Many Americas

Recently I was up in Detroit, gassing up the car at a service station at an exit just off one of the freeways, when I noticed this provocative sign on a tire business across the street.

Commerce doesn’t lie.  The business owner obviously thinks that theft of wheels from parked cars is a sufficiently widespread problem that advertising about the ability to help victims of the thefts will generate additional sales and revenue, and you have to assume that there’s a factual basis for that belief.  I thought:  “Really?  Wheels on cars parked on public streets are being stolen, and police haven’t caught the perpetrators of such brazen criminal activity?”  The sign, and the real message it was sending, made me uneasy.

The sign was just one more bit of tangible evidence that we don’t live in one America any more, if we ever really did.  Instead, there are lots of different Americas, dealing with lots of different issues.  Where I live, we thankfully don’t have to worry about coming out to our car and finding all of the wheels taken by wheel theft gangs.  In this particular neighborhood of Detroit, however, there is obviously a different reality.

This shouldn’t be a revelation, of course.  Read the news and you quickly understand, intellectually, that there are pockets of the country where the heroin epidemic is raging and leaving families devastated, where the local economy has been bottomed out and there are no jobs to be had, and where the relations between police and the local populace has been poisoned, and there are parts of America where people are concerned because housing values are too high, where companies are concerned because they just can’t hire enough high-tech workers, and where people are lining up to spend a thousand dollars on a new cell phone.  And don’t get me started about how different places like Hollywood, or Washington, D.C., seem to be from the rest of the country.

And yet, when you live in your own world, it’s easy to view everything from your own personal experience, and wonder why people could possibly have different perspectives on the issues of the day.  The next time I feel that kind of self-absorbed conceit, I’ll think about that unsettling sign in Detroit and try to remember that there are a lot of people in this country dealing with lots of issues and problems that I’m not even aware of — much less affected by.  America is a diverse place not only in terms of its population and demographics, but also in terms of personal experience.  We shouldn’t forget that.

 

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Addressing Homelessness, One Job At A Time

What should cities do to address the issues with their homeless populations?  It’s a persistent, nagging question that often seems impossible to solve.  For decades, cities and charities have offered support and services to help homeless people, and yet the homeless remain.  And advocates for the homeless remind us that giving money to people who are panhandling isn’t really helping them.  So what should be done?

545479804_1280x720In Albuquerque, New Mexico, the mayor decided to take a job-oriented approach to the homelessness issue.  From his conversations with members of the city’s homeless population, he learned that many of the homeless just wanted to work, but didn’t know how to go about getting a job.  So the mayor worked with a charity to give some of the homeless people jobs cleaning up city streets and helping with landscaping of city properties.  The homeless people who perform the jobs are paid $9 an hour for their work, receive lunch, and are offered shelter at night.  The program has been operating for a year and has helped 100 people move on to permanent employment.  And while there is a cost, the city benefits from the work performed by the participants.  The Albuquerque program is called “There a Better Way.”

Cities seem to take different approaches to the problem of homelessness.  As the article linked above notes, many cities have begun criminalizing panhandling.  Other cities seem to simply put up with homelessness and begging, or institutionalize it.  On our recent trip to New Orleans, we saw many homeless people sleeping on the streets, with only a bit of cardboard for shelter; New Orleans seems to tolerate its homeless people and expects visitors to do so, too.  In Columbus, on the other hand, some of the homeless people participate in a program in which they receive a license and sell newspapers about homelessness at designated locations.  It’s better than aggressive panhandling, I suppose, but it doesn’t seem to be moving people on to private-sector employment.  At the street corner near our firm, for example, the same pleasant and polite woman has been selling the papers for years; she even refers to what she’s doing as her “job.”

The Albuquerque approach clearly is preferable to ignoring the problem, and those of us who have always worked know the value of having a job and earning a paycheck, but the article doesn’t say what Albuquerque does with homeless people who don’t want to participate in the program.  Those are the people who present the real challenge.  No one wants to see people living on the streets, suffering from exposure to the elements and in harm’s way, but most cities also don’t want homeless people accosting pedestrians and begging for money on street corners, either.

Flippy’s Takeover

Out in California there’s a “fast casual” restaurant called Caliburger.  As the name suggests, hamburgers are one of the staples on its menu.

