The U.S. labor shortage is reaching a critical point

Discussion in 'General Discussion' started by Czer, Jul 5, 2018.

  1. Czer

    Czer I'm a poor person. The lambo is my cousin's.

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    There is absolutely no way this is accurate.

    If production is reaching the highest peaks ever with fewer employees, A LOT of people do not have jobs.

    So either they are hiring people based on something other than technical ability, which I guarantee is accurate. (Watering down expectations in order to fill FIT instead) when no one matches the FIT expectation it's a job unfilled.

    I have been watching MSP's merge and combine over the last couple of years and throw away half of the technical side because it becomes redundant on the merge, that's just in IT.

    The U.S. labor shortage is reaching a critical point
    • Private payrolls grew less than expected in June, likely due not just to a slowdown in hiring but also a decline in the labor pool.
    • For the first time, there are more job openings than there are eligible workers to fill them.
    • Economists expect wage pressures to continue building as part of increasing inflation.
    https://www.cnbc.com/2018/07/05/the-us-labor-shortage-is-reaching-a-critical-point.html

    America’s labor shortage is approaching epidemic proportions, and it could be employers who end up paying.

    A report Thursday from ADP and Moody’s Analytics cast an even brighter light on what is becoming one of the most important economic stories of 2018: the difficulty employers are having in finding qualified employees to fill a record 6.7 million job openings.

    Truck drivers are in perilously low supply, Silicon Valley continues to struggle to fill vacancies, and employers across the grid are coping with a skills mismatch as the economy edges ever closer to full employment.


    “Business’ number one problem is finding qualified workers. At the current pace of job growth, if sustained, this problem is set to get much worse,” Mark Zandi, chief economist at Moody’s Analytics, said in a statement. “These labor shortages will only intensify across all industries and company sizes.”

    Private payrolls grew by 177,000 in June, a respectable number but below market expectations. It was the fourth month in a row that the ADP/Moody’s count fell short of 200,000 after four months at or above that level.

    The reason for the tick down in hiring certainly isn’t because there aren’t enough jobs.

    The Bureau of Labor Statistics reported that April closed with 6.7 million job openings. May ended with just over 6 million people the BLS classifies as unemployed, continuing a trend this year that has seen openings eclipse the labor pool for the first time. At some point that gap will have to close. Economists expect that employers are going to have to start doing more to entice workers, likely through pay raises, training and other incentives.

    “Pressure is building for employers, and both hard data and anecdotal reports indicate that wage pressures are building,” Jim Baird, chief investment officer at Plante Moran Financial Advisors, said in a note. “With the economy still humming, employers are able to justify stronger wage increases to retain or attract talent, but it’s becoming a more challenging proposition.”

    As employers face the pressure, the costs likely will end up getting passed on.

    Most inflation measures are at 2 percent or more now, and are likely to continue rising. Companies are reporting record profits, but could find themselves constrained by a double-short of inflation, both from wages and rising costs due to escalating trade tensions and tariffs between the U.S. and its trading partners.

    “How much might rising labor costs chew into corporate profits? How much will be passed through to customers in the form of higher prices? That remains to be seen," Baird said. "Rising labor costs will boost take home pay, but we’re also all likely to see the effect in rising prices for goods and services."

    Those are all issues the Federal Reserve will have to weigh as well.

    The U.S. central bank has been raising interest rates as it sees the economy growing and inflation meeting the Fed's 2 percent target. Fed officials have indicated they will be raising rates two more times in 2018, but the market has been skeptical, with traders assigning just a 51 percent chance of that happening.

    The economy has "bumped against the proverbial labor wall," David Rosenberg, chief economist and strategist at Gluskin Sheff, said in his morning note Thursday. "Inflation pressures will intensify and the Fed will be forced to act more aggressively, just as has been the case in the past. There is no Presidential Tweet that will stop Mother Nature from taking its course."
     
