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James Hanley

James Hanley is a two-bit college professor who'd rather be canoeing.

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  1. Avatar E.C. Gach
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    says:

    “Many people will look at that and worry about increasing income disparities, and use words like “feudalism,” but it will really be about how much economic value any of us has to offer. We like to think that everyone deserves a living wage, but it can’t be a one-way street. People need to be contributing value to society to expect to get value from society. That’s a bit harsh sounding (and I’m not arguing for eliminating the social safety net, as it can help people return to being productive contributors when they run into short-term problems, and I’m all for taking care of those who have long-term problems that prevent them from being able to contribute, even if they’d like to). ”

    You mention that the prices of certain commodities have fallen because of cheaper imports and manufacturing gains in productivity. This is suppose to help substitute for people being laid off into less lucrative service industries. you might make less per hour, but look at what that dollar can get you (sounds a bit like a McDonald’s commercial, “yea we’re paying you minimum wage, but hey, the double cheese burger is now on the dollar menu!).

    And you mention that a result of this will be that some service industries will be more lucrative then every, and others will be created to serve the needs of that very lucrative class. So a fragmented middle class will contain both the people developing software, designing, etc. as well as the servers/ grocers,/retailers, who get them their morning coffee, food stuffs, and cheap designer furniture.

    In that example, the Starbucks server and the programmer/web designer/content developer will both benefit from drops in food prices, prices per computing power, etc. But what is the server to do when it comes to Healthcare and education costs? How does the server “educate” themselves to get into the more lucrative industry?

    I’m less interested in a safety net, and more concerned that in this massive reset, something akin what a person like Richard Florida might predict, there seems to be little talk of funding for massive “retooling” programs (since “education” tends to get us into debates of liberal arts/academics vs. professional skills, etc.)

    And while I’m sure you would agree that healthcare costs need to be dealt with, and only disagree with me over how best to do that (a disagreement I think is perfectly respectable and legitimate) it seems like there is still a sizable portion of the people who will be falling off the middle class cliff still against any kind of action whatsoever to deal with these issues.Report

    • Avatar James Hanley in reply to E.C. Gach
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      E.C.,

      Actually the dollar over time has generally gotten us more. A television used to cost several weeks wages, now they generally cost a few days wages (unless you absolutely have to have that big screen HD–but if you’re demanding luxury without earning the big bucks, I have little sympathy). Sure, it’s hard to improve the quality of a McDonald’s hamburger so that it becomes effectively cheaper, but for lots of things that matter to us, that’s not true. And the alternative to allowing outsourcing and imports is to stultify the economy, and ultimately for us to be materially poorer.

      As to how the Starbucks baristas educate themselves–pretty much the way everyone else does. I’m pretty sure a goodly number of them are working at Starbucks to pay for that education they’re working on.

      As to paying for education and retraining, I’m all for that. Retraining turns out to be more difficult than we’d think, because it can be hard to get people into the right retraining programs. (When every former rivet shooter from GM gets retrained as a welder, then we have too many welders.) But that’s a technical problem that we need to try to solve as best we can–I.e., it’s an argument about not having falsely high expectations about retraining programs, and working to figure out how to do that process best, not an argument against them.

      As to people falling out of the middle class, well, we’ll see. I don’t think it’s at all sure, because I’ve been hearing about the end of the middle class since I was a kid in the ’70s, and by god I just don’t see that it’s ever happened yet. Up until the recent housing market collapse, people kept buying bigger and bigger houses–the size of *starter* houses increased from something like 800 square feet in the 1950s to well over 1500 square feet in the 1990s. People who aren’t middle class don’t buy larger homes. And middle class now means two cars, not just one, and a large screen plasma tv, not a 12 incher, and central air conditioning instead of a window air conditioner and fans. The problem is not that the middle class is absolutely worse off, but that their expectations are so much higher that it’s harder to meet them. If middle class people settled for the middle class lifestyle of the 1950s, I think they’d find it’s not so hard to achieve.

