodak in Rochester, New York in the 1980s, and the other by a woman currently working at the Apple headquarters in Cupertino, California.  The two women earned about the same amount, adjusted for inflation, and performed the same kinds of work.

mop-and-bucketThe Kodak worker, however, was a full-time employee of the company.  She received more than four weeks of paid vacation annually as well as a bonus payment, and the company also reimbursed some of the tuition she paid going to college part time.  When the building she was charged with cleaning closed down, the company found her a different job.  The janitor at Apple, on the other hand, doesn’t work for Apple at all; she works for a service that Apple contracts with to keep its buildings clean.  She can’t afford to take a vacation because she can’t afford any lost pay, and there are no opportunities for bonuses or transfers to different work at Apple.

Although the Times article veers off into the unusual story of the Kodak worker — who ended up taking computer classes, getting transferred to a professional job in information technology, and ultimately becoming the chief technology officer at Kodak — the more interesting point is the macroeconomic lesson.  As the Times describes it, American companies have “flocked to a new management theory:  Focus on core competence and outsource the rest.”  The Times article notes that the outsourcing approach has made companies “more nimble and more productive, and delivered huge profits for shareholders,” but “has also fueled inequality and helps explain why many working-class Americans are struggling even in an ostensibly healthy economy.”

There’s no doubt that outsourcing has been a huge trend in the American economy.  But what the Times presents as a kind of optional management theory designed to reap windfall profits for shareholders while shortchanging working-class Americans seems to me to be more of the inevitable consequence of the cold hard reality of global competition.  The business world has changed, and companies that want to compete with low-cost providers overseas have to keep their intellectual capital while cutting costs wherever they can.  Outsourcing is one result of that reality; the disappearance of company-funded health care benefits and pensions, the rise of employee-funded retirement plans, and movements of company headquarters to the states and cities that offer the most favorable tax abatement schemes are some of the others.

The proof of the cold hard reality is in the outcome:  Apple is thriving, while Kodak — which once was one of the most successful, innovative companies in America — has gone through bankruptcy, laid off thousands of workers, and repurposed itself into a much smaller concern.  Kodak may have paid a price for its generosity.  And for workers, the lesson is clear:  do what you can to become one of those intellectual capital assets that companies want to keep around.

Thoughts On 2010

A few thoughts about this new year that we are breaking in. (And starting it off with a Rose Bowl win and relaxation in the Bahamas is a good beginning.)

First, I am going to call it “twenty ten,” and not “two thousand ten.”  I realize that this is an abrupt change from 2009, which I did not call “twenty nine” for obvious reasons.  Still, I lived most of my life in the 1900s, and no one called 1980, for example, “one thousand, nine hundred eighty.”  So, I’m going with “twenty ten.”

Second, I don’t consider this a new decade.  In my book, decades run from —1 to –10, or –20, or –30.  Technically, this must be true, because way back when there was no year zero.  In my experience, too, the decades we think of often don’t really end until some event that doesn’t coincide precisely with the end of a calendar year.  In America, “the ’60s” really didn’t peter out until after December 31, 1969, and “the ’70s” didn’t end until about the time President Carter left office in January 1981.

Geopolitically, I think 2010 will be a very interesting year.  The efforts of the U-Trou bomber and the escalation of the war in Afghanistan will probably make terrorism a more significant focus.  The recent protests and attempted clampdowns in Iran bear watching, there no doubt will be weirdness from rogue states like North Korea, and we will have to see whether the global economy pulls out of recession.  Domestically, this year we will be voting for all members of the House of Representatives, one-third of the Senate, and a slew of governors.  In Ohio, we will be electing a new Senator to replace retiring Senator George Voinovich and also voting for Governor, and the contests in the Buckeye State already have attracted some national attention.  The election will happen against the backdrop of a weak, struggling economy that has affected different states differently, lots of partisan rancor, and a President whose approval ratings have dropped significantly as the grueling health care reform battle has proceeded.

I don’t think there is much point in making predictions about what will happen; years usually look different as they draw to a close than people expected when the year began.  About the only thing that is certain is that there will be lots to talk, and blog, about — and through it all UJ, commendably, will find a silver lining and things to be positive about.

Uh Oh

Dubai World, the state-owned company that has been borrowing like crazy and building artificial islands, fantasy structures, and other projects to convert Dubai into a kind of vacation wonderland, has announced that it will not be making interest payments on its loan debt.  In other parts of the world, where the markets aren’t closed for the Thanksgiving holiday, the reaction apparently is panicky and some banking stocks are getting hit hard.

My guess is that traders everywhere are still jumpy after the near meltdown that happened last year, and any sign of possible significant default by a big borrower is going to make the markets especially nervous and curious about on whose balance sheets the eventual liabilities may land.