Monday, February 6, 2017

What Kind of Jobs Will be Left after the Border Adjustment Tax is Implemented?

If Kevin Brady gets his way and we must endure the noxious Border Adjustment Tax, what will happen?  When the Brady vision becomes our life, will you and your relatives be able to get good jobs?

I think it's fair to say that not every American is qualified for a high tech job.  Just think about how easily you or your family members can fix your PC, deal with Comcast, adapt to the latest trend in social media.  Is it easy? And none of that qualifies you for a tech job.

Retail jobs are going to be laid to waste by the BAT.  One in four jobs in the U.S. is in Retail according to the National Retail Federation. Those jobs are open to all Americans and are a gateway to the Middle Class.  Given the dramatic negative impact of the BAT on Retail in this country, and the weakness across Retail generally, it is not a far throw to expect many of those jobs to go away. Retailers also have an incentive to automate to save labor costs.   It's a matter of survival, and besides, they face devastating competitive pressures. Consider this novel store:

There appears to be one person working in this store, making sandwiches.

And here's another store in San Francisco, a coffee shop, with no employees:

There actually is a guy there to make sure the robot doesn't break.  I suppose that counts.  As the WSJ puts it to the robot attendant, how does it feel to work for a robot?

Good times.

And then there is the bounty of manufacturing jobs that Brady asserts he will bring back. And what are those jobs, exactly? The poster child for these jobs is car manufacturing.  Perhaps the politicians and economists have Henry Ford's assembly lines in mind but that's not realistic today. Again, a hyper-competitive market, several recessions and the march of technology have made manufacturing highly automated and efficient, and as a result, shop floor jobs are very technical and hard to get.

Consider this video of a Mercedes-Benz A Class assembly line.  It's more than 12 minutes long and pretty ,mesmerizing.  It's fun to watch and displays cool technology. Of course, the first human to appear on the assembly line is at the 7:09 point.  Don't worry, a human snaps the Mercedes logo onto the car.  That job can't be automated for some reason.

If we realistically assess the skills and educational background of the retail workers who will be fired as a result of industry weakness compounded by a terrible tax law, how likely is it that they will find work in the manufacturing sector?  Will manufacturers for some reason go backwards in time and create lots of labor intensive processes to employ these folks?  Or will they have to (HAVE TO) remain competitive on a cost basis, and instead, build factories that look like the Mercedes-Benz factory above?  I know what I think.

Perhaps we should ask Mr. Brady.  No doubt he'll become a job creator himself.  As a starting point, I hope he already needs more people to answer the phones . . . . if you catch my drift.

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