Some thoughts on skilled trade shortages

[ThomasPowers]

I worked with a fellow once whose wife had also worked for the same company---they were hired in with the same degree from the same college and at the same rate.  After a couple of years she left to concentrate on having and raising their kids; after several years out of the workforce she returned and was hired in at a higher salary than her husband was making who had worked the whole time.  He was annoyed.

[Charles R. Stevens]

I think that hits it on the head, Thomas. If your employer is not giving you 6% per year, you are being paid less due to inflation, so if they act like 4% is good, update your resume. Then start telling them you need to use your personal time to go to interviews. See how fast they give you a real raise. If not, hey your looking for a new job anyway. 

[LawnJockey]

That isn't always correct.  For example, the US CPI is rising way under 6% if you believe what the government says. I think it is about 1% for the past 12 months and thus you are gaining a net of 3% on purchasing power with a 4% raise.   Maybe a better way to look at it would be what pricing power the employer has.  Have they been raising the price on what they have been selling?  Have their cost of goods sold gone up due to energy costs, regulations, etc.  If they are publicly traded has the dividend gone up, management salaries and bonuses too.  And the most important factor, can you do better going down the street.

[John McPherson]

Hey, we were giddy to get a 2% raise last year, the first one since 2007. The number of folks fleeing the college for better paying jobs in private industry is epic.

 

 

[Charles R. Stevens]

Average inflation in the US has been about 6% for a long time. 

[John McPherson]

7 hours ago, Charles R. Stevens said:

Average inflation in the US has been about 6% for a long time.

Hence the 10-20% annual institutional turnover, even at a government job. Several of my younger compadres have jumped ship for double or triple wages; plus, they are treated better by management. If I wasn't so old and busted up, I would consider it too.

[LawnJockey]

Scroll down to page iii for the last 12 months:  http://www.bls.gov/cpi/cpid1604.pdf

According to the government inflation was 1.1% over the past 12 months.  Personally I find the number hard to believe like many things put out by government but the number is what it is.

[Charles R. Stevens]

After the heavy hit we all took with $100 a barel oil, a stagnated year of inflation is just an adjustment. 

[LawnJockey]

Energy price fluctuations have historically been a big factor and that is why they came up with the Core CPI which strips out food and energy prices.  Even with the Core CPI (which I always thought was a BS measurement like unemployment numbers that remove those who have given up looking for work) we have just over 2% 12 month trailing inflation.  http://data.bls.gov/timeseries/CUUR0000SA0L1E?output_view=pct_12mths 

We are experiencing a very unique time where deflation is a real possibility.  More and more we are hearing about negative interest rates as a real possibility.  The problem with deflation is that when people start to think they might be able to buy something cheaper if they wait they hold off purchases and the economy comes to a stop.  The monetary tools available work much better controlling inflation than deflation.  We have all seen the massive pumping of the system by the Fed and the Federal goverment through stimulus spending which one would think would cause more inflation.  But so far it hasn't happened which implies massive deflationary pressure.

One aspect about deflation that will keep you awake at night is our massive borrowing by the federal government.  There has always been the argument that we will be paying it back with cheaper dollars but if deflation kicks in those will be more expensive dollars.

I know this is getting out in the weeds so back to the topic, maybe stagnant wages are a whole lot better than decreasing wages.  We have seen some of that with businesses importing temporary workers to replace more expensive American workers.

 

 

[Charles R. Stevens]

I agree, food and fuel is where we live! Lol. Of corse as it takes fuel to grow and move food...

[rockstar.esq]

LawnJockey,  As always you've given us lots to think about.  I think the economic statistics we're getting are sending mixed messages.  The unemployment numbers are low, wages are stagnant, and GDP hasn't reached 3% going on 8 years now.  Outstanding College debt exceeded credit card debt for the first time in history, but nobodies talking about the incredible debt on vehicle loans.  Many employers are requiring a credit check which means that college debt is actively working against young applicants.  If there isn't a ready market offering good wages for a new grad, it's a bad idea to take on debt for that education.

I recently read an article that claimed the majority of Americans would struggle to come up with $400 to pay for an emergency.  I've seen three homes  go up for sale within a week of when one of the household earners lost their job.  A lot of average people are barely treading water whether they're talking about it or not.

