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Where did my job go and will I get it back?

Frank Pauly, Frank Pauly


864 654 0220    

October, 2009  

2009  F. Pauly                      

The general topic of jobs is a popular media topic since the worldwide downturn has created concerns about what happened to jobs that were reasonably available.  Job hopping was not easy, but jobs were available for most workers.  The world has changed.   People out of work want to have their paychecks and benefits restored, employers don’t want to hire anyone that doesn’t improve profit potential, local governments have social and tax concerns, foreign national governments want to maintain a balance of trade, and global suppliers want to maintain their markets. 

For generations, manufactured products have been the backbone of the global economic balance, and many assume that will continue to maintain that position.  What has changed is that people are a smaller and smaller component of the resources needed to produce the vast majority of products we see on the market today.  Ever since 1956, when, for the first time, white-collar and service workers outnumbered blue-collar workers in the US, the definition of work has undergone radical change.

The perception that blue-collar jobs are lost due to transfer to foreign “cheap” labor regions are attributed to many factors, mostly false ones.  The reality is that the vast majority of jobs, particularly in the manufacturing sector, are not transferred but eliminated all together. The old concept of why jobs are needed has been transformed from assessing “what benefit could an employer derive from hiring a new employee”, to one of “everyone is entitled to a paycheck so hire me”.

Our culture has changed in the last fifty years in regard to the role of people in the work force.  We have been ignoring the question of whether anticipated employment created value over and above employment cost.  Another way of saying this is that investment in new capacity probably won’t include any significant labor cost when compared to other factors involved in expansion of capacity.

Immediately after WWII, returning military personnel required a means of employment, and they went to work in factories, making “things”, many exported to rebuild war torn countries.  This was, however, a relatively short-term advantage. These markets disappeared when Europe and Japan began to catch up and supply themselves with essentials.  Thanks to the Marshall plan, many American companies were active in assisting foreign counterparts, or subsidiaries, to recover and become competitive, with a substantial amount of American money and technology.  Today, the shoe is on the other foot, where we are running fast to compete with global competitors that won’t go away.

After WWII, typical costs billed as direct labor ranged somewhere between 50% to 70% of total cost of manufacture.  With the onset and growth of automation, use of molded plastic parts, instant data transfer, electronic miniaturization, improved transportation capability, and cross training of employees, direct production cost attributed to labor of most manufactured goods is now less than 10%.  If direct labor is a measurable component of manufacturing cost, the product is probably not competitive in the world market. Humans are obsolete in most modern factories, regardless of where that factory is located.  Many manufacturers don’t have “direct labor” as an employment category any more.

Another result of the post war culture came from the GI Bill where education for anyone with military service got the opportunity for advanced education.  For the first time in the history of the world, free advanced education was available to a high percentage of citizens, even those that came from a family background where advanced education had been an impossible dream. This created a new generation of thinkers, not laborers.  There are now two to three generations beyond returning WWII military employees.  The entrepreneurial spirit that came home with returning veterans has not carried through to today’s students.

Pay of a production worker in the past was based on how many good pieces per hour each employee finished.  Rows of machines, each with an operator, producing many copies of a part to be added to an assembly were commonplace. Single function machines producing one piece at a time are now gone, replaced by small groupings of machines performing multiple tasks.  Today a production worker in a profitable company tends several machines that operate through machine control centers.  Highly trained technicians tend these cells. They spend working time insuring incoming materials are available, keeping the next machine grouping supplied with acceptable components, learning new skills, and insuring cell output is on schedule, and within acceptable limits.  They also are the source of data about production output direct to senior management.

In the typical modern factory, cross-trained employees perform multiple tasks as a routine job assignment.  Each employee has a unique skill inventory and no two employees have the same job description.  In this environment, elements of individual employee job descriptions are shared in different combinations with other workers.  Employees with the widest scope of skills are paid the most.  This makes organization of employees into unions almost impossible.  From the workers viewpoint, a union is not needed because the destiny of the worker is in his hands.

Employers need specialized education facilities, to train individuals in advanced and specific areas. Alvin Toffler, in his book Revolutionary Wealth, observes that “a fundamental shake up in the way increasingly temporary skill sets are organized to accommodate temporary purposes throughout the economy”. This is occurring in many industries, and will accelerate as the impact of globalization reaches more industries.

Distributed data processing capability with the growth of Personal Computer’s has eliminated virtually all middle management jobs.  Starting in 1960’s, timely information became available to senior management that previously stayed on the production floor.  This means the today’s shop floor operator has to be able to identify, collaborate to improve, and defend current trends and reported results to senior managers, rather than to a middle management consolidator or a local foreman.  Uneducated production workers are challenged to fill this job requirement.

In the past, local production shops or office environments that employed several workers performing the same or similar tasks for a local customer were oper

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