    Last edited: Jul 5, 2018
  2. Agrul

    Agrul TZT Neckbeard Lord

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    Jobs for every1!

    pras trump
     
  3. Czer

    Czer I'm a poor person. The lambo is my cousin's.

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    No way those numbers are right.
     
    Last edited: Jul 5, 2018
  4. Velox

    Velox TZT Abuser

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    I'm not sure what part you are surprised about, but western economies have a growing matching problem between ever more advanced jobs and labor skills that do not advance at the same rate. There is a huge shortage at the top of the skill pyramid, but swathes of low skill laborers have trouble finding a job (and some stop looking which make them fall out of the statistics).

    A more useful metric to look at can be labor participation levels: https://data.oecd.org/chart/5dWZ

    As you can the US does indeed have shrinking participation which is not reflected in the unemployment stats, probably due to people giving up. This is fairly unique for the US among western nations though, the others are better at reeducating their unemployed. It's generally quite possible to have growing productivity without growing unemployment on average.
     
  5. Agrul

    Agrul TZT Neckbeard Lord

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    better at reeducating their unemployed

    more like taking their boostraps from them and feeding the entitlement complex
     
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  6. Czer

    Czer I'm a poor person. The lambo is my cousin's.

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    So, you're not taking into account any kind of production automation or job irrelevancy

    also how is that chart measured, do they just take the total population and if they have income put them down on participation?

    • Labour force participation rate
    • 15-64 year-olds
    • % in same age group
    • 1986 – 2017
    • Source: Labour Market Statistics: Labour force statistics by sex and age: indicators
    >>?

    Retirement makes up 16-17% of the total population, and children 0-17 make up another 23% or so, but there is overlap as 15 is the start of the labor age in that chart

    Also how many people in the age range for labor are disabled from work completely

    Just start asking these questions and you can tell these numbers are made up

    I'm running away on a tangent about the accuracy of the measurements and away from the original point that the numbers issued are incredibly misleading
     
    Last edited: Jul 5, 2018
  7. AgelessDrifter

    AgelessDrifter TZT Neckbeard Lord

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    Tangentially related, but one huge problem I see in the labor market in the US is that even in the best case scenario post-unexpectedly-losing a job (i.e. You find a new one immediately), it takes, like, fucking six weeks to go from application to first paycheck.

    Tailor-make a resume/cv/cover letter for each of 1274628636 job openings, fill out ten page online application complete with personality test (featuring questions like "Choose the statement that best describes you: 1) I find it hard to get motivated when I know I can't do everything perfectly 2) I sometimes get frustrated with people around me's incompetence", wait for a phone call to schedule a skype interview, possibly wait a week for a second interview, maybe in person this time, wait to get emailed some shit you can print out to take to a drug lab to get piss tested, make an appointment at the piss lab, wait a week for results, get scheduled for an appt with HR to fill out some tax shit, maybe you do orientation the same day, maybe you don't, actually start (training?) two or three days later, have first paycheck withheld and/or start in the middle of the pay period so that your first check is for, like, 14 hours, six of which are at a training rate that is less than your actual rate.

    Then choose one of: work 29 hours a week and get no benefits OR work overtime sometimes but have the numbers pushed around so that it looks like you never work over 29 hours in any one week and never get benefits OR work salary and be asked to come in every day for 14 hours and answer emails over your vacation and get benefits but die at 45 of a heart attack after your spouse leaves you for being emotionally unavailable.
     
  8. Velox

    Velox TZT Abuser

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    These are OECD figures so they are supposed to be moderately standardized (nothing is perfect though). I'm sure you can look up the exact methodology.

    I just gave you better numbers. As an example, the % of women working used to be the largest factor in country vs. country comparisons, but it is clear that the US has a downward trend.

    Productivity gains and automation have not been a big problem for unemployment so far, outside the US at least. This might change at some point, but this is not necessarily a problem. Outside the US at least.
     
  9. Czer

    Czer I'm a poor person. The lambo is my cousin's.

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    What numbers did you give me, also hold on you can't just say outside the US at least. That changes vastly depending on the nation, especially continent.

