Efficiency Causes Job Loss

[uscitizen]

The food I eat is an operating expense. If I do not eat I cannot work or produce anything.
So are basic clothing housing a vehicle, etc.
I cannot deduct any of those things as an individual.

And Bingo on this:
"Seems to me righties -and- lefties in office need to stop giving my money to their buddies."

 

[Not2BSubjugated]

The food I eat is an operating expense. If I do not eat I cannot work or produce anything.
So are basic clothing housing a vehicle, etc.
I cannot deduct any of those things as an individual.

And Bingo on this:
"Seems to me righties -and- lefties in office need to stop giving my money to their buddies."

Those aren't operating expenses because they're expenses that you'd have regardless of whether or not you had a job. The corporation gets taxed with different considerations because a corporation is different from a person (despite this corporate personhood bullshit). Eventually, that corporation's profit goes to people. . . people who also eat and clothe themselves. On their personal taxes, they don't get to deduct those "expenses" either.

 

[Wiseacre]

The food I eat is an operating expense. If I do not eat I cannot work or produce anything.
So are basic clothing housing a vehicle, etc.
I cannot deduct any of those things as an individual.

And Bingo on this:
"Seems to me righties -and- lefties in office need to stop giving my money to their buddies."

Neither can anyone else. That's fair, isn't it?

 

[uscitizen]

The food I eat is an operating expense. If I do not eat I cannot work or produce anything.
So are basic clothing housing a vehicle, etc.
I cannot deduct any of those things as an individual.

And Bingo on this:
"Seems to me righties -and- lefties in office need to stop giving my money to their buddies."

Those aren't operating expenses because they're expenses that you'd have regardless of whether or not you had a job. The corporation gets taxed with different considerations because a corporation is different from a person (despite this corporate personhood bullshit). Eventually, that corporation's profit goes to people. . . people who also eat and clothe themselves. On their personal taxes, they don't get to deduct those "expenses" either.

I was just making jest of the above silly claim that corps would pay less taxes if they were taxed like an individual.

 

[Not2BSubjugated]

The American consumer is buying less than they used to. Over the past 25-30 years, we've over-leveraged our credit, based on home equity that has disappeared. We don't have the wealth, or the sense that we can afford to borrow like we used to. So, demand is down, and until wages and employment begin to go up at a higher rate then the rate of new workers entering the job market, we're kinda stuck in quicksand. Doesn't look to me like things are going to get a whole lot better any time soon.

People bitch about jobs going overseas. One big reason for that is because demand is up overseas, other economies are growing faster than ours, and it's cheaper to make our stuff there than it is to make it here and ship it there. In some cases it's also cheaper to make it there and ship it here, although it's less so than before due to the higher shipping costs. Deal with it - jobs that went overseas are not coming back. So what's better, having multi-national companies here that have some jobs here and most elsewhere, or multi-nationals that move all their jobs elsewhere cuz we made it too expensive or too much trouble to stay here. Other countries are making it more attractive to move there, and we're increasing the costs of doing business here. How stupid is that?

As for the OP about efficiency, which is another word for productivity, there's no doubt that we've lost jobs for just that reason. Might even be the number 1 reason, but that's progress for ya. I see no solution for that, except to compete for the jobs of the future. Those jobs are going to exist somewhere, but they won't be here if we don't stop screwing around.

