Wednesday, January 30, 2008

Michigan´s Conflicting Economic Story: Losing Auto & Manufacturing "Union Pay Scale" Jobs; Workers leave State vs taking Low Wage Jobs!

As I study the Economic News about Michigan, I can only be heart-broken. I am a Michigan girl at heart, born and raised in the shadow of the Capital. What is curious to me are the conflicting stories. Below I am sharing three articles. The first two focus primarily on the Auto Industry, GM laying off thousands of workers and staffing new jobs at half the salary. The third about the AgJobs Labor Shortages and Michigan´s quest to immigrate in migrant laborers from Texas and Mexico.

My question is, if the ROOT CAUSE is Business Profitability and Government policies, and we compound this with there are in fact jobs Americans won´t do (e.g. AgJobs, Manufacturing Jobs at Non Union Scale), then what will be the impact if there are no more manufacturing jobs in the U.S. at Union Scale?

Newsweek Reports: ECONOMY - Driving Towards Disaster By Keith Naughton Newsweek Web Exclusive - Jan 28, 2008 Michigan has been an economic wasteland for virtually the entire decade. Its fortunes riding shotgun with America's ailing auto industry, Michigan has lost more than 400,000 manufacturing jobs since 1999. Its unemployment rate, 7.6 percent in December, has been at or near the highest in the nation since 2003. FOR SALE signs dot the landscape, even in the neighborhood of GM chairman Rick Wagoner. But there are few buyers: Foreclosures have quadrupled in the last two years, according to the Web site The Sunday Detroit Free Press recently printed a 121-page section listing thousands of homes facing foreclosure. And in the last year, 30,500 people have left Michigan, Census officials estimate. "Michigan is the worst economy in the country, by far," says economist Mark Zandi of Moody's "But the financial pain Michigan is suffering now will become evident in many other parts of the country by this summer." ...Sure, the auto industry is to blame for Michigan's malaise. (Just last week, Ford, which lost $15.3 billion in the last two years, offered buyouts to all 54,000 of its U.S. factory workers). But many of the factors that drove Detroit into the ditch--$100-a-barrel oil, the credit crisis, globalization--also are preying on the rest of the nation.
WSJ Article: Ford Looks to Trim Up to 13,000 More Jobs One of Ford's goals with the latest buyouts is to replace many workers with new employees who will earn a lower wage under terms of its recently negotiated labor agreement. New hires will earn a little more than $14 an hour, about half of what current union workers earn.
Michigan officials seek to attract Hispanic farm workers
Associated Press - Friday, February 16, 2007 7:02 AM
Michigan officials are trying to lure more migrant farm workers to the state this year, hoping to avoid labor shortages that hurt the agriculture industry last harvest. The marketing pitch is "Venga a Michigan", which is Spanish for "Come to Michigan." The slogan is part of a promotional effort that Michigan's Department of Labor and Economic Growth is using to try to lure potential workers to the state. Department officials last week visited nine sites throughout Texas, targeting areas with large Hispanic populations that also have high unemployment rates. The goal was "to promote Michigan agriculture and the various services available," Rick Olivarez, a state monitor advocate, said during a meeting this week of the Michigan Interagency Migrant Services Committee. The Michigan group met with 400 to 500 families, according to The Muskegon Chronicle. State officials are planning a similar recruiting trip to Florida later this winter. Agriculture is the second-largest industry in Michigan. According to state census estimates, approximately 90,000 migrant laborers -- including their families -- come to Michigan each year. State officials want to avoid a repeat of last year, when some employers had difficulty finding enough migrant workers, Olivarez said.


patriot said...

Michigan's economy and job outlook has been dismal for at least the past 30 or more years. This is nothing new about Michigan.

I don't know what the answer is to stimulate their economy and job growth but obviously they have serious management and political problems to have allowed this to go on for so long. Maybe their government needs to study how other states in the snow belt have been able to have a successful economy but they haven't for some time now.

Anonymous said...

I agree - certain states in the snow belt are doing just fine

MINN in particular has spectacular growth and high paying jobs.

it is all about how well educated the workers are and how business friendly the state is

are wages important as well?

I am not sure what Dee's position on wages is - i mean when a restrictive law is put in place, is dee saying wages go up or wages go down? Here is the quote from Dee -

I did NOT say they rescinded the laws because they increased wages. I said they increased wages to try to resolve their labor shortages caused by the restrictionist laws.
(end of Dee quote)

i am somewhat befuddled - Dee, can you clarify what happens to wages right after the restrictive laws are passed?

appreciate it

Anonymous said...

