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No Going Back?



July 05, 2011 – Comments (10)

Board: Macro Economics

Author: FastMike

”...The trouble with our times is that the future is not what it used to be...”----Paul Valery

Dear sparkling Fools,

Begin Sojourn :

At first, I didn’t think that I’d be contributing all that much, but a during a ‘free moment chat’ with a few financially savvy coworkers, I thought twice, and thought "what the hey, I'll post it".

I began working with the US Postal Service in 1984. This was after a long period of unemployment and underemployment because of the deep recession in the early ‘80's caused, in part, by a banking crises and real estate bubble. I had graduated, (with a mere BA in Mathematics) in June 1981 (great timing). I couldn’t buy a job in that recession.

At the time, the US Postal Service was offering starting salaries at $27,000 plus health and life insurance plus a pension plan. I figured it was better than nothing. Then I discovered that there was this little known APWU contract clause that resulted from the 1970 strike : the clause guarantees a lifetime of no layoffs nor reduction of force for all employees that had completed six years of continuous service. Absurd, yes. But I took it. After a few years in ‘mail processing’ I really got myself in a niche by some “retraining” and became an “ET” : electronics technician, just at the time of the big tech “build out” of the early 90's.

Fast forward 27 years, and it seems I’m getting the last laugh over all those resumes and interviews that fell in front of blind eyes and deaf ears, all those years ago.

But, never mind my last laugh. Here’s the issue : I started as an “LSM Clerk”. An LSM (Letter Sorting Machine) was an electro-mechanical monstrosity that required a crew of 15 clerks, with back-up to cover days off or absences, on each of three shifts and could process 70,000 “canceled mail pieces” a tour. The cancellation operation was separate and required two to three ‘mail-handlers’, with similar coverage. Not to mention the number of employees to unload trucks, open sacks and dump mail onto the conveyors, in order to route mail to the appropriate place in the operation. There were dozens upon dozens of clerks who manually processing mail back then. (This was considered a 'small' facility).

At that time there were so many containers of mail pieces and so much equipment and just piled so high that it was sometimes impossible to move around. This went on 24x7 all year, with (usually) the exception of Christmas day. I don't care what the accounts showed, at one time the Postal Service was making money, hand over fist.

Today, even with technologically aging equipment, (mostly designed and deployed in the 90’s), mail can be processed at an astonishing rate : an Automatic Facer-Canceller can cancel well into the hundreds of thousands of mail pieces and face, resolve delivery destination, apply bar codes and then store the information from mail pieces so that the customer can track it from input until delivery. After indicia (stamp) cancellation, the mail is then further sorted (on a Delivery Bar Code Sorter) into carrier route order (Carrier routing was once done manually and took hours). A DBCS can process in the high tens of thousands with two people ( perhaps two relief). A ‘Flats Sorting Machine' can run with three to six employees and easily process 70,000 pieces per tour, and the current ‘parcel sorters’, deployed 20 years ago, have eliminated the need for manual processing of larger, bulky parcels. Optical Character Readers have in general eliminated the need for manual sorting altogether. In theory, at least, 100% of printed addresses can be resolved by OCR and 98% or better of handwritten addresses can be resolved as fast as a flash trade. The images of those few pieces which a computer can't resolve is sent over a vpn to a remote site (private contractor) and resolved by a person who simply types in the handwritten address. Newer, ‘Robotic’ equipment requires more maintenance personnel than mail processing employees.

Even more advanced systems being deployed now, will require a mere handful of employees, for an entire mail processing plant.

Now include in this ‘mix’ the recession-reduced mail volume and the amount of mail lost forever to technology. For example the IRS doesn’t send hard copy tax forms and most are then electronically filed. Lastly add every type of instant communication along with newer automated equipment coming on line creates a problem has made post cards and letters a thing of the past.

What it all amounts to is that, even after early retirements, buyouts, management reductions, there are still far too many employees in a system that simply has nothing for them to do ever again. Recently it was announced that the work force will be reduced by another 180,000.

Now I hasten to ask the reader to please not be critical. You see, it goes back to that conversation among my co-workers a few afternoons ago: the Postal Service is a scaled down reflection of the global economy, in general. Technology is outrunning the attrition rate of people leaving the workforce and growing global population is creating demand for more employment.