I agree with all of this except the last bit. Needlessly gloom and doom'y, and also untrue. If technology and efficiency's end result was the loss of jobs, then the technology-driven increases in efficiency during the industrial revolution (the fastest period of manufacturing advancement in recent history) would have created widespread poverty and concentrated all the wealth of the growing masses of unemployed into the hands of the rich capital owners. In actuality, the industrialized nations experienced unprecedented leaps in average economic standards of living. Why is this? Because in a properly regulated economy (i.e. one that doesn't allow monopolies in any market arena and thus insures perpetually the potential for competition), the inevitable result in advances in manufacturing efficiency is the eventual lowering of the cost of those things being produced. For this reason, advances in manufacturing efficiency reduce the number of labor hours necessary for the average person to dedicate toward their necessary maintenance, and reduces the number of hours it takes for the average person to accumulate wealth in general. The end result is people with more disposable time and more disposable wealth. When people have these things, the demand rises for "stuff" to do to fill that extra time, and the extra wealth is there to support that demand. So now less people work in the slaughter house, but a lot of those folks who would, if not for the new robot arm decapitating the chickens, be working at said slaughter house, are working for Sony, building televisions and playstations for people to acquire with their newly disposable wealth in order to fill the spare time they never had in the past, cuz it took longer to afford more "expensive" (proportionately) food, clothing and shelter before the shit got easier and cheaper to make. One or two of them might be professional athletes (not even plausible before current levels of manufacturing and wealth creating efficiency), maybe high paid actors or musicians. Even more of these potential chicken choppers -are- still in the industry, designing, building, and maintaining robot arms for decapitating chickens.

In a competitive market, advances in efficiency are always, always, always a good thing.

 

[Douger]

Yep jobs get destroyed in the USA and created in low wage overseas countries.

and yes increase efficiencies mean lower wages, less employees, etc.
or perhaps price increases.
Does inflation increase efficiencies?

Right. We'd all have a higher standard of living if we went back to needing 90% of the population to make food. If you're going to claim bullshit that's completely inconsistent with the most rudimentary economics, at least show how it's consistent with the example given in the OP.

I was expanding on the concept of the OP.
In a consumer spending driven economy creating lower wages and lower employment does not create more jobs.

Now if our economy was mainly based on exports that would be a different story.

If you look at offence spending, it seems to be true.

 

[itfitzme]

In 1790, farmers were 90 percent of the U.S. labor force. By 1900, only about 41 percent of our labor force was employed in agriculture. By 2008, less than 3 percent of Americans were employed in agriculture.

Where'd you get the 179 and 1900 numbers?

The BEA has the agriculture and total employment number. The table only goes back as far as 1940. From the BEA numbers an census populations, I get about 20% workforce and 10% population in 1940, down to 1.6% and 1%

Year %Agr/pop %Agr/workforce
1940 ...9.56%... 20.1%
1950 ...6.82%... 12.2%
1960 ...4.66%... 8.3%
1970 ...2.53%... 4.4%
1980 ...2.01%... 3.4%
1990 ...1.70%... 2.7%
2000 ...1.16%... 1.8%
2010 ...0.93%... 1.6%

On the overview, what we are waiting for is for the standard of living in China, India and the rest of the world to come up so that their wages are not so far South of ours. Then imports won't be so cheap.

Sure we run a net import but as long as we keep printing money, buying imports, and borrowing it back again it's not a problem. It's not like they can spend the US currency anywhere else. It's not much good except in the US currency zone.

Perhaps a smarter way to go is keep importing oil and saving our reserves. Then when the world supply dwindles, we can sell ours a $1 million a barrel. Surely China will still want to fuel their air force when Saudi Arabia and Canada runs dry.

 

[DSGE]

In 1790, farmers were 90 percent of the U.S. labor force. By 1900, only about 41 percent of our labor force was employed in agriculture. By 2008, less than 3 percent of Americans were employed in agriculture.

Where'd you get the 179 and 1900 numbers?

The BEA has the agriculture and total employment number. The table only goes back as far as 1940. From the BEA numbers an census populations, I get about 20% workforce and 10% population in 1940, down to 1.6% and 1%

Year %Agr/pop %Agr/workforce
1940 ...9.56%... 20.1%
1950 ...6.82%... 12.2%
1960 ...4.66%... 8.3%
1970 ...2.53%... 4.4%
1980 ...2.01%... 3.4%
1990 ...1.70%... 2.7%
2000 ...1.16%... 1.8%
2010 ...0.93%... 1.6%

On the overview, what we are waiting for is for the standard of living in China, India and the rest of the world to come up so that their wages are not so far South of ours. Then imports won't be so cheap.

Sure we run a net import but as long as we keep printing money, buying imports, and borrowing it back again it's not a problem. It's not like they can spend the US currency anywhere else. It's not much good except in the US currency zone.