448b016b00000578-4905576-image-a-2_1505977728222Caliburger’s Pasadena location has a new worker called Flippy.  Flippy is a quiet, methodical, highly reliable worker who doesn’t take up a lot of space, because Flippy is actually a robot.  Made by Miso Robotics, Flippy’s design is simple — it’s a robot arm, bolted to the floor in the restaurant’s kitchen next to the grille.  Flippy has a spatula where his hand should be, and he’s programmed to flip burgers and then put the cooked burgers onto buns.  A human assistant puts the meat down, Flippy does his burger-flipping thing, and then the human worker finishes dressing the burgers to fit the incoming orders.  The fact that Flippy has only a spatula hand make it easy to clean and maintain.

Flippy sells for $60,000.  Caliburger was one of the investors in the company that manufactures Flippy, and it got one of the first devices.  It has pre-ordered others, and it plans to install them in a number of its restaurants.  And, of course, Miso Robotics will look to sell Flippy to other burger-oriented restaurants.

Each burger-flipping robot will be performing a job that used to be done by a human being.  At about $60,000 a pop, Flippy seems expensive — until you figure that, with many states and cities raising the minimum wage, it wouldn’t take many months of operation before Flippy starts to pay for itself.  And Flippy is never going to miss work, or show up late, or complain about its hours, or become distracted by talking to a co-worker.  And Flippy is not going to need health insurance, or file a claim against his restaurant employer for violating a federal or state statute, or advocate for wage increases, either.  Until legislators start legislating about treatment of robots, Flippy is a lot easier for employers to deal with.

Welcome to the future.  And good luck finding that entry-level job that pays the ever-increasing minimum wage that is supposed to be an economic panacea and allow a fast food restaurant worker to support a family of four!

Amazon Primed

Amazon — that massive, gushing river of deliveries that has fundamentally and forever changed the modern retail business — has announced that it is looking to build a second corporate headquarters somewhere in North America.  Cities like Columbus are jockeying for position and hoping that they get picked to host the Amazonians.

amazonLanding Amazon and its “HQ2” has got to be tempting for just about any city.  You can look at what Amazon has done for Seattle, where its corporate headquarters is located, and see what having Amazon might mean.  Amazon employs 40,000 people on its Seattle campus, it uses an enormous chunk of the available Seattle commercial real estate, and it calculates that, since 2010, it has contributed $38 billion to the Seattle economy.  The proposed “HQ2” is being presented as a similarly enticing proposition for job-hungry municipalities.  It is supposed to create as many as 50,000 jobs paying an average of $100,000, and also produce $5 billion in capital investment in the first 15 years.

As Seattle’s experience demonstrates, these don’t appear to be pie in the sky numbers.  Instead, Amazon has a proven track record of doing what every city wants from a leading corporate citizen — it creates good jobs that are filled by people who pay their taxes and it injects money into the area, which in turn creates jobs at the companies that provide the services that Amazon and its employees need.  Sure, there might be some drawbacks — Seattle real estate has become pretty expensive — but most cities would gladly accept that problem in order to tap into the Amazon river of tax revenue.

Amazon has released a list of detailed criteria that will be applied in its search for the right location for HQ2.  It’s looking for a metropolitan area of at least 1 million people, close to an international airport, with good roads, schools, and mass transit.  Oh, and it also needs up to 8 million square feet of office space.  And the modern world being what it is, we can expect Amazon to look for competing cities to produce packages of tax incentives, tax deferrals, and available development funds designed to entice Amazon as it makes its choice.

Columbus, where several Amazon data and distribution centers have located in recent years, is expected to compete for the prize, and Richard has written about San Antonio’s hope that it wins the crown.   We can expect the big boys, like Chicago and Dallas, to put in significant bids, and struggling cities like Detroit would no doubt see the Amazon initiative as a chance to really turn things around.  And don’t forget that Canada is part of North America; Toronto is said to be interested, too.  In all, about 50 metropolitan areas meet the 1 million population cut-off and would be in a position to compete for the prize.  Bids are due by October 19.

Hey, Amazon!  Come to Columbus!  You’d like it here!

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.

