Wednesday, August 31, 2005

Us dumb 'mercians

American Prospect: Skills Setback

The other common response, like the one from Treasury Secretary John Snow, is to blame the victims -- the “less-educated people,” in his words -- whose lack of skills and smarts have blocked them from cashing in on an otherwise broad-based recovery. Opportunity abounds, according to this argument, if you’ve got the gumption and education to grasp the brass ring. Snow’s undersecretary, Randal Quarles, amplified the point. "If the country as a whole is going to undergo economic growth,” he said, “then the population has to be able to take advantage of opportunities.”

Sounds reasonable, given the constant drone by economists, policy-makers, and central bankers (e.g., Alan Greenspan) about the skills deficits of the U.S. workforce. But there are two fundamental problems with this view.

First, it’s not true. If it bothered to look at the actual trends in employment rates -- the share of a given population at work, and a proxy for that group’s job opportunities -- the skills crowd would learn that since the last economic peak, March of 2001, they’re up for one educational group (high-school dropouts) and down for everybody else, including college graduates.

This doesn’t mean we should all become dropouts. Obviously the more education you have, the better off you’ll be. But even with its recent uptick, job creation has been persistently weak in industries that hire lots of college graduates, like information technology. The Congressional Budget Office also made this point in its recent analysis of the problem.

Moreover, college-educated workers have not escaped the broad deterioration over the last few years in real wages. According to Bureau of Labor Statistics figures, college graduates’ weekly earnings grew 0.9-percent less than inflation did in 2004.

Runaway globalization and destruction of Wages and Jobs have been possible politically because most voters thought they were profiting at someone else's expense. Once it becomes clear that most workers are getting screwed maybe that will change. "Ask not for whom the bell tolls, it tolls for thee"

$4 a gallon gas coming soon?

OPIS tracks wholesale and retail oil prices and provides pricing information for AAA's daily reports on fuel prices.

Brockwell said with gasoline prices now exceeding $3 a gallon before even reaching the wholesale level, it "doesn't take a genius" to expect retail prices to hit $4 a gallon soon.

"Consumers haven't seen the worst of it yet," Brockwell said.

He expects consumers in the Southeast and Northeast to be pinched first, following the impact of Hurricane Katrina on the Gulf Coast region.

As a truck driver who delivers auto parts I am worried. Of course, I don't think anybody's going to be feeling good after 6 months of $4 a gallon gas.

Tuesday, August 30, 2005

Our Booming Economy

Delong: WOWCWHABPC - Jonathan Weisman

Today the Census Bureau reports:

Real median earnings of men age 15 and older who worked full-time, year-round declined 2.3 percent between 2003 and 2004, to $40,798. Women with similar work experience saw their earnings decline by 1.0 percent, to $31,223.... There were 37.0 million people in poverty (12.7 percent) in 2004, up from 35.9 million (12.5 percent) in 2003....

Maybe we'll close the income gap between men and women by differing rates of decline....

Saturday, August 27, 2005

Race all the way to the bottom, baby!

Union Labor under Attack

Membership is at its lowest in a century. Locally, teachers and auto workers are being pressured to take pay and benefit cuts. Mechanics for Northwest went on strike Saturday and watched helplessly as replacement workers took their place and members of other airline unions crossed picket lines.

Detroit, the cradle of the labor movement, is ground zero in a battle for the soul -- and survival -- of organized labor. Unions are losing pay, losing members, and even losing the sympathy of supporters like Roth to the corporations that employ them.

So tell me again how wonderful globalization is. We can all live in perpetual job insecurity, watching our real wages sink, and likely be unemployable in our 50s and 60s (while the retirement age soars upward) as we transition from "careers" to "casual employment". Of course most of the loony right is sure everything would get better if we just abolished the minimum wage and environmental laws and the loony left is glad that Americans (the bastards!) are getting their just desserts for being the source for all evil in the worldTM . And a lot of folks who are going to be hurt will cheer the approaching storm until it flattens their house.

Drug Reimportation

Mechanic's Tale: Will we end up with MediCar?

The column is about auto repair, but this is great stuff:

There is a similar analogy in the public discourse right now and it is called drug re-importation. Because of foolish treaties that our government signed, the patents on drugs are not protected in other nations. Any nation can declare an emergency and simply start making an American-patented drug. Since foreign nations know this, and the drug makers know this, the drug companies are likely to sign deals to make whatever minuscule amount they can, while making their real profits in the home market.

