Interesting article but I wish they had more examples than a heat pump based electric water heater and a $3100 refrigerator
The article is suggesting that jobs that can support a family are coming back, but with the described poverty-level $13.50 wages for skilled line workers that's obviously not the case. We're not talking high school dropouts either: among the tasks given to the production workers is redesigning from scratch products which use impractical and inefficient designs, at least according to the scenario explained in the article. The article also points out that these are lines where there are not many workers per line.
My own thoughts about the market were piqued by the description of the chosen product. Here we have an electric heat pump heater that costs over $1300. This is right at a time when running an electric heater, even an exceptionally efficient one, has become a poor choice given the price of gas. Furthermore, gas is very likely to remain cheaper than electric for many years. Not to mention that gas heaters are simply more efficient for heating to begin with. Rather than buy an $1600 chinese or $1300 american water heater, one can buy a $150 mexican factory built water heater that runs on gas and will save many thousands of dollars in energy costs over its lifetime. That's the rational choice, it is unlikely this complicated electric one is going to be something with a lot of market growth. Hopefully there are better examples of high growth reasonably priced mass market items that can be built as well, which have a chance at creating more than a handful of these $13.50 jobs (comparable to the salary at CostCo or McDonalds, BTW).
We're essentially reaching an intersection between the cost of Chinese labor (steadily increasing as China's economy grows and their currency gains value) and US labor (depressed because we're still at 8% unemployment). If these workers still wanted to be paid $30/hour, those jobs would still be in China.
In December 2011 there was a similar article in the NY Times, which addressed the expansion of manufacturing jobs but had a much bigger focus on wages.
Unfortunately for those workers, wages won't go up until the US economy continues to improve and unemployment goes down. Until then that "just thankful to have a job" feeling will suppress labor wages in general. Last quarter, corporate profits reached a historic high even as wages reached their lowest-ever share of GDP.
Maybe I'm just raw from the hostile election season, but this has always been personally frustrating to me. Our private sector doesn't pay enough for the jobs it offers, yet any suggestion to have the government assist is considered "redistribution" or "socialism."
Sum[wages] / GDP is down because employers are finding ways of getting more output with fewer employees. I.e., Sum[wages] = (average wages) x (# of workers) is down because # of workers has decreased, not because wages have.
If wages had decreased, we would not have had a recession at all (according to Keynesian economics).
$13.50 isn't poverty level. At 40 hours a week, 50 weeks a year, it works out to $27,000/year, which is just about the median individual income nationwide.
This yields an after-tax net of $1,750 per month. You can rent a 2 BR apartment in Louisville for $450 per month. The $1,300 left over is enough to live quite comfortably in Louisville--heck I don't spend much more than that in New York City (the difference is I pay $1,500/month on a studio).
You just got out of college. You went to a good school, you got good grades, and you worked hard. There are no jobs in your field.
You're bringing in 1750 a month, but 500 of that is going to student loans. 450 goes to rent. 200 for heating in the winter. Add in the rest of your utilities, and you're looking at 1300 a month. Do you have a car? 300 a month. Do you want to eat? You can probably get by on 150 for food.
But you have no health insurance. You have no savings. You cannot start a family because you can't support a family.
And, unless you get very lucky, this is going to be your situation until your loans are paid off. You will be 35 when your adult life can actually start.
But if you're unlucky - if you get sick, if you need to take care of your family, if nearly anything bad happens, regardless of how minor, you're probably completely and utterly fucked to an extent that a lot of people can't possibly realize.
It you went to a good school, and got good grades, you probably are not working this job. It seems that it has become fashionable to believe that every job should pay upper middle class wages or not exist at all. Hindsight should make it completely obvious what happened when unions forced that issue. Those jobs went away and are not coming back, they were never sustainable.
A 2BR in Louisville for $450 puts you squarely in the bad part of town. Aside from it being less safe and generally less enjoyable to live in (probably noisy neighbors, people up all night, etc.), you also are going to be commuting 20 - 30 mins per day to the other side of the city where the decent jobs are.
What family are we talking about? Just-married or with three kids, two cars and a dog, living in a rented apartment? There aren't that many things that can support irresponsibility or chronically poor decisions.
Anyway, I'd say yes, it does, because a partner is bringing in his/her $1,750, too, and $1,300+$1,750 is pretty OK.
I strongly agree with the overall direction of your comments on this subject, rayiner, and I think the workability of a median income in North America is vastly underrated.
... but it makes me a little sad that the median family household in this model requires both parents to be out of the house for 40 hours per week plus lunch hour plus commute. I mean, I think the Ward&June Cleaver myth was a little silly, and I don't think it's an Inalienable Right that every single family should be able to afford indefinitely supporting 4 people on one income.... but it seems like it would be better for society if kids got more parental energy than I can imagine them getting in this circumstance.
I mean, I'm not complaining about my job (ha, not at all), but I note that I'm barely a functional spouse when I get home after work, much less able to be a great father (not that I have kids). And even if I was, I'm not getting home until 7 or 8. Suppose my wife had the same schedule, what kind of (hypothetical) parents would we be?