Considering “Universal Basic Income”

Mark Zuckerberg is the latest of the Silicon Valley quadzillionaires to espouse the concept of “universal basic income.”

mark-zuckerberg-harvard-speech-01-480x270In a commencement speech at Harvard last week, the founder of Facebook called for the creation of “a new social contract.”  “We should have a society that measures progress not by economic metrics like GDP but by how many of us have a role we find meaningful. We should explore ideas like universal basic income to make sure everyone has a cushion to try new ideas,” Zuckerberg said.  Zuckerberg noted that, because he personally had a safety net to fall back on, he had the confidence to try projects like Facebook, and he thinks everyone should have the same financial wherewithal.

For some, like Zuckerberg, universal basic income has become the Great White Whale.  It’s not fair, they think, that only people who come from families that have financial resources can experiment in pursuit of their dreams.  Proponents of UBI believe that, if only everyone had guaranteed funding irrespective of whether they worked or not, all people would have the freedom to follow their dreams, invent new things, and experience personal fulfillment.  Why, the outpouring of creativity and innovation would promote the flourishing of art, literature, music, technological development, and human interaction that undoubtedly would lead to a new Renaissance!

Or, people who got the money would sit around in their place of residence all day, watching TV and enjoying the recreational drug or adult beverage of their choice.

Look, who am I to disagree with Mark Zuckerberg?  But let’s lay aside the gnarly issue of how we could possibly pay for a basic stipend sufficient for every American to live on without working.  (Taxpayers, hang on to your wallets!)  My experience teaches that having a job is a good thing.  Working brings structure to lives.  It allows people to become self-sufficient and to learn the value of a dollar.  It promotes the development of responsibility, punctuality, responsiveness, planning, and other positive personal attributes.  And the labor of every worker also helps to fund things like national defense, Social Security, health care, national parks, and a bunch of other things that might not be as amply supported if the funds are going to pay basic living expenses for a bunch of people who are happily contemplating their navels.  And, if you really think your job sucks, maybe that will motivate you to go out on your own, become an entrepreneur, and follow your dream with the benefit of the real-life experience you’ve acquired.

And don’t call it “universal basic income,” either.  In my book, “income” should be reserved for something that you earn, through work or investment, not something that is handed to you.

So let me respectfully disagree with Mr. Zuckerberg.  If he wants to really help to create a “new social contract,” let him and the other mega-tycoons enter into some actual contracts — with employees working for the new ventures that Zuckerberg and the other filthy rich are in a position to establish and fund with their wealth.  Let’s help more people learn the value of actual work.

Back And Forth On Globalization

One key theme is Donald Trump’s presidential campaign could be summarized — using one of Trump’s favorite adjectives — as “disastrous trade deals.”

Basically, Trump argues that, for decades, American leaders have been taken to the cleaners by foreign counterparts and have negotiated trade pacts that have cost countless American jobs, as cheap goods manufactured overseas have flooded the United States while companies have moved their operations to countries where products can be built more cheaply.  It’s a theme that Trump sounds whenever he comes to the industrial Midwest and can stand in front of an abandoned factory.

30501Today the Washington Post has an article that adds a bit of nuance to the globalization debate.  It’s about a Chinese billionaire named Cho Tak Wong who has bought a former GM factory in Moraine, Ohio to manufacture automotive glass.  Moraine is one of those “rust belt” communities that have been devastated by the departure of good-paying, steady blue collar jobs that used to be a staple of the Ohio economy, and local officials are hoping the factory will help to reverse that trend.  The Post reports that the purchase is part of a shift in globalization fortunes, as wealthy Chinese businessmen look to parlay their profits in China into purchases of American businesses.

Nothing is ever as simple as a presidential candidate presents it, and trade certainly falls into that category.  And blaming “trade deals” doesn’t recognize the impact that other decisions — like laws imposing increasing wage and benefit obligations on employers, or the ongoing pressure from the American consumer for products at cheaper costs — have had on the exodus of American jobs to places where labor and benefit costs are substantially cheaper.  You can argue the merits of “globalization,” but the reality is that we are in a global economy whether we like it or not.  It will be interesting to see whether what’s happening in Moraine, and elsewhere, will ultimately shift the debate.