Top of the News: Today’s housing report — December existing sales off 17 percent — isn’t surprising. The old housing boom isn’t coming back, these gauges are volatile and housing can’t be detached from…jobs.
The really significant news came over the weekend when Wal-Mart unit Sam’s Club said it would cut 10 percent of its workforce, 11,200 jobs, as it outsources in-store product demonstrations. This is more than a sign of a continuing weak labor market.
Wal-Mart has become the leader in many corporate trends, including those that relate to employment. No matter the criticism of the mean practices of Wal-Mart, other companies watch and imitate. Wal-Mart is the reverse of Henry Ford at the start of the 20th Century, who led the movement to pay better wages so his workers could buy his cars. (Ford likely wouldn’t have been so magnanimous if he had enjoyed a global supply chain and global oversupply of cheap labor, as well an American middle class that had accumulated wealth for decades and for the moment was relatively affluent.)
So if a company already so lean, and so stingy on wages and benefits, is going another step into outsourcing, watch out. This shows how the recession reset is changing fundamental assumptions about the way companies do business and, more precisely, the future of American jobs and, ultimately, living standards.
Imagine how much cheaper the outsource company must be to save Wal-Mart money on employees…
The Back Story: Bill Gates on the economy, via his annual letter:
— “Although the acute financial crisis is over, the economy is still weak, and the world will spend a lot of years undoing the damage, which includes lingering unemployment and huge government deficits and debts at record levels.”
— “Because of budget deficits, there is significant risk that (foreign) aid budgets will either be cut or not increase much…The public may not prioritize keeping foreign aid at high levels because so many of them have not heard how effective it is.”
— “The most important innovation required to avoid climate change will be a way of producing electricity that is cheaper than coal and that emits no greenhouse gases. There will be a huge market for this, and governments should supply large amounts of funding for basic R&D.”
— “If we project what the world will be like 10 years from now without innovation in health, education, energy, or food, the picture is quite bleak. Health costs for the rich will escalate, forcing tough trade-offs and keeping the poor stuck in the bad situation they are in today. In the United States, rising education costs will mean that fewer people will be able to get a great college education and the public K-12 system will still be doing a poor job for the underprivileged. We will have to increase the price of energy to reduce consumption, and the poor will suffer from both this higher cost and the effects of climate change. In food we will have big shortages because we won’t have enough land to feed the world’s growing population and support its richer diet.”
Today’s Econ Haiku:
Big Ben’s bells tolling
Do they toll for thee or he?
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