Raise the Hammer

Happy to read this article, Katie. It comes at a perfect time as unions in North America (and especially in the USA) are under attack. It's well acknowledged that unionization and a strong labour movement helped support a burgeoning middle class and humane welfare state in the post-WWII period.

The shift you describe is not only a shift away from manufacturing (heavy or otherwise), but a shift away from traditional relationships between employers and workers to a model characterized by more flexibility. This works out very well for employers, who can reduce costs and reorganize production with little consideration given to the workforce.

And despite sunny depictions of the new arrangement as 'good for workers,' it is always is a negative for workers who lose access to steady paycheques, benefits, and the psychological upsides of having secure, meaningful employment.

Economists keep telling us we need to squeeze more out of every worker, yet these gains so very rarely translate into an improved standard of living.

Meanwhile, they promote policies that weaken workers' ability to organize, when the only tried and tested method of raising quality of life for vast sectors of the population has been labour organization and mobilization.

"The displaced workers continue to struggle to find ways to maintain a regular standard of living."

Ummm... No, that one has been broken for some time now. I know, the folks in Local 1005 didn't take the memo seriously, but trust me....

To put it another way: If you were in Tokyo today would be going to the hardware store to stock up on duct tape and plastic tarps, or would you perhaps consider the airport a more appropriate destination?

Perhaps this will be of some assistance as a starting point:
https://docs.google.com/Doc?id=dtxqwqr_19gjjvp8&pli=1

Real (inflation adjusted) spending by Canadian businesses on machinery and equipment, as a percent of GDP...

1961 - 0.0250 or 2.50%
0.0253
0.0265
0.0295
0.0330
0.0372
0.0363
0.0317
0.0326
0.0325
1971 - 0.0320 or 3.20%
0.0331
0.0375
0.0406
0.0422
0.0415
0.0395
0.0392
0.0430
0.0447
1981 - 0.0484 or 4.84%
0.0422
0.0392
0.0393
0.0416
0.0447
0.0492
0.0554
0.0578
0.0550
1991 - 0.0545 or 5.45%
0.0535
0.0508
0.0532
0.0558
0.0583
0.0704
0.0735
0.0766
0.0774
2001 - 0.0738 or 7.38%
0.0696
0.0736
0.0778
0.0862
0.0926
0.0943
2008 - 0.0943 or 9.43%

Our governments/businesses tout spending on machinery and equipment as the magic bullet in creating economic growth. Yet, the numbers tell a different story. From 1961-69, real GDP increased at a rate of 5.56%, when business spending on machinery/equipment averaged around 3% of GDP. Fast forward to the 2000's, where real business spending on M/E was up to 9.43% of GDP, Canada's real GDP increased by only 1.85%.

If governments increased taxes on automation and used that money to lower payroll taxes, instead of machines replacing workers, workers would start to replace machines, or at least reach a happy medium. Who knows, it may even be possible to return to a sixties style economy, where human capital was in higher demand versus automation, that an average family could afford to live off one salary.

... seriously?

I mean, I love job growth as much as the next guy, but jobs that can be more efficiently be automated aren't jobs, they're makework.

I want to see job growth happen because of growth of the economy, or because of employees working shorter hours and thus sharing the workload further. Not because of artificial busywork.

You're missing the point. In decades prior, we could spend only 2.5% of GDP on automation and produce GDP gains of 5% a year. Today, we spend 4X as much on business machines and yet economic growth is less than 2%.

We may be investing in more automation, but it isn't translating into more output of goods and services.

It may be like the person who drops his calories down too far and then gets fatter because his metabolism slows down. If we replace the person with businesses and calories with humans, it may just be that in trying to cut waste, businesses are actually destroying their customer base.

By raising taxes on M/E, businesses could still buy them, but they would only be the ones with the greatest return on investment. In other words, the machine would have to be so much better than the human, that it would be stupid not to buy it. In this way, the quantity of machinery would likely go down, but the quality would go up.

The net effect would be that business would have more money to pay in salaries, dividends, or lower prices for consumers, while the average business machine would be more valuable than is currently the case.

I've discovered something terrifying: drownings are *directly* correlated with ice cream sales. The higher the sales of ice cream, the higher the rate of drownings. It may be that people who eat ice cream and then go swimming can't swim because of the ice cream and drown. Or maybe the ice cream makes cools them down and makes their body overcompensate by heating and then they go swimming to cool off again. No matter the reason, we need to stop people from eating ice cream so we can prevent all those drownings.

Since 1961, every area of our economy, including personal consumption, government consumption, government investment, residential construction, business spending on structures are essentially flat as a percent of real GDP.

The only two macro areas that have changed, have been net exports and business spending on machinery and equipment. Whereas in 1961, we imported the same as we exported, in 2008 net exports were minus 7% of GDP, while businesses spent 7% more real dollars on M/E.

What do you think happens to middle class jobs (Stelco, Westinghouse) when we start importing more stuff, while simultaneously replacing workers with automation?