Perhaps a smarter way to go is keep importing oil and saving our reserves. Then when the world supply dwindles, we can sell ours a $1 million a barrel. Surely China will still want to fuel their air force when Saudi Arabia and Canada runs dry.

So far I've got 37% of the labour force as farm employment from Historical Statistics of the United States, Colonial Times to 1970: Bicentennial Edition. I'll keep looking through for earlier stuff.

 

[DSGE]

And around 41% of total employment in 1900 was farm. And around 52% of employment in 1870 was agriculture. Same source. Don't think any of it goes back as far as 1790 though.

 

[Barb]

The reason people and politicians complain about losing manufacturing jobs, is not because of efficiency, its about shipping jobs oversees. Yes, todays manufacturers are more efficient then in the past, so less are needed in proportion to the population, but many of those jobs are still oversea's or in mexico. Truth be told, it wasn't even a big deal before the recession, because most of America was employed, so no one cared. It actually increased the GDP of America. Today it is a big deal because there are literally over a million jobs overseas that are run by American companies, while millions of American's can't find jobs.

Please see the post by DSGE.

I find it hilarious when people use the term "shipping jobs overseas". Have you ever been to a port? I have, and I've never seen a container being exported that contained jobs, only ones that contained products. The term "shipping jobs overseas" is a neural linguistic term that really means nothing but seems to get people emotionally aroused.

I have to wonder if you are also upset that 70% of Toyota cars that are sold in the US are manufactured in the US? Does it upset you that those poor Japanese people had their jobs (to use your term) "shipped overseas" to the US? What about Nissan, Mercedes Benz, Hyundai, Siemens, Tesco, BMW? Or is this a one way street for you?
But I digress.

In some places in the world, human labor is still cheaper than technology. That is changing, and those people will lose their assembly line jobs at some point (think cheap labor in China). This notion that manufacturing jobs (assembly line) is supposed to be a boon to an economy is an old economic model. Technology is replacing it, just as technology allows us to produce so much more food with so much fewer labor. Clinging to an extinct model is not going to make things better. Again, I ask, name a politician that want's his child to grow up and have a manufacturing job.

"shipping jobs overseas" is a loose translation of outsourcing / expatriating production. It isn't a "neural linguistic term that really means nothing," it is a business trend and an economic hardship for those who can't find decent paying jobs and are told the lie that there are plenty out there for those willing to work / look / relocate / enlist

And the reasons that the downsizing of farm labor wasn't screamed about were:
The slaves weren't getting paid anyway. (cotton gin)
Farm kids moved into manufacturing.

Now that manufacturing is close to nil, where are the new industries?

name a politician that want's his child to grow up and have a manufacturing job

Its a pretty safe bet they (his or her, btw )wouldn't want their kids asking, "Do you want fries with that?" either, but a service economy, and a pretty shaky one, is what most college grads are graduating to. If one needs an advanced degree to manage a MacDonalds, where does that leave those with only a HS education?

 

[editec]

Increasing efficiencies in manufacturing (and in all other forms of formerly human labor) is going to be the biggest problem facing mankind in this century.


Our entire economic system is based on a system that we are rapidly migrating out of.

One where human labor was economic viable.

Increasingly human labor is less efficient than machine labor.

And it isn't JUST low skilled jobs that are doomed.

Artifical iintelligence is going to replace human intelligence in many areas, as well?

You're an general practive MD?

You can be largely replaced by an AI program that asks the patient about 200 diagnotic questions that will lead to a Dx that is at least as accurate as that which a human doctor would arrive at. (and that AI tech exists TODAY, imagine what it will be like in 20 years?)

Human intelligence is old, unreliable and expensive technology and it is going to be replaced in most areas of production AND services, too.

And educating our children isn't going to solve this because we are building machines and AI that can learn faster ANDWORK CHEAPER than any human being.

 

[itfitzme]

In 1790, farmers were 90 percent of the U.S. labor force. By 1900, only about 41 percent of our labor force was employed in agriculture. By 2008, less than 3 percent of Americans were employed in agriculture.