I'm not saying it's Wrong or Unjust. I'm just saying it seems a little sad.
To be fair, these are 40 hour a week, 9-5 jobs. Very few $13.50/hour jobs require the kind of extended hours that professionals endure.
As for what kind of parents you'd be not getting home till 7-8... parents like my wife and I? The baby isn't old enough yet to really recognize either of us as anything more than a milk source, but when she gets older that will be her reality. I honestly don't think it's a big deal--my dad never got home till 8 each night, and traveled extensively and work the whole weekend, etc, and my brother and I have a great relationship with him. A lot of the "putting in face time" when it comes to kids is more for the parents than for the kids. Kids are perfectly happy playing with their friends at school/having the nanny take them around so long as they know that you're there and see you everyday.
>but with the described poverty-level $13.50 wages for skilled line workers that's obviously not the case.
A couple of points: 1. $13.50 * 2080 is $28,080, which is clearly not rockin' Prada but, in places with low costs-of-living, is very livable. Silicon Vally and places where HNers are likely to congregate are much more expensive, in large part due to housing restrictions (http://www.slate.com/articles/business/moneybox/2012/05/face...).
2. $13.50 is where workers start, not necessarily where they end.
3. I'm obviously not arguing that workers are making a LOT of money or that they're likely to get rich, but they're also not poverty-level in most of America and are still much higher than minimum wage and much better than nothing.
You have to be careful there, because some of the largest consolidated insurance providers are nonprofits that are incentivized to maximize overhead (to the benefit of internal executives and managers). The ones that aren't have to compete with the ones that are.
FWIW, I used to work on an ambulance and when the person didn't have insurance the cost was $500, not $8000. Not sure what we billed insurance though. Oh, and if they couldn't pay, we didn't follow-up. They were sent one bill and that was it.
I'm sorry but we can't constantly let the price of medicine / medical care drag down the world's economy as a whole.
"We've got this medecine that shall raise your life expectancy by one year if you have a cancer and it cost $20 000, let's offer everyone this".
"We've got this medecine that shall raise your life expectancy by two year if you have a cancer and it cost $100 000, let's offer everyone this".
"We've got this medecine that shall raise your life expectancy by three year if you have a cancer and it cost $100 000 000, let's offer everyone this".
"We've got this medecine that shall raise your life expectancy by four year if you have a cancer and it cost $100 000 000 000 000 000, let's offer everyone this".
Where do you put a limit of what's acceptable?
In the end it all comes down to death tables and one day politicians and everyday people will understand that.
If 99 persons can live decently with $28 K and the hundredth one can't pay the $8 K ambulance, so be it.
Because, in the end, it all comes down to death tables and we can't allow totally overpriced and unjustified crazy high medical (and related) cost, like a $8 K ambulance trip, ruin down the entire world's economy.
Also it would be nice if these arbitrarily high medical price ween't constantly used as a form of intellectual terrorism justifying more and more debt creation.
It's about returns to worker productivity. As the article mentions, factory workers are hundreds of times more productive than they were in the 1960s. They are probably thousands of times more productive than they were in the 1760s.
How much has worker productivity increased in, say, symphonic music? In the last 300 years, I would guess it has perhaps doubled, if that (amplification) And yet symphonic concerts still happen, despite costs increasing without bound!
Medical costs rise because new services are available, but worker productivity rises slowly. Medicine may be a larger and larger fraction of the economy, but as long as worker productivity rises in OTHER fields, we will still be able to afford it.
I love our Medicare system (Canadian) because it creates a peaceful feeling of reassurance. You show your Medicare card and you are good to go, no paperwork, no bills, nothing. It's hard to explain that feeling, the hospital is not a scary place, it is a safe place. It's there to help you. You just go to the doctor when you are sick, no big deal.
On average, we pay roughly 30-40% Income Tax. The less you make, the less you are taxed. If you make less than $38,000 in my province, you would pay something like 24% (15% federal tax + 9% provincial tax - http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html). And if you make more you get taxed more, but it's reasonable.
Honestly, when you grow up here, you just get used to it. It comes off the paycheck just like retirement savings and employment insurance, and you don't think about it.
I'm a proud Canadian, equal healthcare for everyone is a value we share and I think it's worth paying for.
When I add together my taxes plus the health insurance premium that comes out of my paycheck, my net take home is probably less than what it would be in Canada. Sure I have the choice to not pay for health insurance, but that's an illusory choice. I've got a wife and a kid--I'm not going to opt out of health insurance.
>Not to mention that gas heaters are simply more efficient for heating to begin with.
Are you sure about that? A heat pump with a COP of, say, 2 is 300% efficient (it is said to have an Energy Factor, EF, of 3). That is, for every Joule of electrical energy supplied to the pump, 3 Joules are added to the water tank. On the other hand, the combustion products of a natural gas heater need to be exhausted outside the building. Unless they are first cooled to the temperature outside, the heater is less than 100% efficient.