The public and Congress (who signed the stupid treaties in the name of humanity, assuming that something as vital as medicine is immune from ordinary supply and demand laws) see foreign countries getting our drugs much cheaper than we do and want to re-import drugs to save money. The drug companies (like the auto repair guys), instead of attacking the foolish treaties and insisting that our government vigorously defend their patents overseas, which would bring down our prices as the foreigners paid more, babble about quality and counterfeiting, which may or may not be real issues.

Saturday, August 20, 2005

Hey Ambulance Chasers

From the New Hours of Service Final Rule, Section H

FMCSA carried out a costhenefit analysis of a 10- and 1 1-hour driving limit and other
aspects of this final rule. The results are described hlly in section K.l and in the
Regulatory Impact Analysis (RIA) filed separately in the docket. Motor carrier
operations were modeled very elaborately. As discussed above, the Agency used a timeon-
task multiplier based on the TIFA data. The model assumed that the risk of the 1 lth
versus the 10th hour of driving increased, as based on the TIFA data. FMCSA estimated
that a 10-hour driving limit would save no more than 9.3 lives per year compared to an
1 1-hour limit, but at an annualized net cost of $526 million ($586 million in gross costs
minus $60 million in safety benefits), relative to an 1 1 -hour limit. In other words, a 10-
hour driving limit would cost more than $63 million per life saved.

I recall a few years ago a jury figured the damages in a case against GM based on how much the automaker saved by using a more dangerous design. The comparison breaks down a bit since this is the savings for society as a whole. But I wouldn't be surprised to hear this number thrown about in a wrongful death suit down the line.

Friday, August 19, 2005

"New" HOS rules are out

FMCSA's Sandberg presents new HOS

"The court vacated the [2003] rule based on driver health, and driver health only," FMCSA Administrator Annette Sandberg said. In developing the new rule, she said FMCSA "addressed driver health issue very extensively. We believe we had the science and the data [to support the 2003 rule] to begin with. That's what we said during the court case, and the court wanted us to provide it in a more thorough manner."

Looks like the FMCSA took the "Failure to use footnotes" interpretation of the court's decision, they also slipped in the "Wal-Mart" amendment (allowing a split break to include a 2 hr off duty period, thus extending the workday to 16 hours and only requiring 8 hours of sleeper time between shifts) and exempted some local drivers from using logbooks as well as allowing these drivers two 16 hour work days a week. CORRECTION: the rule does not allow split breaking to extend the 14 hour day

Here's a great quote from the final rule:
Today's rule also creates a new regulatory regime for drivers of CMVs that do not
require a CDL, provided they operate within a 150-mile radius of their work-reporting
location. These drivers are not required to keep logbooks, though their employers must
keep accurate time records, and the driver may use a 16-hour driving window twice a
week. Driving time may not exceed the normal 1 1 hours, but the longer operational
window twice a week enables short-haul carriers to meet unusual scheduling demands.
Short-haul drivers rarely drive anything close to 11 hours, and available statistics show
that they are greatly under-represented in fatigue-related accidents. On a per-mile basis,
long-haul trucks are almost 20 times more likely to be involved in a fatigue-related crash.

One would think if you have one group of drivers that is 20x more likely than a second group have a crash because of fatigue, you'd work on lowering the risk of the more dangerous group rather than increasing the risk to the less dangerous group.

Sunday, August 14, 2005

The China Syndrome

Human Events: China-Mart takes over
U.S. corporations decided that the way to get rich was to destroy their American consumer base by closing their American factories, throwing their U.S. employees out of work and hiring Chinese, instead. The Chinese work for less, you see, and free trade economists say lowering costs makes us better off.
What U.S. corporations and the free trade economists overlook is that giving Americans' jobs to foreigners raises foreign incomes and lowers American incomes. When credit cards and home equity lines are maxed out, there will be nothing to support the U.S. consumer market. The American corporations who moved their capital and technology to China will have to find new customers.
Maybe the Chinese government will let the relocated U.S. firms sell to Chinese customers, or maybe the Chinese government will let the U.S. firms go bankrupt. The latter favors China's strategic interest. Chinese businessmen will purchase the bankrupt firms, and Chinese businesses will sell to Chinese customers.