Meanwhile I see tons of multi-family construction getting slapped up to house the folks displaced by the foreclosure's driven by the financial crisis a while back.  Home prices are still inflated, I see "starter homes" regularly pushing half a million in places that are an hour or more from the major job centers.  Denver has such ugly multi-family buildings going up that the most popular facebook group here is called "denverfugly" .  It was started by an Architecture critic and it's grown exponentially.  Denver is becoming a profoundly ugly city.  I wonder if those hipster developments will be seen as "depression era" housing like Cabrini Green.  I don't understand the appeal of landlocked and joyless bunker housing.

I think things are much, much, harder for working people than anybody's willing to report right now.  I know a silicon valley engineer who spent nearly a year looking for a job at the same level he was at.  Many of my colleagues in construction took pay cuts, or were forced to bounce around for the last six years to keep working.  I have not seen wages going up.  There are companies pretending they haven't gotten qualified applicants for positions that have been open for three years now.  I have first hand experience with these companies offering 20-30% less than the going rate for work.  They're getting plenty of qualified applicants, they're just not willing to pay them.

If the economy was actually doing OK, these companies would be offering competitive wages.  Some of my competitors offer signing bonuses and all kinds of perks with the proviso that you've got to work for them for six months or so to reach the payout.  There's always a convenient round of layoffs just before anybody qualifies to get those payouts.  Most of the time, it coincides with the seasonal slowdowns, so it has an air of legitimacy.

We had an entire crew that was poached by such a competitor, and every one of them came back five months later asking for their jobs back.  If I had to guess, I'd say they probably didn't make any more than if they'd stayed, but there was no guarantee that we would hire them back.

 

[ThomasPowers]

I haven't had any car debt for years now and we are a couple of years away from paying off the house.

My daughter got her undergraduate degree not owing a cent.  She just got her DVM owing more than our house cost  and she did work while in school and got in-state tuition.

Her first job doesn't pay as much as I hoped; I know too many friends who essentially  put their lives on hold till they paid off their student loans.

[LawnJockey]

Thomas, with my kids the goal has been to get them through college without any debt and so far we have done it.  My older daughter went on to get a PhD in mechanical engineering and she got a full scholarship with a 40K per year stipend.  She had a job waiting for her when she was done.  She takes after my wife as she certainly didn't get any of that from me.  In regards to borrowing prudent leverage makes sense if you are purchasing an appreciating asset.  For example when we purchased our new place we could have paid cash but we decided to finance 60% of it due to near record low interest rates.  By my rough calculations if inflation goes over 2% we are winning after taxes.  Historically that is a good bet but who knows, things are far from normal.

People say a lot of stuff about economics but it really boils down to human nature on a group level.  Harry Truman loved "Plutarch's Lives" because he understood how slowly human nature evolves.  If human nature truly evolves slowly and economics is just human nature on a group level then discussion about "new normals" is misguided and such new normals are just swings one way or the other from well established historical trends.  Bumps in the road like the tulip mania or the dot com boom and bust.  No one knows how this will all turn out, all you can do is try to tune out the noise and think out your own path and then follow it.  When new material facts appear be willing to change course as needed.  You will win some and lose some.  If you win more than you lose you will do alright.

[ThomasPowers]

Well as a friend told me "The biggest raise you will ever get is the day you pay off your house".  If you invest the money you would have paid for the house upfront you might gain more than you pay but the risk is there too.  I am rather stodgy; though a screaming lunatic compared to my wife wrt investing.  In my careers, several times I have been laid off and always had my finances such that we could weather a say 7 month job search without missing any bills.  We may not live high on the hog---but it's *our* hog!  We economize where we can so we can spend the money as we like.  Someday my investment in Anvils may pay off big; though if any of the grandkids or great grandkids get into the craft that would count as a payoff to me!

[Charles R. Stevens]

This day and age, it's acualy more economical to rent, make payments on a mortgage, and invest the difference. The landlord gets a lot of tax breaks you simply don't.  

Law to student loans? Your better off going to McDonald U, at least for the first 20 years of your working life than getting a 4 year degree. 

Unless you get a scholarship or your parents pay for it. 

[LawnJockey]

In the 1996 tax reform there was a provision that allowed a single person to take up to 250K in gains on their primary residence tax free and for a married couple it is 500K.  That created one of the best wealth building opportunities for a guy with reasonable skills willing to work hard.  Since that time we have bought 8 homes and sold 6.  We made money on all but 1.  Twice we netted enough we almost had to pay taxes on the excess gains.  If you buy right, that is not buying into a frenzy, there is money to be made.  I like unique properties with larger lots.  Geographical limitations are always a plus, it is hard to make money in sprawl.  Sell into the frenzies.  It has worked for us.