    Automation has had an overwhelmingly gigantic impact on production work and is making its way to retail/service and most jobs that require basic calculation work (accounting/finance). It will end up being a bunch of financial engineers.

    https://qz.com/1269172/the-epic-mistake-about-manufacturing-thats-cost-americans-millions-of-jobs/

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    Looking back, there were two kinds of people who lived in America in 2016: people who believed Donald Trump, and people who believed data.

    Trump claimed on the campaign trail that globalization had destroyed US manufacturing—and in the process, the American economy—by letting China and other countries steal American factory jobs. From the turnout at Trump’s rallies and the “Make America Great Again” stickers slapped on bumpers across America, it was clear the message was resonating.

    The data camp didn’t get it. Yes, the US had hemorrhaged manufacturing jobs, losing close to 5 million of them since 2000. Trade may have been a factor—but it clearly wasn’t the main culprit. Automation was. Robots and fancy machines had supplanted workers, turning the US into a manufacturing dynamo at the cutting edge of innovation. An article in Vox, published a month before the 2016 presidential election, spelled out the situation.

    “Declining manufacturing employment over the past 30 years has given a lot of people the impression that America’s manufacturing sector is in decline. But that’s actually wrong,” the Vox article explained. “American factories are about twice as efficient today as they were three decades ago. So we’re producing more and more stuff, even as we use fewer and fewer people to do it.”

    This was hardly a groundbreaking insight. For a decade or so, this phenomenon had been put forth by Ivy League economists, former US secretaries of treasury, transportation, and labor, Congressional Research Services, vice president Joe Biden, president Barack Obama—and by Quartz too, for that matter. In a 2016 New York Times articletitled “The Long-Term Jobs Killer is Not China. It’s Automation,” Harvard economist Lawrence Katz laid out the general consensus: “Over the long haul, clearly automation’s been much more important—it’s not even close.”

    Manufacturers’ embrace of automation was supposedly a good thing. Sure, some factory workers lost their jobs. But increased productivity boosted living standards, and as manufacturing work vanished, new jobs in construction and other services took its place. This was more of a shift than a loss, explained Bradford DeLong, economics professor at the University of California, Berkeley.

    So when Trump won the presidential election, the true-blue data believers dismissed his victory as the triumph of rhetoric over fact. His supporters had succumbed to a nativist tale with cartoon villains like “cheating China” and a shadowy cabal of Rust Belt-razing “globalists.”

    But it turns out that Trump’s story of US manufacturing decline was much closer to being right than the story of technological progress being spun in Washington, New York, and Cambridge.

    Thanks to a painstaking analysis by a handful of economists, it’s become clear that the data that underpin the dominant narrative—or more precisely, the way most economists interpreted the data—were way off-base. Foreign competition, not automation, was behind the stunning loss in factory jobs. And that means America’s manufacturing sector is in far worse shape than the media, politicians, and even most academics realize.

    Worse than the Great Depression: America’s manufacturing jobs implosion
    In the four decades between 1960 and 2000, US manufacturing employment was basically stable, averaging around 17.5 million jobs. Even during the 1980s and 1990s, as Korea and other smaller Asian nations joined the ranks of Germany and Japan to threaten the dominance of US factories, the absolute number of manufacturing workers stayed mostly flat. That’s why what happened next is so alarming.

    Between 2000 and 2010, manufacturing employment plummeted by more than a third. Nearly 6 million American factory workers lost their jobs. The drop was unprecedented—worse than any decade in US manufacturing history. Even during the Great Depression, factory jobs shrunk by only 31%, according to a Information Technology & Innovation Foundation report. Though the sector recovered slightly since then, America’s manufacturing workforce is still more than 26% smaller than it was in 2000.

    What’s odd is that, even as US factories laid off an historically unprecedented share of workers, the amount of stuff they made rose steadily—or at least, it appeared to. The sector’s growth in output, adjusted for inflation, had been chugging away at roughly the same pace as US GDP since the late 1940s. That makes sense given that productivity—that is, advances in technology, skill, or management that allow workers to make more stuff in less time—has also been growing at a zippy clip.