Where'd you get the 179 and 1900 numbers?

The BEA has the agriculture and total employment number. The table only goes back as far as 1940. From the BEA numbers an census populations, I get about 20% workforce and 10% population in 1940, down to 1.6% and 1%

Year %Agr/pop %Agr/workforce
1940 ...9.56%... 20.1%
1950 ...6.82%... 12.2%
1960 ...4.66%... 8.3%
1970 ...2.53%... 4.4%
1980 ...2.01%... 3.4%
1990 ...1.70%... 2.7%
2000 ...1.16%... 1.8%
2010 ...0.93%... 1.6%

So far I've got 37% of the labor force as farm employment from Historical Statistics of the United States, Colonial Times to 1970: Bicentennial Edition. I'll keep looking through for earlier stuff.

Sorry, BLS ftp://ftp.bls.gov/pub/special.requests/lf/aat1.txt

I have wondered though about food distribution and farming products, like fertilizers and tractors, if they are included

 

[itfitzme]

Efficiency Causes Job Loss - Output per worker is about three times as high as it was in 1980 and twice as high as it was in 1990.

Of course, the idea is that efficiency in one product frees up labor to produce other products. And, if everything was running well, everyone could be employed making different products. It doesn't seem to work that way.

John T. Harvey points out that this efficiency is the underlying cause of business cycles. We have a constant over supply of labor. When a new technology develops, hundreds of companies enter the market. This absorbs excess labor as the supply begins to build out the shortage of demand. We clearly saw this with the dot com bubble as tens of thousands of html programmers worked to build every sort of internet company.

This boom propagates through the economy. The demand for other products increases. Employed html programmers buy houses, furniture, and every sort of product.

As the excess demand becomes satisfied, the demand falls to a steady state level. The market shakes out with lessor competitors falling by the wayside, leaving only the top two or three companies.

This process of building out demand occurs at all sorts of levels. My favorite was the building out of broadband internet in a major metropolitan area. I knew some of the guys that laid cable. When all the cable had been laid, all the cable guys found themselves unemployed. One team moved to a new metropolitan area where they worked to build out that area. Another team, now unemployed, started a little "business" ripping up cable and selling it for scrap.

Eventually, though, as companies begin to fall away, the excess labor returns to the unemployment line. This decline in demand also propagatesthrough the economy. The demand for houses, furniture, and every sort of product falls off. Unemployment rises and we start back into a recession.

The problem is magnified. As unemployment begins to rise and the economy slows, people that would otherwise be spending pull back. Output falls further than it would had it not been for the cycling of output. Consumer credit contracts, even reverses direction as people stop spending. This deepens the trough.

The Chinese have still not taken 1st spot as the worlds largest manufacturer of goods. The US still held that title through 2010 and 2011.

If the US still leads the world in exports in manufacturing, why has it run a net export since "forever"?

 

[likeabird03]

Technology advances these days are absolutely useless to mankind. That's the problem here. 40 years after putting a man on the moon and look at our economy today; based on trinkets like the ipad, social media, games, and lets not even mention "green technology." At this rate maybe we'll all be living in caves again in 40 years, now that'll be progress!

 

[DSGE]

Where'd you get the 179 and 1900 numbers?

The BEA has the agriculture and total employment number. The table only goes back as far as 1940. From the BEA numbers an census populations, I get about 20% workforce and 10% population in 1940, down to 1.6% and 1%

Year %Agr/pop %Agr/workforce
1940 ...9.56%... 20.1%
1950 ...6.82%... 12.2%
1960 ...4.66%... 8.3%
1970 ...2.53%... 4.4%
1980 ...2.01%... 3.4%
1990 ...1.70%... 2.7%
2000 ...1.16%... 1.8%
2010 ...0.93%... 1.6%

So far I've got 37% of the labor force as farm employment from Historical Statistics of the United States, Colonial Times to 1970: Bicentennial Edition. I'll keep looking through for earlier stuff.

Sorry, BLS ftp://ftp.bls.gov/pub/special.requests/lf/aat1.txt

I have wondered though about food distribution and farming products, like fertilizers and tractors, if they are included

Yeah I just realised I didn't date it. That's 37% of labour as farm employment in 1910. Whoops.