By the way, it isn’t all a “blue collar” problem. Run away technology has eliminated the need for an astonishing number of professional positions, for example, NYSE Floor Traders. Algorithmic Trading is utilized in every single global market. The knowledge, skills and abilities needed to trade in any market has been reduced to a few firms for select clienteles. Ditto for many legal services, for example Tax Services. The ‘average’ person simply does not need a tax consultant or accountant. Google offers ‘scholarly and patent’ searches. The point being that many professional service positions are simply no longer practical. The list goes on, for example in ‘Brick and Mortar” retail, for one.

Not only is less manufacturing labor needed, but also far less service personnel are needed.

Technology is rapidly reducing jobs at a time when the demand for jobs is increasing. And this is the very heart of the problem of this on going recession. It isn’t like past recessions, like the one I was thrust into decades ago : a two economy world that waxed and waned, where over supply meant a slowing down of production until demand caught up. This is very, very different.

And I must emphasis that I don’t mean all this is happening in the near future. I don’t mean that people need to retrain or adapt for a changing world. I mean it this all happened yesterday! It’s already happened! It started years ago while credit card limits stretched and a mortgage could be had as if from a vending machine!. The world was changing right under our very doorsteps.

History teaches that progress is inevitable, so we tend to think of the gradual changes that have occurred during the industrial revolution : from about the end of the 18th century until (IMHO) the late 1980’s. And with few exceptions, those changes caused shallow recessions. However, the advances and implementation in technology, robotics and emerging market labor has eliminated the need of existing jobs in the ‘older’ industrialized west.

The housing, real estate, and credit boom-bubble was the last castle which defended the economies of the established industrialized world. And in hind sight, it was clearly unsustainable. We are indeed in perfect storm : a global ‘disinflating’ recession; over expanded semi-totalitarian industrialized economies with an impossible task of fueling their economies with declining export demand; and high demand for ever-decreasing cheap-light-sweet-crude.

This morning dawns another 4th of July. A day when we rightfully celebrate our uniqueness as a people, in spite of all our individual disagreements. We are one people out of many. We are one mind out of many. We have one purpose out of many. It would only be fitting and proper to end on an optimistic note : there have been much, much worse times.

It needs to be realized that there’s no going back to the way things were. The housing market can’t be restored, nor will the auto industry be ruled by a few companies, nor will the four horseman of technology create a 98.5% employment rate and a budget surplus. Nor will government agencies continue on as they have in the past. It isn’t politics or privatization. It is, however, a technology that has advanced far more rapidly than anyone could have imagined. Plain and simple. That’s the heart, the root cause of what we’re in today.

The die has been cast. The old way is gone forever. Plain and simple.

So last Saturday was the first day of my reassignment. I was lucky : tour 2, the day shift. The other ‘ETs’ were reassigned to the midnight shift. There is no more afternoon tour. It’s been abolished. Saturday was quite a remarkable day for me, and again I am lucky : Over 27 years I watched my workplace which operated 24x7 (which wasn’t enough to handle the volume), with so many employees that they had to ‘double park’ until a space became available when those kept for overtime left, evaporate down to one midnight tour with one third the number of employees, which are still far too many.

It isn't a slow down or a soft patch or debt crises or whatever you want to call it. The world has changed. It isn't just government jobs, or private industry or the banks or, gosh, any "two bit" catch phrase. There has been a subtle, quiet, gentle sea change in the way that the world turns.

As for me : the contract I was hired under guarantees my employment until retirement. Period.

The funny part was thinking back to those endless days, in summer’s heat, cold spring rain, crisp fall days, going from one Manhattan office building to another, walking to save the fare, skipping lunch, all the ‘shoe bite’, blisters and all those resume services, employment services and their fees. All the rejection. To think : had I been hired by one of those firms, had I gotten a job, had I been "successful", I might be walking the streets unemployed again today.

I know it isn’t funny to a lot of those who have lost there jobs. I realize that. I know what it's like. The memory still lives. But I just can’t help but think of that old saying : He who laughs last, laughs best.

End Sojourn. (At least this chapter).