    How, then, do you reconcile the epic employment slump of the 2000s with the steady rise in output? The obvious conclusion is that factories needed fewer people than they did in the past because robots are now doing more and more of the producing. That’s tough for factory workers, but US manufacturing is doing fine.

    That rests on the basic assumption that the manufacturing output data reflect the actual volume of stuff produced by US factories. It’s a reasonable assumption to make. Unfortunately, it’s not an accurate one.

    Houseman’s light bulb moment
    Economists have long been aware that computers and electronics, a relatively small sector of manufacturing, has powered much of manufacturing’s growth in output over the past few decades. But until 2009, no one had connected this fact to the puzzling paradox of surging manufacturing output alongside dwindling employment. That’s when Susan Houseman and her colleagues first took a crack at it—and, in the process, discovered something funny going on with data.

    An economist at the Upjohn Institute, an independent organization that researches employment, Houseman specializes in measuring globalization. She had been working with a team of Federal Reserve economists with access to more granular data than was publicly available, which allowed them to strip away the computers industry output from the rest of the data. That revealed just how the rest of manufacturing was doing—and it was much worse than what Houseman and her colleagues expected.

    “It was staggering—it was actually staggering—how much that was contributing to growth in real [meaning, inflation-adjusted] manufacturing productivity and output,” says Houseman.

    This was especially striking given that the two measures lay at the heart of the prevailing narrative that US manufacturing is growing healthily.

    In 2011, Houseman and her colleagues mentioned their discovery in a paper they published in the Journal of Economic Perspectives. But the point went largely unnoticed.

    Undeterred, Houseman spent the next few years digging further into why this relatively small industry was driving so much growth—and what was really going on with America’s manufacturing.

    How economists calculate manufacturing output
    In order to understand how the manufacturing sector is doing, economists look at how much stuff factories are making compared with previous years. The key measure of this output is “value added”: manufacturing sales, minus the cost of things like electricity and parts used in the manufacturing process. They look at this across a dozen or so manufacturing subsectors, such as paper, apparel, furniture, and chemicals.

    But that figure alone isn’t enough. To make the output volume comparable from one year to the next, the statisticians aggregating the data adjust for price changes, as well as improvements in product quality. For example, let’s say statisticians want to figure out how much the sales of Intel processors grew in 2017 versus 2016.

    The problem is, the processor released in 2017 is superior to that sold in 2016 in many tangible ways. But how do you account for the fact that a 2017 processor provides users with more value? In general, statisticians assume the difference in value between the two models is just the difference in their prices. If, say, the 2017 processor costs twice as much as the 2016 one does, then selling one 2017 processor counts as selling two of the 2016 versions in the statisticians’ books.

    In this hypothetical, the real output data might look like increased sales of processors. But it could also simply reflect the statisticians’ assumptions that people value their new processor more than they did earlier models, because the new version’s superior performance.

    Government data wizards do this sort of quality adjustment for all sorts of products, including automobiles. However, the biggest adjustments show up in processors and the other goods made by the computers subsector, in which the blazing pace of technological change makes for dramatic and ultra-fast leaps in quality.

    In other words, the method statisticians use to account for these advances can make it seem like US firms are producing and selling more computers than they actually are. And when the computers data are aggregated with the other subsectors, the adjustment makes it seem like the whole of American manufacturing is churning out more goods than it actually is.

    Misreading the manufacturing statistics
    It’s this adjustment that is the crux of economists’ misinterpretation of the health of manufacturing. There’s nothing wrong with accounting for product quality. But most economists and policymakers have failed to take into account how adjusting for quality improvements in a relatively small subsector skews the manufacturing output data.

    “Even though well-trained economists know that you can’t look at descriptive evidence and jump to the conclusion that productivity growth in the form of automation is causing employment declines,” says Houseman, “the evidence just looks so compelling it seems obvious that’s what going on.”