Rents are rising dramatically across the country so if you rent you will always be subject to increases beyond your control.  If you buy, assuming you can responsibly do so, you can fix your monthly payments for the most part, taxes and insurance can still go up.

I am a big believer in education, I have a JD and my wife has a PhD and a MBA.  For me the thing about education is not the goal of getting a piece of paper to wave in front of an employer.  It is about accumulating knowledge and more important, learning how to think and find answers.  A lot of kids getting out of high school really don't get it and their college experience is a wasted effort  They take the slacker route and come out with nothing more than a cocky attitude and a piece of paper of very questionable value.  Education isn't just about enhancing future earnings.  It is about valuing ideas and looking at things from different perspectives.  If you do it right it continues life long after you graduate and upon your own motivation.

[Charles R. Stevens]

LJ, I agree with most of your points, but I am looking at the younger generation. For them it's different, the mortgage, interest, property taxes, insurance, maintinance etc.  capital gains dosnt help untile you retire, the difference, honestly is in the favor of renter, investing the difference right now. As to education, education costs has doubled since we were kids, and jobs and wages for them are not so great. It will take them at least 20 years to pay it off, so 20 years to pay off a student loan, where do they come up with the $ for a a 30 year mortgage? Honestly since Ragain's tricle down economics, the old joke about being a slave to the banks....

[SpankySmith]

One of my old bosses liked to use the phrase "Mortgaging your future" when referring to people who bought expensive cars every couple of years or McMansions.  That phrase stuck anytime I assumed any debt, with a mind toward it's impact on my future.  If you're making house and car payments (not to mention credit cards) your decision about what kind of work you will do is made FOR YOU - your choices are limited to what pays enough to meet all those obligations, whether it's a job you love or a job you hate.  Remove all that and what you gain besides more takehome/keep pay is CHOICES.  I purposely bought what I called a "McDonald's House" (as opposed to McMansions that were so popular at the time).  If I lost my job the mortgage was low enough that I could have taken a full time job at McDonald's and still paid it.  I paid it off several years back.  

Education is expensive, but I guess it depends on what you're doing it for.  I'm starting an MA program in August, it'll take about 2 years and tuition will run about $10k total.  I'm 55 years old, so going for more education at this point in my life, when age discrimination is a very REAL entity, may not be a great looking move, on the surface.   But honestly, I'm so interested in the subject I'll be studying and am soooooo looking forward to the stimulation of academia that I really don't care if I walk across the stage in two years, diploma in hand, and can't get a related job.  The educational process is of enough value to me all by itself.  

[rockstar.esq]

The cost of tuition has far more than doubled in a generation.  Tuition raises absolutely every time guaranteed federal loan thresholds are raised.  Many Universities have more administrators than faculty.  As the bubble is popping and enrollment has fallen, the faculty is laid off while the administrators are kept on.

It's been my experience than industries where the client isn't the person paying the bills suffer from this form of malignant management growth.  Higher Education, Health care, and Insurance, are all examples of what I'm talking about.  Both the client and the person actually rendering the service are chronically mistreated, while the costs increase and the administrators metastasize.

Wherever there's a lack of transparency, competition, and accountability, there will be mismanagement.  I suspect that most administrators consider this a feature, not a bug. 

Spanky,  I admire your tenacity to pursue your education.  Be very wary of your required curriculum as it pertains to your total timeline.  My University would take a required course that was typically a fall course, and they'd offer it in the summer session without making much fuss about it.  Then, all of a sudden it would disappear from the next year's fall course offerings.

The tricky bit is that it's a required course that has prerequisites.  Students returning from the summer at home discover that they can't continue their coursework without at least one additional semester.  It gets worse because the material taught in the missing class compliments everything else you'd normally study.

Any effort to call shenanigans on their games is met with a meticulously maintained calendar of course listings that prove it's technically possible to graduate in the proscribed duration without summer sessions.  However it requires that you take some classes out of order.  In the engineering disciplines, this magnifies the difficulty for the students.

In the time I was there, I never met an engineering student who graduated in 4 years without at least two summers of classes.  Those summer courses cover the exact same syllabus in literally half the time. Our student advisor was so horrible that seniors volunteered their time to help junior students enroll in their courses. 