Furthermore, since 1961, payroll taxes have gone from 3.92% of total government income to 11.15%. Throw in workers comp premiums, minimum wage laws, difficult firing protocols and tax credits for companies to upgrade equipment and you hardly have made a fair playing field for humans to compete with machines.

Question: why do you think Canada's economy has slowed down every decade since 1961? If you can't think of an answer, then how do you know it doesn't have something to do with our increased dependence on machines, instead of human ingenuity?

Interesting data there, Smith--thanks for posting it. Looking it over and seeing your analysis, I despair that we're spinning our wheels faster and faster, but appear to be getting no further ahead in any meaningful way (i.e. improvements in quality of life).

It is kind of sad. Everyone at my work, (myself included) used to make much more money then we do now.

We work like slaves for slightly above minimum wage. Work too slow and you won't be coming back. Work too fast and you give yourself an unpaid day off. As soon as you get ahead of the next guy on line, your week is over and you get to go home and wait by the phone.... Until your work piles up and you have to rush to get caught up again.

It is really unfortunate because we are all skilled, are excellent at what we do, and we all take pride in our workmanship. We all want the best for the customer and work hard to exceed quality standards. Many of the people here have 20+ years in the industry. And we may be a little rough around the edges, but we give it our all every day.... And we ask for very little in return.

The worst part about it is the stress involved with not being able to plan beyond the minute. You can be off for weeks on a moments notice. You constantly ask yourself, can I afford to do do groceries today, or am I going to have the next week off? Planning and budgeting for bills and expenses is next to impossible.

Anyways, I got a little off track and I don't really know what my ranting has to do with the original article..... But I guess I hope that those poor bastards laid off from previously high paying jobs have their houses paid for, because the world of $12 skilled labour isn't going to help them much.

And I would like to add that I do love my job. And not just because it beats being at home waiting for the phone. I love going to work because my coworkers are amazingly generous and positive people. They are grateful and appreciative for the fact that they have a job and they always ensure that they give it their all for the company.

Supply and demand works for labour markets too. Every person who sees their wages drop by two thirds (being laid off and re-hired as a temp, or outsourced etc) puts a downward pressure on wages for everybody in any similar situation. Every additional qualified person looking for work means that each will have to settle for less wages (on average), and that employers can offer far less. And if everybody is making less money, then everybody has less to spend.

To put it bluntly, when Wal Mart pays wages so low that it has to encourage workers in many states to apply for food stamps to compensate, they're also virtually requiring workers to shop at low-quality discount stores like Wal Mart, because they can no longer afford to buy locally produced goods. And so the cycle continues.

In practical terms wages have nothing to do with productivity and everything to do with bargaining power. We are FAR more productive now than we were in the 1970s, and there are far more people working. We have more technology, fancier corporate power structures, and many more billionaires. 80% of us, though, aren't making any more in real terms. Why? Because they've broken unions, globalized economies and become much better at lending us money.

Having lived through the Harris years, I have a lot of sympathy for what Wisconsin is facing now. Glad to see somebody's stepping up and fighting this.

>> We have more technology, fancier corporate power structures, and many more billionaires. 80% of us, though, aren't making any more in real terms. Why?

If you want to go back to the "middle class" years (1946-1969) that Obama talks about, keep in mind that military spending was around 10-12% of GDP (U.S), there were no deficits and non military spending averaged around 17% a year. That means that for every dollar paid in taxes, the average American only got back 60 cents in social services.

In contrast, in the third quarter of 2010, non military spending (primarily entitlements) in the U.S. was 32% of GDP, while tax revenues were only 27%. That means the for every dollar paid in taxes, people got $1.18 in social services.

From 1946-1970, Canada's military spending averaged 4% of GDP and deficits were small.

Today, military spending is low, 1.3% of GDP and yet the federal deficit is 3% of GDP and the Ontario deficit is 3% of GDP.

Imagine if Harper told Canadians he was going to go back to post WWII spending trends. He would need to cut $55B in spending (current deficit), plus take an additional 2.7% of GDP, or $43B from current spending and move it to the military. That's $2,882 less per person in Old Age security, health, education.

But that's not it, McGuinty would have to run a balanced budget as well (debt in Ontario was only 13% of GDP in the late eighties, compared to 37% today). That means cutting $20B from current spending, or $1,500 per person.

In other words, in order to go back to the type of government we had in the 50's-60's, when the economy was strong, $4,300 would need to be cut from social benefits per person, given current tax levels. To understand this number, public health care spending in Canada for 2007 was around $2,700 per person.

If you added that $4,300 per person figure to the average Hamilton household, which according to the 2006 Census was 2.5 people, that works out to an additional $10,750 in non cash, after tax benefits.

The median annual payments for a dwelling in Hamilton for 2006 was $11,748. That means that the current non cash benefits that we now receive due to our expanded welfare state, almost equals what it costs to own a home.

The question becomes, do we want a welfare state, or do we want a fast growing economy?