    Many economists are aware of the computer industry’s outsize contributions to sector statistics. But few realize that the figures showing vast increases in manufacturing output have been dominated by a single small industry, according to Houseman.

    “The dominant narrative is that there’s no problem, that it’s doing very well, and that’s kind of the end of the story, at least among economists,” she says. “Trump won to some degree arguing that trade had harmed US workers and that US manufacturing was not doing well. Very often, the mainstream media and economists were quick to point out that that’s not borne out by statistics. But that’s based on a misreading of the statistics.”

    The hollowing-out hidden in the data
    This erroneous notion, based solely on a statistical anomaly, long ago crystallized into deeply misleading consensus that high-tech advances in America’s manufacturing sector give it a comfortable competitive edge. And that’s not at all the case.

    One way of gauging how the sector has been doing is to compare how much real output in manufacturing has grown, both with and without computers, compared to the private sector as a whole—which encompasses everything from finance and agriculture to retail and manufacturing. According to Houseman’s research, between 1947 and 1979, real output in manufacturing and the private sector expanded at about the same speed. Strip out the computer subsector from both datasets, and that trend is pretty much the same.

    The divergence first emerged in the late 1970s, as the semiconductor industry took off and the computers and electronics subsector began driving growth in manufacturing output.

    Between 2000 and 2016, the average growth in the sector’s real output was only about 63% of that of the private sector. But when you take out computers out of both data series, the trend is far more striking: Since 2000, manufacturing output expanded at an average pace equal to only 12% of the private sector’s average growth.

    In fact, according to Houseman’s data, without computers, manufacturing’s real output expanded at an average rate of only about 0.2% a year in the 2000s. By 2016, real manufacturing output, sans computers, was lower than it was in 2007.

    This has grim implications for what had been assumed to be healthy productivity. As with real output, productivity growth comes mostly from the computers subsector’s quality adjustment—which means that the apparently robust growth in manufacturing productivity is mostly a mirage.

    To be clear, automation did happen in manufacturing. However, throughout the 2000s, the industry was automating at about the same pace as in the rest of the private sector. And if booming robot-led productivity growth wasn’t displacing factory workers, then the sweeping scale of job losses in manufacturing necessarily stemmed from something else entirely.

    The truth about automation versus trade
    It’s not perfectly clear what, exactly, is the culprit behind relatively anemic growth in manufacturing output. But the signs indicate trade and globalization played a much more significant role than is commonly recognized.

    Of particular importance is China’s emergence as a major exporter, which US leaders encouraged. A pair of papers by economists David Autor, David Dorn, and Gordon Hanson, found that the parts of the US hit hard by Chinese import competition saw manufacturing job loss, falling wages, and the shrinking of their workforces. They also found that offsetting employment gains in other industries never materialized.

    Another important paper by this team of economists, along with MIT’s Daron Acemoglu and Brendan Price, estimated that competition from Chinese imports cost the US as many as 2.4 million jobs between 1999 and 2011.

    Why did China have such a big impact? In their 2016 study, economists Justin Pierce and Peter Schott argue that China’s accession to the WTO in 2001—set in motion by president Bill Clinton—sparked a sharp drop in US manufacturing employment. That’s because when China joined the WTO, it extinguished the risk that the US might retaliate against the Chinese government’s mercantilist currency and protectionist industrial policies by raising tariffs. International companies that set up shop in China therefore enjoyed the benefits of cheap labor, as well as a huge competitive edge from the Chinese government’s artificial cheapening of the yuan.

    The resulting appreciation of the dollar hurt US exporters—in particular, manufacturers. A 2017 study on the dollar’s appreciation in the early 2000s by economist Douglas Campbell found that the dollar strengthened sharply, in real terms, compared to low-wage trading partners including China. The subsequent increase in foreign imports and diminished demand for American exports resulted in a loss of around 1.5 million manufacturing jobs between 1995 and 2008.