Where I live, a Joule from the electric company costs about 2.5 to 3 times as much as a Joule from the gas company. A quick Google search indicates that this type of water heater typically has an EF of 2 to 2.5. The cheapest gas heater I could find on the Home Depot website was over $300 (twice your Mexican one) with an EF of 0.62. So it wouldn't surprise me if the energy cost of an electric is on par with the energy cost of a gas heater, and it would surprise me if the electric actually used more energy. I don't see how you would save thousands of dollars in energy with a gas heater: Even in the worst case (a 2 EF electric heat pump vs. a 0.62 EF gas in a location with a 3x energy cost ratio), the gas only just breaks even.
Market effects affect to the economic perspective, but considering the transformation of fuel to heat, gas is sure to be more efficient. Electricity used to run the heater is generated by burning something and running a turbine - a process that itself runs with around 30% efficiency. Add to that the power loss from electricity distribution. 300% efficiency on the heater isn't enough to break even so that you'd get as much heat from the same amount of gas burned locally versus in a power plant.
Well, ok, so 30% thermal efficiency at the power station, and 10% loss in the transmission lines? That gives us .3 * .9 * 2.5 = .68, or 68% thermal efficiency. That compares favorably to the manufacturer-claimed 62% efficiency of the gas heater I cited above. I can even imagine a scenario where an architect could design a house so that heat source of the water heater is near the heat sink of the fridge. In that case, the coefficient of performance of both devices would improve.
In case this wasn't obvious before, let me state this very clearly: Over 30% of the energy content of the natural gas used by your water heater goes up the chimney and is not used to heat the water. Gas water heaters and furnaces are NOT 100% efficient.
 Wikipedia claims that conventional external combustion (i.e., steam) power plants have a thermal efficiency of 33%.
 Wikipedia claims that transmission and distribution losses nationally averaged 6-7% in recent years.
This is neither here nor there, but it strikes me as interesting that the most efficient energy management in a home is just ensuring that your interior environment stays stable and isolated from the exterior as much as possible.
Okay, you got me. Still, burning stuff locally is in the same ballpark as running a heat pump with the electricity. Should microturbines become feasible to buy and operate in every home, it would be the most efficient way, running a heat pump by a turbine of your own and using the waste energy as heat source as well.
Maybe I've had too long a day and misread something, but here I go anyhow.
The efficiency of a gas water heater may be increased through mechanisms that enable it only when water flows through it, such as when one takes a shower or fills the dishwasher. In contrast, a classic electrically heated water tank sits there to be filled with cold water, which gets heated up, and if it isn't all draining out already, cools back down to require reheating.
Reheating a standing tank of water several times over the course of a day is wasteful.
In a related thread, also consider the same water tank while one takes a long shower. We've all* (* This is a vast generalization for the internet) had the hot water run out of us during a nice shower, and this is because an electric water heater cannot effectively heat a freshly filled tank of water while said tank is being drained.
I'm sure if another person feels the need to expand on this at all, they're quite capable.
There are plenty of on demand water heaters in both gas and electric.
Combination Boilers that provide both hot water for heating and hot tap water are advancing quickly. Flexible PEX tubing these cut out a ton of traditional cutting and brazing plumbing labor to install hot water loops. It's also a lot more efficient to move hot water to a heat exchanger of some form in each room than to push air through ductwork. Some of these rigs also can be easily combined with a solar thermal roof array, further cutting your gas or electric costs.
I'm pretty excited about the last option, since I have an older house with poor air return paths, which means my furnace is almost always ingesting chilly basement air rather than getting a nice recirculation of heating air that's already been heated. Not to mention radient heat exchangers are silent and allow easy individual room temperature control with the smarter thermostat systems.
I recently moved into a house with the worst heating system ever: In ceiling radiant heating. Apparently the house was designed without regards to the laws of thermodynamics. On the upside, we have probably one of the warmest attics in the winter.
If I turn the heat on in all the rooms, I can watch the electric meter spin.
If you have access to the attic and it's unfinished, check if there's a reflective layer above the coils. If not, that's easy to add and will make a big difference.
Not this is a _reflective_ layer, not just insulation. The thermodynamics of radiant heat systems involve photon transmission, not just gas convection. If it was installed by a general contractor they may not have understood this distinction and the need for aluminum couplers and metalized reflective insulation.
Thanks for that tip, I'll try it. I actually reasearched it a bit more, and see that it is possible to have in-ceiling radiant that isn't crap, it's just that mine is crap. Supposedly it responds faster than forced air, but mine takes about an hour before I feel its effects. Also one room has 12' ceilings, which is stupid.
I just moved in to a house that has a gas on-demand hot water heater and I basically can't figure out why we use so much energy to keep gallons of hot water on hand all the time. It just doesn't make any sense to me. I think the upfront cost was higher, but the savings across the entire system are more than worth it.
I think you're misinterpreting the article regarding production worker tasks. While they do suggest that production workers were involved - "By considering the workers who would have to put the water heater together—in fact, by having those workers right at the table, looking at the design as it was drawn" - they don't say that the production workers themselves designed any products, let alone from scratch. It's fairly clear that feedback from some production workers was taken into account during the design process, nothing more.
Mechanical design work of appliances is not something that you'd do alongside shift work. The workers getting paid $13.50 an hour are not going to be mech-eng degree holding designers.