For what it's worth, I transferred from Electrical Engineering to Construction Management.  I was shocked to discover that unlike Engineering where you're largely taught by foreign Grad Students, the majority of my Construction Management courses were taught by PhD's who often had a decade or more of experience in Construction related fields.

The attitude in the CM department was all about getting qualified professionals to the workforce.  Their advisors went out of their way to allow transfer credits, and to count relevant work experience towards internship requirements.

 

[Charles R. Stevens]

Acualy, Spanky as your out of the "child bearing years" age descrimination may not be as much an issue as sexual descrimination was. 

Higher ED isn't alone in this, a higher percentage of GNP has gone to education, wile the actual amount of $ reaching the stunners has declined. How many of you old timers were taught algebra in the eight grade? I know my Grandmother was, and that was a One room school in Norge Ok. Last year I was visiting a friend, and his daughter, taking Physics in 11 grade came home all exited because she was a "blue" what dose being a blue have to do with physics? Nothing her teacher was teaching "personality colors" he dad and I where contimplating the advisability of getting a rope...

if you live in the US, it's better to buy your kid a plane ticket to Germany, Norway or Sweden, they will give them a free coledge education and a stipend to live on in the hopes that 10% of them will stay and join their workforce.

i had better shut up now, as I'm getting dangerously political...

[notownkid]

On ‎5‎/‎19‎/‎2016 at 9:55 PM, Frosty said:

I'd like to see all laws enforced at all levels. Just imagine what would happen if Congress had to pee in a bottle before a vote?

I've been pushing that on a local level for years, breath test to get in and even pushed the police to test them on the way home but he told me he couldn't because they pay him, wrong we pay him.

On the training of young folks.  My son has hired two college students to work with him on a large gentleman's farms to mow lawns and help with the haying.  One quit after the first day because the "paper work was too much for him" he had to punch in and punch out at the end of the day!  The other one was watched leaning on the mower for over an hour talking or texting on his not so smart phone, when my son told him to leave the phone on his belt until the end of the day he told my son " He had a constitutional right of freedom of speech and would talk on his phone all he wanted".  He may be but it is at a different location as he fired him on the spot.  When his father called my son to ask what happened he said "all the kid learned for a whole yr. at college for $30,000 was his rights"  His dad said he thought he might fire him and wasn't paying one more penny for college and said too bad the draft isn't still in force. 

Son has decided only to hire retired people or vets from now on. 

Charles, Home school the kids if at all possible, friends grand daughter was having trouble in Math in 5th grade teacher said she would never get it, they pulled her out of school home schooled her for 6 months and had her tested at an independent testing location and she has jumped in most subjects including math 1 1/2 grade levels, she will  not be going back as planned to public school.

[ThomasPowers]

I usually ask them to read me that right:  "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."

and then ask them if they think I am Congress!

[Charles R. Stevens]

My kids are grown, tho I would be on board with home schooling the grand babies, tho the 3R would be on the cariculum, so would critical thinking, and a few other oddities...

[SpankySmith]

Critical thinking?!?!?  Charles!!!  You know that's not allowed!!!

[rockstar.esq]

I ran across an article this morning that suggests that taking two additional years to graduate from a University can cost a student nearly $300,000 over their lifetime.

Most of the math involves the compounding effect of saving for retirement as early as you can. Still, in most places $300K would buy a nice home. 

I think it's particularly significant that they rattle off the percentages of graduates at four versus six years.  They're saying that only 40% of the students who eventually graduate get it done in the proscribed 4 years.  A full 60% of the graduating class take 6 years which is 50% longer than the curriculum requires.

The reason I'm making a point of referring to the graduates versus the enrolled students is that the higher education drop out rate is utterly appalling.  This study suggests an average of roughly 59% of first time students enrolling in a 4 year program will eventually graduate with that degree. 

That suggests the higher education has an average dropout rate of 41%.

So every year, only 23.6% of the freshmen class will end up with a degree four years later. 

Looking at this another way, 76.4% of higher education's customers are going to pay more than advertised, and only 35.4% of the overpaying group will have a degree to show for it in the end.

The drop-out rates are correlated to admission standards.  Universities with stringent requirements, and limited admission have drop-out rates that are half the average.  I think it's fair to suggest that when the student and the institution are serious about education, things tend to work according to plan.