The Hard Truths About Today’s Labor Market

Jerry Haar

Unemployed coal miners want their jobs back. So do manufacturing plant workers whose employment has been outsourced to lower-wage countries. Add to those young people, including scores of college graduates, whose job prospects are grim, forcing them into underemployment and requiring them to live at home rather than on their own.

This litany of complaints (and outrage) has fueled, in part, the resurgence of populism not only in the United States but in Europe, as well. And while these grievances are understandable, it is time for real truths–not alternative truths–about labor markets. These are:

Dying industries cannot be resuscitated. Typewriters, pay phones, folding maps, beepers, Kodak film, and cassette players are obsolete, their product life cycles have run their course and their replacements/substitutes superior in every way. Coalmining employed nearly 130,000 workers when Obama was elected president. By 2015 that figure had dropped to 98,000. Competition from cheap, shale gas; fracking; renewables; and technology was and will continue to be the reasons for the continual fall. Other declining industries include knitting and apparel, hardware manufacturing, communications, equipment, and glass manufacturing. Here, too, technology will boost productivity while decreasing labor input.

Most offshored jobs will not be re-shored. Although some will be coming back, the vast majority will not. Outsourcing, whether transferred in-company to an outside supplier, from a union state to a right- to-work state, or to a foreign country like China or Mexico is intended to reduce costs to allow a company to sell to consumers at a lower price. The negative impact on a firm’s employees will be the same. Reducing costs allow the company to offer consumers a lower price. When Delta moved 1,000 jobs to India it reduced costs by $25 million and used the money saved to fund 1,200 new reservations and sales positions in the U.S. The intent of market capitalism is to serve the consumer, not the producer’s employees.

Continue reading

Treasury Turns Its Gaze to Municipal-Bond Market

Department to Form New Unit, With Focus on Troubled Borrowers

U.S. policy makers, concerned about strained public finances in places like Detroit and Puerto Rico, are moving to keep closer tabs on the ability of states and cities to raise money in the $3.7 trillion municipal-bond market.

The Treasury Department is forming a new unit to broadly monitor the market, with a focus on troubled borrowers, according to a Treasury official. The unit, which will be headed by a veteran public-finance banker at J.P. Morgan Chase & Co., also will track state and local pensions as…

Read more in WSJ:

What Drives Globalization? Part 4/4

Globalization is driven by four factors:

  1. Cost
  2. Market
  3. Environment
  4. Competition

Competition:

To remain competitive, global rivals have to intensify their marketing everywhere by attempting to sustain advantages that, if weakened, could make them susceptible to market share erosion worldwide. Competitive companies introduce, upgrade, and distribute new products faster than ever before. A company that does not remain ahead of the competition risks seeing its carefully researched ideas picked off by other global players.

Leading companies drive the globalization process. There is no structural reason why soft drinks should be at a more advanced stage of globalization than beer and spirits, except for the opportunistic behavior of Coca-Cola. Similarly, German beauty products maker Nivea is driving its business in a global direction by creating global brands, a global demand for those brands, and a global supply chain that helps the company meet those demands.

Nonetheless, the four global drivers have affected countries and industrial sectors differently. While some industries, including paper and soft drinks, are truly globally contested, some others, such as government procurement, are still closed. Commodities and manufactured goods are already in a globalized state, while many consumer goods are accelerating toward more globalization. Similarly, the leading trading nations display far more openness than low-income countries and that openness is advancing the positive state of globalization in general.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg. 92.

 

Related posts:

What Drives Globalization? Part 3/4

Globalization is driven by four factors:

  1. Cost
  2. Market
  3. Environment
  4. Competition

Environment:

Increasing consumer wealth and mobility, rapid information transfer across borders, publicity about the benefits of globalization, and technological revolutions continue to accelerate demands for global products and services. Newly emerging markets are benefiting from advanced communications by leaping over economic development stages that others slogged through in earlier years.

A new group of global players is taking advantage of the increase in trading regions and newer technologies. These “mini-nationals” or “born globals” serve world markets from a handful of manufacturing bases rather than building a plant in every country as was the procedure in earlier years. Their smaller bureaucracies also allow these companies to move quickly to conquer new markets, develop new products, or change directions when the situation calls for it.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg.91-92.

 

Related posts:

What Drives Globalization? Part 2/4

Globalization is driven by four factors:

  1. Cost
  2. Market
  3. Environment
  4. Competition

Market:

Consumers in advanced economies are becoming more similar in terms of education, income, lifestyles, aspirations, and their use of leisure time. Marketers of certain products find ready buyers in countries with high purchasing power and well-developed infrastructures. Still other products might fare best in markets that are less sophisticated.

Having a global strategy does not mean that a company should serve the entire globe. Critical choices include deciding where to spend resources and where to hang back. The usual approach is to start by picking regions and then countries within them. Regional groupings might follow the organizational structure of existing multinational management or export offices, such as splitting Europe into northern, central, and southern regions that have similar demographic and behavioral traits. Market data might be more readily available in situations where the firm is grouping markets according to existing structures and frameworks.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg.91.