Fifty: Make Work (10-04-2023)
America is the outsourced administrative department of second-world manufacturing "nations". With various figures and various methodologies to identify an "office", it's summarily clear that most US workers are in administrative and managerial roles. Debate can bicker on over email-jobs, which serve no productive function or are make-work roles fulfilling even more make-work HR quotas. Regularly, tik toks and Youtube videos about product managing and low-effort tech, pharma, or corporate gray lifestyles within the real middle go viral as an expose of the malaise or infeasibility of contemporary American work economics.
Since the midcentury, America has shifted from manufacturing to management. We push pencils for bosses to confirm that some far-away thirdworlder is producing the expected amount of some doodad that the government wants, or that some Walmart forklift driver is to be sold. I am one of these pencil pushers. The workforce makeup looks something like this, from bottom-to-top:
Cobalt mine slaves
Sweatshop manufacturer
Sweatshop manager
Warehouse worker
Construction worker
Foreman
Project Manager
A thousand-strong dreg of underwriters, risk managers, project coordinators, their subsequent manager's and manager's directors
The VP's, the corporate landless gentry
The C-suite
There's a small parallel cast in the deceptive upper-middle here of HR ladies and "product managers", who serve to facilitate the obfuscation of hierarchy and implementation of various non-product distractions. Mobility between the bottom and the middle, essentially the jump from worker to employee or careerperson, is typically the product of a college education or professional training program, though it's obvious these are fairly exclusive and often ineffective pursuits in of themselves. The jump from manager-director to VP or C-suite is possible, supposedly, after decades of dedicated work and effort, though it's increasingly obvious that the pipelines of experience and mentorship that gave the current caste their position no longer exist.
A pricing estimator won't ever be CEO, since the CEO no longer sees themselves as the pricing estimator. The same way the baby boomers kicked down the economic ladder before the Xers and Millenials could climb it, the current Boomer-X C-suite has closed the valve of worker flow up the C-suite, and much the same both groups whine of the demise of effective climbers.
Young people truthfully aren't suited for high-level talented business work. Whether they ever will be is doubtfully vague, but the climate of career path for young people has shifted from short rise with the company of first opportunity, with five to ten year stints at competitors riding lateral-move salary increases, ending with a high-management or VP (with C potential) coast into retirement, to the present three year maximum stay before a company, however exploitative or competitively unsure they are, offers a significantly higher salary. I've seen a dozen or so coworkers jump ship, from a company with good benefits, to work somewhere that will pay them 50-60% more, knowing they'll repeat the cycle two or three times until they settle somewhere, maybe for less money, around age thirty-five.
It's fun to read The Business Journals' appraisals of this climate, since managers and directors, or really the writers pretending to be them, either greatly overreact and bemoan the death of all that is corporate, or bury their head in the shredder basket and claim no such nonretention or disatisfaction crisis exists. A tiny phenomenon is no signal of some great coming societal disintegration, but it is indicative of young people's drift away from spreadsheets and their faux-stability. A guy used to get a white picket fence and 2.1 kids from a salary managing managers managing car assemblymen, and now the post-entry level salary doesn't afford a one-bedroom within commuting distance. The opportunity cost of jumping from one pointless careerstart to another is negative when a more desperate company can offer more money.
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Another phenomena I've seen as a young salaryman is prolific fraud and abuse within the Small Business Community. My city has a program that requires reporting of minority business participation in large construction contracts, tracked by dollars spent and workers employed, which would ideally mean poorer, upstart concrete companies run by representatively minority owners get more money and better work, but it ultimately means a nonsense LLC consulting firm owned by a state-school accreditted "professional" is brought on to check some boxes on some papers and provide their "expertise". With the option of awarding a $2 million steel erection contract to a firm undeserving just to meet some budget quotas, at risk of shoddy work, and throwing away $2 million to five nonsense consultants with no worries about delays to completion, multi-billionaire capital program reps make the less risky choice.
This leads to a bizarre ecosystem of cognitively dissonant professionals. A boatload of one-man-LLCs who know their business function is naught, but will gladly ride the happy diverse money river to success, get together regularly at a variety of professional mixers and conference to pat each other on the back and take some photos that dignify their existence in the economy.
Make no misrepresentation- I have no issue with the base policy here- it works sometimes in a great way, and it's workforce requirements lead to good construction jobs staying within the metro area, but some crafty developers and real estate funds take advantage of its good-faith approach to inadvertently line the coffers of also good-faith leeches. It's wasteful spending that feels like a carnival. Maybe it's a little bubble that'll pop.
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Businesses don't make a lot of money. Small businesses, whether restaurants or contract hounds, best just clear overhead costs. The rest gets stolen by a cokehead manager or is squirreled away for continuity. Even big corporations, save for banks, don't usually have enough cash on hand to survive a crisis. Banks don't have enough of your cash on hand to survive a big crisis. Owning a business, especially a small one (all you can ever aspire to) will likely afford a smaller salary than punching in and out, with less of the personal freedom and marginally more economic freedom. Ownership is cool and all, but it costs money.
Take retail. Lease on a good location is about $100,000 a year in the city of this writing's origin. That's for a small storefront with some back-of-house storage. Product upfront costs may or may not match that, but with insurance they will exceed it. $250,000. Each employee is about $50,000 a pop, assuming low-but-doable wages and including overhead, so $500,000. Marketing is cheap in the era of social media, and is probably represented in the estimations. Now take all these assumptions, add a 7% interest rate and a 10% interest rate on that small business loan, and double them because the economy was bad this year. Next year add $65,000 for the cousin your needed business partner (money reasons) hired to "do the books" and add $30,000 for the personal cash injection needed because that $65,000 turned to $95,000 including bad decisions.
Add a monthly $500 for taxes, and $2000 for the property value adjustment. $600 a month because insurance premiums went up when the sprinklers went off because aforementioned business partner's cousin's friend's kid managed to burn a box when they were "helping" one day. Subtract $4000 because business partner got "a deal", but multiply by two because you had a big medical bill you've elected to hide within your business expenses.
Double that upfront product cost in the third year, plus overhead for damaged fixtures, after a mostly-peaceful civil unrest led to your merchandise being reappropriated by disadvantaged communities. Add another $10,000 for local charity protection payment donation as penance to those disadvantaged in the community you've exploited for cheap commercial real estate.
At the end of three years, the cost of running the most accessibly understood small business- retail- totals about $2.4 million. The profits, including personal,, business owner salary, are probably only a couple grand. Funny how that works.
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A local bagel shop popped up about two years ago. A guy had been selling bagels to his friends, making them at home during the pandemic. Word got around a little yuppy community and he quit his day non-job to sell bagels and weird (personally convenient) hours at high (demand-sustaining) prices. The neighborhood loved it, lines out the door and a few low-level jobs graciously given to greedy kids. The lines got too long after about a year, and the owner struggled to balance demand, space, and product quality. He wasn't going to buy a bigger storefront, in or out of the community he started in. His employees suggested tablets for ordering- a medium upfront cost that would free his staff to prep orders. He refused- face-to-face point-of-sale was paramount. No tipping the robots. A couple months later, the shop closed. There's another bagel place a few blocks away, it's been there a long time, though they say it's not as good.