    There are also observable signs that automation wasn’t to blame. Consider the shuttering of some 78,000 manufacturing plants between 2000 and 2014, a 22% drop. This is odd given that robots, like humans, have to work somewhere. Then there’s the fact that there simply aren’t that many robots in US factories, compared with other advanced economies.

    The cost of complacency
    Two decades of ill-founded policymaking radically restructured the US economy, and reshuffled the social order too. The America that resulted is more unequal and more polarized than it’s been in decades, if not nearly a century.

    In effect, US policymakers put diplomacy before industrial development at home, offering the massive American consumer market as a carrot to encourage other countries to open up their economies to multinational investment. Then, thanks to the popular narrative that automation was responsible for job losses in manufacturing, American leaders tended to dismiss the threat of foreign competition to a thriving manufacturing industry and minimize its importance to the overall health of the US economy.

    “A lot of policymakers, not everyone, but most, just missed the boat,” says Houseman. “We didn’t have the intelligent debates about what was going on with trade, etc., because a lot of people were just denying there was any problem, period.”

    The problem is that manufacturing plays a significant role in the US economy. Manufacturing jobs tend to pay better, and create opportunities for learning skills that are particularly important to workers with less formal education. Factories also encourage innovation by attracting research and development (R&D) facilities, which need access to production lines to translate design into real products and to work out the kinks in prototypes. This is why when plants shutter and are moved overseas, R&D centers almost always go with them, says Houseman. Detached from the innovative feedback loop formed with R&D, US factories struggle to compete.

    The received wisdom that the US was simply becoming a service-driven economy also lulled leaders into complacency about the long-term economic and social cost of lost manufacturing jobs. The establishment assumed that the apparent increase in the sector’s output and productivity would eventually solve the problem; where there was wealth, there would be new job openings to replace lost factory work. But, as a growing heap of research shows, workers hit by mass layoffs suffer unusually big wage losses throughout their careers, and many exit the workforce entirely.

    While the forces of globalization battered America’s middle class, they largely benefited the country’s emerging urban professional elite—managers, consultants, lawyers, and investment bankers enriched by booming international investment and by the cheapening of imports. And as multinational corporations and their bosses gained political clout, the interests of the middle class faded.

    Two decades of complacency among US leaders gave companies in Asia and other emerging export bases time to create world-class factories and robust supply chains. Tellingly, even as the real output of the computers subsector has appeared to grow astonishingly quickly, the sector has been steadily losing market share to Asian competitors, according to a 2014 paper by Houseman and economists Timothy Bartik and Timothy Sturgeon.

    A legacy of ignorance
    One reason why Houseman’s revelation is so important is that the myth of automation continues to have a strong grip on the minds of American policymakers and pundits. The lessons of the populist backlash during the 2016 presidential election didn’t seem to take. As the US gears up for mid-term elections this year, the Democrats have no vision for how to reverse the industrial backslide.

    Ironically, that criticism applies to Trump, too. His campaign ignited a vitally important national conversation on the relationship between US trade policies and manufacturing’s decline. Since he took office, however, Trump has paid minimal attention to boosting US manufacturing. Instead, he’s favored counterproductive protectionismand ignored currency manipulation, preferring the punitive over the constructive.

    US leaders’ longstanding misunderstanding of the manufacturing industry led to the biggest presidential election upset in American history. But they still don’t seem to grasp what’s been lost, or why. It’s easy to dismiss the disappearance of factory jobs as a past misstep—with a “we’re not getting those jobs back” and a sigh. Then again, you can’t know that for sure if you never try.
     
    Last edited: Jul 5, 2018
  10. Czer

    Czer I'm a poor person. The lambo is my cousin's.

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    Why Made in China 2025 Will Succeed, Despite Trump
    • July 4, 2018

    https://www.nytimes.com/2018/07/04/technology/made-in-china-2025-dongguan.html

    China will succeed in building a powerful technology industry that will rival the United States, even if President Trump starts a trade war to stop it. The reason can be found on the fourth floor of a nondescript factory in a city once famous for cheap manufacturing and prostitution.