 

[American Horse]

Increasing efficiencies in manufacturing (and in all other forms of formerly human labor) is going to be the biggest problem facing mankind in this century.


Our entire economic system is based on a system that we are rapidly migrating out of.

One where human labor was economic viable.

Increasingly human labor is less efficient than machine labor.

And it isn't JUST low skilled jobs that are doomed.

Artifical iintelligence is going to replace human intelligence in many areas, as well?

You're an general practive MD?

You can be largely replaced by an AI program that asks the patient about 200 diagnotic questions that will lead to a Dx that is at least as accurate as that which a human doctor would arrive at. (and that AI tech exists TODAY, imagine what it will be like in 20 years?)

Human intelligence is old, unreliable and expensive technology and it is going to be replaced in most areas of production AND services, too.

And educating our children isn't going to solve this because we are building machines and AI that can learn faster ANDWORK CHEAPER than any human being.

In some areas yes, but the "robots" you are describing will be extremely cost intensive. Two hundred questions? That doesn't seem very efficient,and almost hostile as a bedside manner. A human doc can tell a whole lot by just spending 5 minutes with a patient and asking 4 or five pertinent questions.

 

[alan1]

The below is something I wrote and posted on another board a while back.

--------------------------------------------------------------------------------------------------

Efficiency Causes Job Loss

In 1790, farmers were 90 percent of the U.S. labor force. By 1900, only about 41 percent of our labor force was employed in agriculture. By 2008, less than 3 percent of Americans were employed in agriculture.

U.S. manufacturing employment peaked at 19.5 million jobs in 1979. Since 1979, the manufacturing workforce has shrunk by 40 percent and there's every indication that manufacturing employment will continue to shrink.

I’m sure some of you are asking, “What the hell is your point, alan? Farming and manufacturing aren’t related.”

The answer isn’t about farming or manufacturing, it’s about efficiency. The reason it only takes 3% of Americans to produce the food we eat is because of the gains in efficiency over the methods the farmers of the past used. The same is true for manufacturing. Today's manufacturing worker is so productive that the value of his average output is about $234,000. Output per worker is about three times as high as it was in 1980 and twice as high as it was in 1990. That’s efficiency in action.
Despite the decline in the US workforce involved in manufacturing the US has remained the country with largest output of manufactured goods for 110 years. This year (2010) China may finally overtake the US as the world’s largest manufacturer of goods. But then, they do have 4 times the population of the US.

I can’t find any articles about politicians of the past gnashing their teeth and bemoaning the loss of farm jobs because farms were becoming more efficient. So why is it that today’s politicians are wailing and screaming about the loss of manufacturing jobs? Do the politicians want the US worker to be less productive? Have you ever heard a politician say he wants his child to grow up and get a manufacturing job?
----------------------------------------------------------------------------

Addendum
The Chinese have still not taken 1st spot as the worlds largest manufacturer of goods. The US still held that title through 2010 and 2011.

We continue to hear from politicians that the US needs to increase the number of people working in manufacturing, and (not so) surprisingly enough the media (none of which work in manufacturing) continue to run with those stories about increasing manufacturing employment.
I'm still waiting for a politician or media talking head to say they want their child to have a manufacturing job.

My OP was March 6th (but I did originally post it on another board long before that), and I just read this article http://econfaculty.gmu.edu/wew/articles/12/ItJustAintSo.htm published on March 7th by a professor of economics. He uses some of the same facts and points that I used a day earlier. He also points out some of the same conclusions even though the purpose of his article was a bit different than the purpose of my post.

 

[PoliticalChic]

The below is something I wrote and posted on another board a while back.

--------------------------------------------------------------------------------------------------

Efficiency Causes Job Loss

In 1790, farmers were 90 percent of the U.S. labor force. By 1900, only about 41 percent of our labor force was employed in agriculture. By 2008, less than 3 percent of Americans were employed in agriculture.