      That’s not to get moralistic and say they “should” settle for that. It’s to get moralistic and say they should recognize that if it seems harder to be middle class, it’s because we’ve redefined middle class lifestyles upward so much.Report

      • Avatar E.C. Gach in reply to James Hanley
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        says:

        “SEATTLE, September 22, 2010 – Starbucks (NASDAQ: SBUX) today responded to the recent dramatic increases in the price of green arabica coffee, currently close to a 13-year high, as well as significant volatility in the price of other key raw ingredients, including dairy, sugar and cocoa. The company announced that while it has no plans to raise prices of beverages or packaged coffee sold in Starbucks U.S. or international stores across-the-board, it does plan to implement targeted price adjustments on certain beverages in certain markets. The company further announced that it will continue to closely monitor green coffee prices, and that it could not rule out the possibility of raising the price of packaged coffee in other channels, including grocery, in coming months.”

        You could be perfectly correct. But my feeling is that as the costs of farming coffee rise, at some point Starbucks will be forced to pinch its worker’s wages rather than its customers wallets, but I could be wrong.

        I mean, isn’t coffee in part so cheap because of how much everyone screws the actual coffee farmer?Report

        • Avatar RTod in reply to E.C. Gach
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          says:

          I think this is one instance in which I disagree. It seems to me that Starbucks is in no way cheap coffee. Part of their business model seems to be to say to consumers:

          Look, we charge a lot more than you ever paid for coffee before we created this market – but we have a nice upscale community feel, we pay for unnecessary square footage so that you can sit and feel all urban comfy, and we even pay benefits to our folks even though we’re basically a fast food joint. And so if you like that you can pay $5 for a Grande Carmel Machiatto; if ou don’t you can go back to paying 50 cents for the cup of joe down the street like you did before we came around. The choice is yours.Report

        • Avatar James Hanley in reply to E.C. Gach
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          says:

          Well, Starbucks will certainly feel a pinch if coffee prices rise, but they can’t take it out of their workers unless the local labor market enables them to do so (which would mean they’d effectively been paying those workers more than they needed to in the first place). Wages are basically set by whatever the relevant labor market is, and my guess is that for baristas, it would be what they can get working at the local McDonalds, KMart, Applebees, and the like. If at some particular store it can’t reduce wages without losing the ability to get employees, and can’t run profitably without reducing wages, then they’ll close that store. Or they may keep wages the same but reduce the number of employees, and have the remaining ones work more hours (so long as that doesn’t result in overtime pay that actually increases their labor costs). Or they may turn down the heat/air-conditioning in stores a little bit, reduce the level of lighting, etc., etc. They’ll cut costs wherever they can get away with. If they can get away with it, they’ll cut salaries, too; but it’s not always easy to get away with.

          And sometimes that’s the best alternative available. At my wife’s former job they all took pay cuts to avoid having to lay anyone off. In a job market like ours, making less was preferable to looking for a new job.

          And I have trouble with the “coffee farmers” getting screwed business. Prices are set by the intersection of supply and demand. If there was less coffee production, coffee farmers would be raking it in. But there’s actually–last time I looked–excess coffee production. Working out of memory here, coffee used to be produced almost entirely in Africa, then they started planting it in Latin America, which led to a boom and a decline in prices, and tough times for the farmers. The only thing they’re really getting screwed by is the reality that market competition is the worst thing in the world for producers (but the best thing in the world for consumers).

          That’s not to say I’m not sympathetic to coffee farmers. And I respect those who have helped set up ways to suck a premium price out of consumers. I’d never pay for “fair” trade coffee, but if others want to buy that feeling of doing the right thing, that’s their business, and if a coffee farmers’ co-op can persuade you to part with more of your cash, more power to ’em. It’s a luxury good just like a Gucci handbag. Some people like it, some don’t.Report

          • Avatar Michael Drew in reply to James Hanley
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            says:

            Well, Starbucks will certainly feel a pinch if coffee prices rise, but they can’t take it out of their workers unless the local labor market enables them to do so (which would mean they’d effectively been paying those workers more than they needed to in the first place). Wages are basically set by whatever the relevant labor market is, and my guess is that for baristas, it would be what they can get working at the local McDonalds, KMart, Applebees, and the like. If at some particular store it can’t reduce wages without losing the ability to get employees, and can’t run profitably without reducing wages, then they’ll close that store.