The fundamental issue here, is if the American consumer is broke he can't subsidize the dysfunctional economies of Mexico and China (both of which try to deal with a massive rural underclass by exports to the US (and in Mexico's case by directly "exporting" the rural underclass). Not to mention, US businesses will discover they do not have customers for their goods. Once China does not have to play nice to keep the US market open, the US companies will leave and their intellectual property will stay. We might try to retool, but we will be competing on the World market with "Smokestack warez" , Chinese goods identical in most ways to our best stuff but at a much lower price (when you don't have much in the way of R&D or labor costs, it's amazing what you can do).

Trucking and Drug Trafficking

OOIDA takes driver coercion to task in its comments
The problem with the current hours-of-service regs is that they do not address the fundamental problem facing truckers today: coercion.

That was the message the Owner-Operator Independent Drivers Association delivered loud and clear in its comments on HOS to the Federal Motor Carrier Safety Administration.

"Some drivers, however, express concern with the current rule because they have faced pressure from motor carriers, brokers, shippers and receivers to log on-duty time as off-duty (or sleeper berth) and to maximize their amount of time on the road (use the full 11 hours of driving every day and get back on the road precisely after a 34-hour restart)," OOIDA officials stated in the association's comments.

"This is not a problem with the rule per se, it is the age-old problem of driver coercion."

And that won't change until FMCSA directly addresses the problem, OOIDA points out.

With the War on Drugs and with Highway Safety, the government goes after the unpopular groups to show they are "doing something" without risking serious political backlash. You can attack Supply all you want, but if you don't address demand you aren't going to make a real dent in the problem. With drugs, the pols are afraid of the voter backlash if they dared to say little Johnny is the root of the problem, so we go after the Cartels and the smugglers and the dealers, all of whom indeed richly deserve to be punished. But the problem doesn't get a whole lot better. With Trucking, no one wants to take on Wal-Mart and the organizations that represent shippers and receivers (i.e. most every business in the US), so we go after truckers and trucking companies. Since most of the general public doesn't like trucks (never mind they would like life without trucks a lot less, we're in a NIMBY/free lunch culture) everyone important is happy. Of course , the problem doesn't get much better. The solution is to require shippers to ship their products legally. The shipper must not require a load to be delivered in less time than it can be safely and legally transported (including loading and unloading time). I'd go beyond that and say a comprehensive transit safety solution needs to be developed. Stricter equipment standards, better driver training, EOBRs, and harmonized strict safety rules across the different states would all help. I think a minimum tariff coupled with reasonable truck size and weight enhancements could reduce the number of trucks on the road without drawing traffic from the Railroads onto roads (indeed if the tariff was high enough and permanent it would provide incentive for more rail infrastructure spending and changes in shipping habits) and enhance safety by pulling operations away from the razor's edge of Survival (Pay the driver or put new tires on the truck?).

HOS drama continues

The Trucker:New HOS Rules Coming Soon
The final highway bill, which President Bush signed into law Aug. 10, did not codify the Hours of Service regulations so new rules are making their way through the government process now.

The Federal Motor Carrier Safety Administration must publish revised rules in the Federal Register prior to Sept. 30, as required by a federal appeals court which threw out the new rules last year. Congress extended the rules until Sept. 30 to give FMCSA time to write new rules.

On July 28, the agency forwarded re-written HOS rules to the Office of Management and Budget (OMB) for their final approval and signoff before the rules are formally published in the Federal Register.

According to the Truckload Carriers Association, the rules will likely become effective Oct. 1, but FMCSA may provide another soft enforcement period for a few months as they did in early 2004 when the current rules were first implemented.

TCA reported that FMCSA has scheduled a two-day training seminar, Aug. 31 through Sept. 1, in Washington to train its key field enforcement personnel on the new HOS. Some state enforcement personnel have been invited to the meeting.

I have seen another source claiming that the rules will be published August 22. So law enforcement and the industry will have approximately 1 month to get everybody up to speed. I wonder how long it will take before the "new" rules are in court again. Well, maybe with the free time their staffers have between the publishing of the rules and the next court mandated rewrite they could rewrite the just issued truck driver training rules to require new drivers actually be taught How to drive a truck.