Actually in Japan the ag jobs pay wages closer to the manufacturing wages.

there is no inherent reason why farms can't use a lot of robots like they do in japan and employ highly skilled robot operators

just a thought

visit a farm in japan you will be impressed

Dee said...

Anonymous - Japan,
Do you have any additional insights about Japan? Tell us more about you!
(please name yourself something other than Anonymous so we know who you are)

Anonymous said...

japan has built tons of robots that is why their economy can grow per capital GDP

TOKYO (AFP) - A Japanese-led research team said it had made a seeing, hearing and smelling robot that can carry human beings and is aimed at helping care for the country’s growing number of elderly.

Government-backed research institute Riken said the 158-centimeter (five-foot) RI-MAN humanoid can already carry a doll weighing 12 kilograms (26 pounds) and could be capable of bearing 70 kilograms within five years.
Aging Japan builds robot to look after elderly - Yahoo! News

Fingernail Painting Machine
November 26th, 2003
I was out with my friend Lulu and we saw this crazy fingernail painting machine so I just had to try it out.

It was a little scary at first because you stick your finger in it. I expected some printer head to come by and spray the pattern on my finger like an ink jet printer and I could imagine it messing up and shredding my finger but of course if that was the case the machine wouldn't be out.


Japan Seeks Robotic Help in Caring for the Aged

By James Brooke, the New York Times

March 5, 2004

Toshiko Shibahara in the new human washing machine. "The temperature is just right — the bubbles are really comfortable," she said.

MACHIDA, Japan- With an electronic whir, the machine released a dollop of "peach body shampoo," a kind of body wash. Then, as the cleansing bubbling action kicked in, Toshiko Shibahara, 89, settled back to enjoy the wash and soak cycle of her nursing home's new human washing machine.

"The temperature is just right — the bubbles are really comfortable," she said, happily sealed up to her neck inside the Sanyo Electric Company's latest elder care product. Turning to an attendant hovering around the pink, clamshell-shaped "assisted-care bath," she asked, "May I have a bit more water, please?"

Futuristic images of elderly Japanese going through rinse and dry cycles in rows of washing machines may evoke chills. But they also point to where the world's most rapidly aging nation is heading.

This spring Japanese companies plan to start marketing a "robot suit," a motorized, battery-operated pair of pants designed to help the aged and infirm move around on their own. Then there is the Wakamaru, a mobile, three-foot-high speaking robot equipped with two camera eyes. It is used largely by working people to keep an eye on their elderly parents at home.

These devices and others in the works will push Japanese sales of domestic robots to $14 billion in 2010 and $40 billion in 2025 from nearly $4 billion currently, according to the Japan Robot Association.

Leaders of the Philippines and Thailand, two countries that are negotiating free trade pacts with Japan, suggest a different route: granting work visas to tens of thousands of foreign nurses. But that is unlikely in a nation that last year granted asylum to only 10 refugees and in the last decade has issued about 50,000 work visas a year — a fraction of the 640,000 immigrants a year that demographers say are necessary to prevent Japan's population from shrinking.

Building on such xenophobia, Japan's nurses' unions successfully lobbied lawmakers of the governing Liberal Democratic Party in late February to block the admission of foreign doctors and nurses.

Caught between Japan's high labor costs and anti-immigrant sentiment, some mainstream politicians have even suggested exporting some of Japan's elderly to Thailand and the Philippines, but that has never won much popular support.

So even though the human washing machine retails for almost $50,000, enough to pay a year's wages for two Filipino nurses, robotic home care may lie in the future for Japan's aging millions. Fueling the demand is the decision by the government to push for home care for the elderly.

Nursing homes are not seen as a financially viable option in a society where the portion of people aged 65 or over is forecast to soar to 36 percent in 2050, from 19 percent today. By that time there may be only one worker for every retiree.

But Japanese women increasingly rebel against traditional expectations that they will stay home to care for aged relatives, creating an ever-larger pool of elderly people in need of care. "There are 600 would-be residents on the waiting list here," said Yukiko Sato, general manager of the Katsura-ryo nursing home here, which has only 80 residents.

A year ago Katsura-ryo became one of the first 100 pioneer companies in Japan to buy Sanyo's new washing machine for people.

"Residents say it is really good because they warm their whole body, they can take the bath on their own, they can protect their privacy," Ms. Sato said. "As for the staff, it means less burden on their backs. Also, they can save time, because the whole procedure can be done in a very short time."

To operate the washer, the user sits in a chair that is rolled backward into place. The sides of the machine then close like a clamshell, forming an instant tub with the person's head sticking out the top. Shampooing and drying is done by hand.