    This factory floor, in the southern Chinese city of Dongguan, once employed what one employee called a “magnificent sea of people.” Rising labor costs and a new generation with little interest in toiling in factories forced a new tack. Now the sea of people is being replaced by a whirring array of boxy machines, each performing work it used to take 15 people 26 steps to finish.

    The factory suggests that Beijing’s vision of Made in China 2025 — the ambitious state-driven plan to retool China’s industries to compete in areas like automation, microchips and self-driving cars — is not being pushed just by the Communist Party’s top leaders. Instead, the drive is also coming from the bottom up: from the businesses and cities across China that know they must modernize or perish.

    The Trump administration is not wrong to confront Beijing over Made in China 2025. China’s top-down approach gives its companies unfair advantages and could continue to roil global trade relations long after Mr. Trump retires to Mar-a-Lago.

    worried about labor costs and their own futures. It comes from local governments looking for ways to stay relevant. It comes from a growing network of private-sector entrepreneurs, academics and local politicians who are increasingly working together to overhaul China’s factories and its future. Other cities — Suzhou, Wenzhou, Xuzhou and the industrial areas around Shanghai are just a few examples — have also drummed up their own automation plans.

    The modernization may not happen in 2025. In fact, it may be long after that. But China will get there, mostly because it has to.

    “If Made in China 2025 were a car, the engine has started and it’s definitely moving along,” said Zhang Guojun, director of Guangdong Intelligent Robotics Institute in Dongguan, one of several city-supported local research centers helping the factories upgrade. The city was automating well before Made in China 2025 came out in 2015, he said, “but the policy provided us a clear direction.”

    A city of eight million people in the Pearl River Delta, Dongguan long relied on making and exporting shoes, toys and electronic parts to the United States and Europe. In many ways, it looks like the factory-dominated China of popular imagination, with whole parts of the city pervaded by rows of rectangular factory buildings, one after another.

    Then the 2008 financial crisis hit. Orders dried up. Dongguan became known as China’s capital of prostitution until a government crackdown cleaned it up.

    Beyond the financial crisis, China’s very prosperity threatened Dongguan’s future. The average worker’s income rose fourfold over the past decade. Fewer young people wanted to work on dull and stressful assembly lines, preferring service jobs — like waiting tables and delivering e-commerce packages — that let them interact with people or move around. Some factories moved to lower-cost countries or shut down for good.

    Dongguan’s companies and government had to do something. They committed to modernizing.

    Before Made in China 2025 became policy, Dongguan kicked off a “replacing humans with machines initiative” and funded it with about $30 million a year. It later channeled more money into other automation initiatives. Companies that could prove they had a worthy research project or were willing to invest in industrial robots, software or advanced machinery could win subsidies and tax breaks. The government picked up 10 percent to 20 percent of the tab. Smartphone, furniture, machinery and even cake companies won support, official documents show.

    Mentech, the telecom equipment supplier, once had hundreds of workers winding, packaging and testing magnetic wires that were thinner than hair, all by hand. Even today, the company is desperate for workers. On the side of one factory building it lists the on-the-job benefits it offers: monthly wages with overtime of up to about $1,100, air-conditioned dormitories, free Wi-Fi and even a birthday present.

    “Love your employees,” reads a banner, “and they will love you back 100 times.”

    But labor costs and a lack of hands were holding it back. During the Lunar New Year holiday, when most of China shuts down and goes home, some 500 Mentech executives, engineers and administrative staff had to work three-hour shifts after their normal workday to keep the factory running, said Zhang Xiaodong, a research and development manager.

    Mentech asked Mr. Zhang and others to figure out how to automate the factory. They spent two years working late into the night. Machines needed tweaking. Components needed to be redesigned so that machines could make them. Several projects failed.

    “Not every problem has a solution,” Mr. Zhang said. “We know that smart manufacturing is the future. But getting there isn’t easy.”