There is a slight difference between two different types of "union" busting: Trying to crush public service unions (Harris/WI) and technology replacing jobs. The biggest killer is something we love on this site: the computer. One of the first computer, the weaving loom, put scores of people out of work. Now we are moving past these types of jobs toward more creative work. Or maybe to a white collar wasteland like we foresaw in the 70s.

^ Very Interesting commentary Undustrial. It reminds me of what Bill Maher said the other night in reference to 80 % of the wealth being accumulated by the top 1% of earners between 1980 and 2005. It's like 100 Americans getting together and ordering a 100 slice pizza, and the first guy takes 80 SLICES. When we say, maybe you should take 79, that's socialism!

Here is my question. The workforce that is represented by private sector unions in the U.S. are at the lowest level since 1912. Is it only a matter of time before people here start demanding that public sector unions be dismantled. If one is a victim of downsizing or outsourcing, how is it helpful for people to demand lower wages for civil servants?

It always blows me away when people think they can get out of a recession by demanding lower wages for the "overpaid" auto workers, public employees, unionists etc. That's a strategy which is SURE to spur consumer spending.

Katie: Interesting enough article but you are missing a lot of information. Let us consider that once a worker's EI runs out and still has no job, well they are no longer counted in your unemployment figures.

I suggest you might want to interview Ms Travis and ask her about workfare and how that affects the gorwing poverty levels. Ms Travis seems not to have a issue sending sturggling workers into precarious employment, where their rights are violated, while she easrns a nice wage and most likely benefits. Ms Travis is a vile person in my books, period.

I also suggest you do some research into the OW system as well and take a look into the regulations, where a unemployed, skilled wroker can be forced into low wage work, wehre you could work for up to a year in TRAINING mode, meaning you will not get padi, only receive the measly OW cheque.

Better do some research into those not for profits, who step on the people yet always ahve their hands out for tax payer dollars!

Take a look at what the city of Essen in Germany has done... they are a city of similar population to Hamilton's that have undergone the same thing we are going through now with the manufacturing plants fading out.

Essen was named the European Capital of Culture for 2010 because it took it's old manufacturing district and transformed it into exciting things for the public. Buildings have been transformed into:

Theatres http://www.europeanfilmacademy.org/wp-content/uploads/2009/03/jahrhalle_2006080704021.jpg
http://cache4.asset-cache.net/xc/95665778.jpg?v=1&c=IWSAsset&k=2&d=77BFBA49EF878921A343B2C87A49D8F5F0CFAC874F43B85093200E2A24EB7CCADD853D059EEB533CE30A760B0D811297

An ice rink http://wwwdelivery.superstock.com/WI/223/1848/PreviewComp/SuperStock_1848-43171.jpg
http://www.petul.de/en/eisbahn_bei_nacht.jpg

Pubs http://www.nypost.com/rw/nypost/2010/01/12/news/photos_galleries/day_in_photos/cropped/GERMANY%20CULTURE%20CAPITAL155456--500x380.jpg
http://www.essen-fuer-das-ruhrgebiet.ruhr2010.de/uploads/pics/Heiligenhaus_Steckbrief_01.jpg

A swimming pool https://lh5.googleusercontent.com/-JkGdsHxxBWQ/TXuvsabgiwI/AAAAAAAAAC8/sRggI0Aavrc/s400/uploads_media_Kokereibad_03.jpg

And some all-around badassery http://thomasmayerarchive.de/images/2483/149AG20100118D0020/jpg/149AG20100118D0020,Architecture,projects,Zeche-Zollverein,Ruhr-Museum,entrance-stairs,Ruhr-Museum.jpg


I discovered this at the last James North art crawl where a group called Studio 12 put on a show called Ruhr Meets Hamilton which was also put on by the German Consulate in Toronto. Studio 12 went around taking pictures of places in Hamilton comparable to those in Essen which were photographed by Manfred Vollmer, highlighting how well-suited Hamilton would be for the same transformation.

I'm not saying all the U.S. Steel workers should be laid off in place of a swimming pool, but I think this should be a strong alternative to the future rotting away and deterioration of buildings that seems to be the norm for Hamilton.

Quality of employment is obviously critical. On paper, city officials will tell you that we’re punching above our weight on employment stats… but if you factor in the 20% poverty rate, there’s obviously some dodgy math at play. Hamilton could have 0% unemployment and still have one on five under LICO.

UK’s unemployment rate: 7.7%
Canada’s unemployment rate: 7.4%
Hamilton’s unemployment rate: 5.4%

http://www.guardian.co.uk/business/2011/jun/15/uk-unemployment-fastest-fall-in-10-years

http://www.thespec.com/news/canada/article/545668--canadian-jobless-rate-falls-to-7-4

"The difference in salary and benefits between a permanent employee and a contract worker averages out to 13 per cent. For a temp worker, it is a stunning 34 per cent — for doing the same work."

http://www.thestar.com/opinion/editorialopinion/article/1010423--good-jobs-aren-t-in-the-plan

And even better for an un(der)paid intern! But at least you're not unemployed!