U.S. manufacturing employment peaked at 19.5 million jobs in 1979. Since 1979, the manufacturing workforce has shrunk by 40 percent and there's every indication that manufacturing employment will continue to shrink.

I’m sure some of you are asking, “What the hell is your point, alan? Farming and manufacturing aren’t related.”

The answer isn’t about farming or manufacturing, it’s about efficiency. The reason it only takes 3% of Americans to produce the food we eat is because of the gains in efficiency over the methods the farmers of the past used. The same is true for manufacturing. Today's manufacturing worker is so productive that the value of his average output is about $234,000. Output per worker is about three times as high as it was in 1980 and twice as high as it was in 1990. That’s efficiency in action.
Despite the decline in the US workforce involved in manufacturing the US has remained the country with largest output of manufactured goods for 110 years. This year (2010) China may finally overtake the US as the world’s largest manufacturer of goods. But then, they do have 4 times the population of the US.

I can’t find any articles about politicians of the past gnashing their teeth and bemoaning the loss of farm jobs because farms were becoming more efficient. So why is it that today’s politicians are wailing and screaming about the loss of manufacturing jobs? Do the politicians want the US worker to be less productive? Have you ever heard a politician say he wants his child to grow up and get a manufacturing job?
----------------------------------------------------------------------------

Addendum
The Chinese have still not taken 1st spot as the worlds largest manufacturer of goods. The US still held that title through 2010 and 2011.

We continue to hear from politicians that the US needs to increase the number of people working in manufacturing, and (not so) surprisingly enough the media (none of which work in manufacturing) continue to run with those stories about increasing manufacturing employment.
I'm still waiting for a politician or media talking head to say they want their child to have a manufacturing job.

My OP was March 6th (but I did originally post it on another board long before that), and I just read this article http://econfaculty.gmu.edu/wew/articles/12/ItJustAintSo.htm published on March 7th by a professor of economics. He uses some of the same facts and points that I used a day earlier. He also points out some of the same conclusions even though the purpose of his article was a bit different than the purpose of my post.

So, let's- at least arguendo- agree that the nation is far more efficient, and, for many of the reasons suggested in the thread, there are fewer manufacturing jobs.

What then?

If there are fewer jobs overall, the situation gives impetus to the themes of socialism....that is that private property should be ended and everything owned by all. This would accommodate folks who are willing to work but cannot find their niche.

And it would remove the need for the education system that is 'missing-in-action' today....

But a peek at that future would be bleak at best, with lower standard of living for all,...and to see the kinds of activities and behaviors that would replace the workday, take a look at many urban ghettos....

Luckily that's not going to happen, as


"The United States solidified its position as tech toy store to the world last year as exports of digital gear reached a record $181 billion, accounting for 26 percent of all U.S. goods sold abroad, a leading industry group says in a report to be released today."

Read more: U.S. Leads World in Export of Tech Products / Record $181 billion sold abroad last year

USA Leads in Petroleum Exports & Processing Globally.
USA Leads in Petroleum Exports & Processing Globally. |

Why are the US and Canada the world's leading food exporters?
Why are the US and Canada the world's leading food exporters


And things will pick up once we sweep this “Après moi le Déluge” administration out of Washington....

 

[Widdekind]

the cost of those things being produced... advances in manufacturing efficiency reduce the number of labor hours necessary for [production]

... human labor is less efficient than machine labor

"effective Labor" (Leff), measured in "man-hours equivalent", is the product, of actual hours human labor (L), multiplied by the technology level employed, mathematically modeled as a "labor force multiplier" (T):

Leff = L T​

Ergo, machine efficiency increases total equivalent "effective Labor", which increases production (P ~ Leff). Ergo, machines only eliminate jobs, when increases in efficiency, out-pace increases in demand-for-production, e.g. "demand stays the same; more machines, operated by fewer people, satisfy the same" ?

If, generally, machines are more efficient than humans; then our global economy will trend, towards every human employed, as a machine operator. If so, then the predicted growth sector, would be machine manufacture... until AI obviates human operators, i.e. "intelligent machines" out-compete humans, in a "Runaway x Terminator scenario".