At a Sanyo office in Tokyo, Hiroaki Otsubo, a general director for biomedical business development, noted that the washing machine had been developed by Mitsuru Haruyama, a businessman crippled by muscular dystrophy.

"Some people in the industry say Japanese people are not able to accept a robot as a nurse, that they attach importance to the humanity aspect," Mr. Otsubo said. "So we are stuck in the middle between efficiency and nursing with a human touch. But if you pay attention to the humanity side, you obviously need labor power."

But several elderly women living in Katsura-ryo said they rather enjoyed their robotic baths.

"It automatically washes my body, so I am quite happy about it," said Kuni Kikuchi, an 88-year-old in a wheelchair who is paralyzed on her left side after a stroke. "These bubbles are good for the massage effect."

Eiko Suzuki, 73, generally agreed, saying: "I like both ways. But it is a machine and it hasn't got a heart. So once they set the program they can't change it midway."

Ms. Shibahara, whom the nursing home chose to demonstrate the washing machine, said: "With this `hirb' you don't get a chill. You feel always warm."

On the front of each machine Sanyo stamps "HIRB," short for harmony in roll-lo bathing, because people are rolled in. But for older Americans it might evoke memories of another effort to humanize a machine — the Disney movie about "Herbie," the Volkswagen "love bug" with feelings.

Copyright © 2004 Global Action on Aging
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Hope this is clear
low skill jobs can be filled by robots - giving everyone a better standard of living

Dee said...

I know most countries are investing in automation. I talked to the farm owner last year of the farm where I worked as a migrant laborer as a child. They are using more tree shakers and automation for cherry picking and other farming, but they still have a need for Ag-workers.

I think the point in Michigan is, they are losing American auto workers because GM has cut their wages. They still suffer from labor shortages in jobs Americans do not want to do.

Dee said...

I was re reading the newsweek article I provided in this post. The out of work auto worker, Robert Woods, says it is hard to make ends meet on his $2600 monthly pension. I was thinking about this. If he made $14 an hour, which is the new GM salary, after taxes, he would only bring home about $400 a week. That is $1600 a month. That is $1000 less than he would make just on his pension. He talks about not wanting to work at McDonalds. McDonalds pays $7 per hour, half of the $14.

As an auto worker he was probably bringing home $5000 a month, plus benefits. He probably lives in a $2000 a month house financed with an ARM, interest only mortgage, the home loaded with all the toys (cable, internet, PCs, TVs, cellphones, cars) paid for by credit cards and other credit-loans... you know, like the rest of us. He may have been living month to month with little savings and now the $2600 doesn´t cut it. That is why he is moving out of state, like many workers, to find another big salary job and possibly defaulting on his mortgage.

The question is, will he find another big salary job? With the manufacturing jobs leaving the country, this is not likely.

What is clear is, the UAWs strong arming helped the autoworkers earn exorbitant pay and benefits, resulting in GM´s exorbitant costs. They could not compete without cutting wages and benefits. The workers, however, now expect that type of pay and lifestyle, as do we all. That is our country´s current dilemma.

From the Newsweek article:
Robert Woods went to work in an auto factory straight out of high school and spent nearly three decades making steering gears in Saginaw, Mich. But when his employer, Delphi Corp. went bankrupt in 2005, Woods was downsized out of a job. He didn't get the big buyout bonus other autoworkers received because he didn't have enough seniority. And now, only 48 years old and with three school-aged children, he's finding it hard to make ends meet on his $2,600 monthly pension. The former machinist is looking for work, but there's nothing available that pays like his old factory job. "It's been devastating around here," Woods says. "I don't want to work at McDonald's, but it's just terrible to try to find anything. The American dream has been taken away."

dianne said...

Something to note about Robert Woods is he is only 48 years old and still pulls down a $31,200 pension, and I bet that pension has inflation adjusted increases.

What's so unusual about that? I'll tell you. I don't know of any other places that would pay that kind of pension to a 48 year old other than the armed forces. Those companies that even offer pensions do not offer them to people under 55 years of age. I'm not sure about the US government jobs. I worked for a major drug company for 26 years in an executive position and retired EARLY at 55. My pension is just about the same as Robert Woods and I'm damn glad to get it. I didn't contribute to the pension so that may be diff than his plan. I also own my house and pay all my bills every month and have a 401 K to tap when I need it.

In short, I don't feel one bit sorry for this guy. As far as I'm concerned, he's on the gravy train, he's young enough to get another job to subsidize him pension and if he feels like he has to move, then do it. No boo hooing from me.

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