AT&T Bringing Call Center Jobs Back to The U.S. Hooray!!! Wait, What?

So AT&T is bringing 5,000 call center employees back to the U.S. and claims it will not send any more such jobs overseas.  This is undoubtedly good for an economy desperate for jobs, but not for the reasons you might think, at least not directly, and probably not on a net basis, either.

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Absent From Income Inequality "Debate:" Everything is Amazing & Nobody's Happy

The data is what it is; more income (and hence wealth) is accruing to those at the very top (think top 0.1% instead of top 5% or 1%) while real wages are stagnant if not declining.  That being said, I seldom if ever hear pundits or politicians mention anything about cost/standard of living, absent some economics blogs and papers (which only myself and a tiny tiny portion of the population reads, anyway).

I think Economist/Comedian Louis CK explains it better than I ever could:

June Employment Notes

Many people have summed up today’s unemployment number as dismal, disappointing and “lackluster”. The number in my opinion is plain awful and personally infuriating. I said I was looking for +30k jobs Thursday evening and it looks like I got that and a little more. Here are the numbers at a glance:

May June Change
Civ. Unemployment Rate

9.1%

9.2%

0.1%

All Nonfarm Employees (Seas. Adj)

130999k

131017k

18k

All Nonfarm Employees (Non Seas. Adj.)

131703k

132079k

376k

Civ. Emp. Population Ratio

58.4%

58.2%

-0.2%

All Unemployed

13914k

14087k

173k

Mean Wks Unemp.

39.7

39.9

0.2

Civilian Participation Rate

64.2%

64.1%

-0.1%

Median Wks Unemp.

22

22.5

0.5

U6 Rate

15.8%

16.2%

0.4%

Manufacturing Emp.

11701k

11707k

6k

Government Employment

22103k

22064k

-39

Construction Emp.

5522k

5513k

-9

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Boots On Throats, The Long, Hot Summer

Imagine being told that you need to do something in life and you attempt to do it, but the person that’s very insistent that you do X takes his other hand and actively goes out of his/her way to prevent you from attaining X while each passing moment in time said person begins to label you as “lazy” or not trying hard enough?

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Happy First Day of Summer, or: The Relationship Between Consumer Spending & Gas Prices

I’ve spent far too much time over the past few weeks going back to a hodge-podge of data collected from various government agencies in a semi-futile effort to really learn how, if at all, the price of gas affects consumer spending, and if so, to what degree.  I say semi-futile because some of the data is not available in certain frequencies the rest is, e.g. per capita spending on gas in CPI is annual, while the rest of the data is mostly quarterly.  So, with the caveat that the data from which the following charts and computations are derived is both imperfect and noisy**, I present my (simplistic) conclusions:

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"In a World of Finite Resources We Have to Make Choices"

Contrary to the ignorant and naive (to put it gently) beliefs of people like Michael Moore, we do not live in a world of infinite resources.  Time, money, oil, life, whatever, all finite resources.  This is a fundamental tenet of Economics, so for those of you even remotely familiar with the field, feel free to ignore the following, as it is intended for those who flap their jaws making normative proclamations as if we lived in some magical utopia of the infinite.

In the link, above, economist Milton Friedman tears a young (allegedly) Michael Moore a new one, when Moore asks (in the form of a statement, a curious approach) how Ford isn’t wrong for deciding that spending $13/vehicle to make the Pinto (presumably) more safe would cost more than paying any lawsuits from (wrongful?) death lawsuits.  Let’s put aside for a second Moore’s assertion that “Ford produced it knowing full-well that in any rear-end collision the gas tank would blow-up,” based of an “internal memo” which was later revealed to have been nothing of the sort, or any of the other “facts” he states which were all easily refuted.

A simple fact of life, as economics teaches us, is that not only are resources finite, but as Friedman says in his reply to Moore, “these things are a little more subtle and sophisticated than you were at first led to believe. You can’t get easy answers along this line.”

Coincidently, I read about a real-life example of a problem similar to the (semi-imagined) one faced by Ford (according to Moore).  The fundamental question we – and Friedman – need to consider is whether in a world of finite resources, Is Reducing Risk Always Worth the Price? This is exactly the question Los Angeles citizens and politicians have been asking themselves for years over potential LAX runway reconfiguration plans which would reduce the number of deaths caused by runway accidents.

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How Much Would The iPad 2 Cost If It Was Made In The U.S.A?

With all the talk about how globalization and outsourcing affect U.S. unemployment,  many people seem to be of the mindset that if we were to revive the U.S. manufacturing base, the unemployment problem would take care of itself.  Personally, I’d love to see more goods made here in the good ol’ U.S. of A and thus more manufacturing jobs, but its a two-way street: Labor costs in the United States are SUBSTANTIALLY higher than they are in other countries, namely developing ones like China, Taiwan, Malaysia, etc.

Currently, Apple has contracted with Foxconn to make their iPad 2′s in China, where employees are reportedly paid (after receiving a 30% raise) a king’s ransom of 1,200 Yuan/month, or about $185 at current exchange rates (y/$ = 0.154), or, if we assume an average 8-hour/day, 250-day/year (probably unrealistic assumptions), $1.11/hour.  But what if Apple decided to do the “patriotic” thing, and hire U.S. workers in the U.S. to make its heralded tablet?  How much more would it cost to make the iPad 2 in the U.S. versus in China?  Let’s run some back-of-the-envelope numbers and see:

Average U.S. manufacturing/mining/construction compensation is $32.53/hour as of December, according to the BLS. Research firm iSuppli estimates the iPad 2 costs $10 to manufacture, which – using the $1.11/hour rate – works out to about 9 hours each to complete.  If assembly and manufacture took the same amount of time in the U.S. as it does in China (another possibly unrealistic assumption), the cost of making each iPad 2 comes out to $292.77!

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Jobs Are Not Coming Back

Unless we, as a Country, decide to “go Luddite.”  Contrary to claims by Unions and other pro-labor groups, “offshoring” is not the obvious and primary cause of job loss in the U.S; productivity improvements and shifting business dynamics are (among other things).  This chart, from the Atlanta Fed proves the Unions/labor wrong, rather conclusively:

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What Do People Do All Day?

When you were a kid, there was a book so elegant in its simplicity, so flowing in its narrative that its lessons are permanently etched into your mind.  You may not know it – at least not consciously – but Richard Scarry’s “What Do People Do All Day?” was your first, and possibly best, economics lesson.  And this is probably the best essay I’ve read this year, explaining not only why, but why these lessons are so important even today, 40 years after the book was first published.

Scarry’s supremely fluent style is based on a panoptic principle: every window is open, every wall or outside surface is potentially see-through. Every building and every structure can be made to open up to the child’s meticulous scrutiny. The drawings are deliciously detailed but not in an overly technical way. The text is more informative than lyrical. And the scope of the work is genuinely impressive: What Do People Do All Day? is 64 pages long. It covers farming, domestic work, several clerical, retail and services professions, road building, the provision of healthcare, sea travel, railroad travel, policing, fire-fighting, the extraction of coal and its use in the production of electricity, the collection, purification and reticulation of water, saw milling and the paper and pulp industry. The occupations represented include mayors, newsagents, street cleaners, private detectives, policemen, watch repairers, shoemakers, hoteliers, newspaper reporters, newspaper editors, book printers, photographers, secretaries, artists, story writers, poets, janitors, photographers, models, violinists, booksellers and saleswomen – and that’s just in the first two pages.