Your Cheshire Fool,

P.S. : I’ve kept up well with mathematics over the decades. The internet allowed me to search out and purchase texts (and subsequently study thoroughly) that would have been nearly impossible and expensive to find otherwise. (Recall Strand's in downtown Manhattan) Who knows? I just might look for something new in a year or two... fm

10 Comments – Post Your Own

#1) On July 05, 2011 at 12:58 PM, ikkyu2 (98.57) wrote:

Wow.  If you think your job and other jobs like it are really safe, you haven't been paying attention to the very trends you're describing.  Tell it to GM workers and retirees whose benefits are gone; yet Chevrolets are still made.  USPS will reorg in bankruptcy sometime this decade.

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#2) On July 05, 2011 at 1:17 PM, motleyanimal (39.46) wrote:

So...are you saying there is no "George Jetson" lifestyle in my future?

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#3) On July 05, 2011 at 3:45 PM, rofgile (99.57) wrote:

Its a weird world.

We're losing all the average jobs, but some (fewer) people out there must be profiting immensely.  The engineers who designed the OCR readers, the managers who can accomplish more work with fewer workers, etc.  There are a lot fewer people earning decently, but a handful more people earning exceptionally.


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#4) On July 05, 2011 at 4:39 PM, FastMike (< 20) wrote:

Dear ikkyu2 : Yes, you are precisely correct. And the Auto Industry is the prefect parallel! There's no going back to the "Big Three". Today it's a global industry with many players, at lower wages, hardly any benefit aside from what their governments provide and it's far more automated! Don't misunderstand my point. The USPS is already behind the technology. It can't scale down fast enough. But look at the consequences of a rapidly deflated postal service : Hundreds and thousands of jobs directly lost. 1.8 million otherwise effected (USPS has numerous contracts with big industry in the US and Europe, and also local industry. But this phenomenon is global. Technology eliminating the needs for jobs in a world demanding more jobs!

 Dear Motleyanimal : Yes, in a way, yes. In an extreme case, the we might be heading towards a "Flintstone" era.

 Dear rof : Spot on!

 Thanks for your comments.... FM

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#5) On July 06, 2011 at 9:24 AM, outoffocus (24.06) wrote:

Does anyone think that population will begin to scale down as a result?

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#6) On July 06, 2011 at 9:29 AM, Jbay76 (< 20) wrote:

Great artilce.  Since I was a teenager, i have wondered how life coudl be moving at its pace with all teh technology, and that was several decades ago. It seems that my saturation theory back then  is holding true now and will continue to do so.  But, in the end, with technologoical advancements and a growing population, the workforce becomes saturated.  The work place environment either becomes inefficient to allow more hires and decrease unemployment OR less people work and we have to adjust cost and quality of life to accomodate that.

Given how society is, I think it would be a blessing in disguise if we had a radical change in society that would allow one of the two heads of a household to stay home and tend to the home/family life.  It simplifies life, can provide for better nutrition, time for R&R, or athletic activity, and assuming the one who stays home can parent, maybe we can reduce crime through parenting, that thing that doesn't seem to happen anymore.

Heck, I'd love to be a stay-at home dad, go surfing everyday after the kids were dropped off at school, brew beer, get dinner ready, etc. while the misses worked...

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#7) On July 06, 2011 at 11:46 AM, whereaminow (< 20) wrote:

By guaranteeing your employment, they trapped you.  They kept you from getting the incentive to gain skills that the market actually needs.  The last laugh is on you, my friend.  I hope you can adjust.

David in Qatar

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#8) On July 06, 2011 at 12:32 PM, Jbay76 (< 20) wrote:

Interesting point David!

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#9) On July 06, 2011 at 8:02 PM, FastMike (< 20) wrote:

Ah! David in Qatar?? Awesome!

David, see it his way. No one can give nor take incentive from me nor anyone. Life is what you make it. At one time, I was angered about my "bad breaks", but now I see that it might have been "a blessing". Now all my hard work, staying focused and healthy, is on the verge of paying off! I've been prepared for years! My "first' finish line is in sight.... thank heavens!

Then the other side of the coin is that what we now see as a blessing, technology, might actually become an obstacle!  

Please post on the METAR board with your first hand view about the economies, views and expectations in the Arabias! They certainly would be welcomed!


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#10) On July 06, 2011 at 8:12 PM, FastMike (< 20) wrote:

Hey Outtofocus! You used the magic word : :scale . Can the problems that accompany population scale up to a point where they can tip the balance and reserve growth trends?? Or can technology itself magnify (scale up) the problems that already exist!

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