    Today, a factory floor that once needed over 300 workers now needs 100. More than half of the factory has been automated. The workers clustered around the machines will probably be replaced by machines themselves in a year or two.

    To help, the Dongguan government provided $1.5 million in subsidies. It is also luring start-ups and helping scientists open research centers to provide more know-how.

    One start-up aiding Mentech is Dongguan Precision Intelligent Technology, which will provide a good chunk of the machinery the company needs to automate fully. Because the equipment will be Chinese-made, it will be cheaper than purchases of automation systems from Japan or the United States.

    “The biggest trend in manufacturing is that automation is irreversible,” said Forest Tian, a former venture capitalist who founded Precision Intelligent Technology. “There will be huge demand for these machines.”

    The Dongguan government has taken other steps to ensure these centers of innovation help local manufacturers. For example, it formed about 30 research institutes in partnership with major Chinese universities. Once the initial money was given, Dongguan officials told the institutes they had to figure out how to make money on their own.

    The institutes teamed up with companies like Guangdong Janus Intelligent Group Corporation, a once-dowdy cellphone parts maker facing the familiar problem of high labor costs. Experts in the field became recurring visitors to its factory.

    such as building up world-class microchip industries or self-driving cars, remain out of sight for now.

    Yet when it comes to manufacturing, Dongguan suggests Made in China 2025 will succeed partly because the effort is bigger than Beijing. Chinese companies and local government officials are determined to climb the value chain so they will not fall into obsolescence. The best Washington can do is to make sure its policies help American companies stay ahead of the game.
     
  11. Czer

    Czer I'm a poor person. The lambo is my cousin's.

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  12. Agrul

    Agrul TZT Neckbeard Lord

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    45,957
    CZER vs VELOX

    THE IRATE IRANIAN VS THE VOLUBLE VIRTUOSO

    ROUND 314

    GO
     
  13. Czer

    Czer I'm a poor person. The lambo is my cousin's.

    Post Count:
    25,941
    no you don't make any decisions

    make a long agrul post about how im right

    [​IMG]
     
    Last edited: Jul 5, 2018
  14. AgelessDrifter

    AgelessDrifter TZT Neckbeard Lord

    Post Count:
    44,015
    This figure saying here are more jobs than people to do them has been floating around for a week or two. I've seen some older/more conservative fb friends bandying it about with commentary on how this is proof that millennials are lazy whiners.

    Regardless of how it's being calculated I imagine it's getting the spotlight right now as part of a lead-up to further attacks on liberal arts education funding
     
  15. Velox

    Velox TZT Abuser

    Post Count:
    5,959
    Agrul: I'm hurt, I try to be terse these days. I can't help that Czer's posts all fork in 19 directions (all roads lead to Russia though :tongue:).

    Czer: Historically automation has created as many jobs as it destroyed. You will be proven right eventually, it's just that if you look at labor participation figures for western economies, only the US figures have gone down. That could be more due to shitty labor policies than anything else.
     
  16. Czer

    Czer I'm a poor person. The lambo is my cousin's.

    Post Count:
    25,941
    I mean some of those roads lead to Israel and right wing extremists
     
  17. Agrul

    Agrul TZT Neckbeard Lord

    Post Count:
    45,957
    i didnt actually wanna call u voluble but i ran outa v words real fast
     
  18. AgelessDrifter

    AgelessDrifter TZT Neckbeard Lord

    Post Count:
    44,015
    Haven't you seen V for Vendetta

     
  19. Samassi Abou

    Samassi Abou TZT Abuser

    Post Count:
    5,648
    Interesting how everyone in the article acts like wage rises are a terrible thing. Wage stagnation has meant that employees don’t have the money to buy the products that companies want to produce.
     
  20. Sanlaven

    Sanlaven TZT Abuser

    Post Count:
    9,386
    Because of inflation. It’s not that they inherently don’t want people’s wages to rise, but if inflation is already pretty much at an ideal level then rising wages across the board are going to push it even higher and will negate any benefit people have from the higher wages in the first place