            Having known some Starbucks employees and based on this video – http://www.cnbc.com/id/15840232/?video=1422667788&play=1, while I certainly don;t deny that wages at Satrbucks stores are driven by local service labor markets, I think there is evidence that Starbucks really has been in a sense paying its employees more than it has strictly had to to staff its stores. Employees have received health benefits for art time work for at least a decade, they receive retirement contributions from the company, and have the option to buy stock at discounted rates. What I believe Starbucks would say it has been doing is not overpaying for labor, but rather simply identifying an element in its supply chain that it believes it needs to assure consistent quality in in order to ensure a consistent customer experience is come to be identified in consumers’ minds with their brand. They’ve chosen to get this assurance by electing to bid high in the market, in order to receive offers of “product” delivery from the kinds of providers they want to receive them from. The product in question, of course, is good customer service, and the providers are people in the community willing to spend eight or so hours a day in a Starbucks not on their laptops working on providing other products to perhaps better-compensating purchasers, but rather maintaining a friendly, clean, potentially caffeinated environment in which we can do so for a small price.

            So in other words in this account this sentence:

            If at some particular store it can’t reduce wages without losing the ability to get employees, and can’t run profitably without reducing wages, then they’ll close that store.

            is correct so long as by “get employees” we mean “get the employees necessary to run the store in a way where it will produce an approximation of our brand-experience standard that is acceptable to us in this location.”

            We can contrast this idea of brand-experience standardization to the approach taken by Ray Croc, who I believe (though I don’t want to disparage his view of the human resource element as I don;t have the information to do so) made the focus of his vision of experience-standardization within a brand mostly about consistency of product (though perhaps it is his successors in management who allowed service to decline as an input into overall experience delivery). Starbucks, of course, took that model (they do, of course, deliver a very consistent physical product across stores) and extended it into the whole customer experience, with a heavy emphasis on providing a consistent personal as well as foodstuff experience.

            The other thing I think Sarbucks would say it is doing is “investing in” its employees. I can’t make as specific a case about the place of that practice in the business model, but it seems plausible that building loyalty to the company in entry-level workers has paid off in being able to retain some of them and promote people with a genuine commitment to the company into middle management. That’s speculative, though, I don’t have any data to support that.

            Another speculation I’d hazard that I have no data to support would be to wonder whether, if in local service job markets where Starbucks has become a player in the market for good customer service provision there has been a trend among major national brands that can afford to do so to emulate this approach to the purchase (compensation) of customer service labor (workers). I.e. has McDonalds, Chipotle, PF Changs, whoever, chosen to adopt the strategy, thereby necessitating that they compete in a market that has been changed by Starbucks, or have they decided to be in a different (lower cost) part of the service skills market, and how has it worked for them? It could be that this is a problem that Starbucks is over-solving as it were, but it still wouldn’t necessarily be the case that they are overpaying for labor out of pure beneficence or incompetence (not that you said they were).

            I do think there evidence is, though, that they were a leader (or perhaps just a lonely, isolated actor) in putting in the field a new way for strong-brand retail/customer-experience providers to approach local service labor markets.Report

            • Avatar James Hanley in reply to Michael Drew
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              says:

              Michael Drew,

              Agreed. Thanks for adding more depth to the basic argument I laid out. I would only add that Starbucks is probably also, in addition to wanting to ensure quality service to attract regular customers, wanting to reduce turnover to keep its training costs lower. I’ve always been puzzled by businesses that had high turnover and seemed to accept it–I can only guess they don’t worry about it because they don’t spend much on training new employees and they figure it doesn’t cost them customers. And they probably know better than I do. But I always thought if I ran an ice cream shop or something like that, I’d pay a little more, and demand a little more from my employees.Report

        • Avatar James Hanley in reply to E.C. Gach
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          says:

          RTod,

          I more or less agree, and it gives me an excuse to re-tell my favorite story about markets.

          In grad school, I had a friend who hated Starbucks. “Corporate coffee,” he called it. He preferred a coffee shop just two doors down from the local Starbucks, where they had tiny little tables too small for laptops, rickety wooden folding chairs that were uncomfortable and at risk of collapsing under you, coffee served piping hot in handleless glasses, and if you sat around for a while after finishing your cup, er, glass of coffee, they’d tell you to buy another or get out.

          By contrast, Starbucks, as we all know, has comfy chairs, tables large enough to work at, serves its coffee in appropriate containers, and literally will let you sit all day for the price of one cup of coffee. (And on top of all that, they compensated their employees better than the other place did.)

          And that, I tried to explain to my Marxist-leaning friend, is why Starbucks is a successful business.

          I can’t stand the taste of Starbucks coffee, but that’s not really what I’m paying for when I go there. And I willingly pay a few bucks for a quiet place to work for several hours. I’ve checked out the price for a small private office in my town–renting a seat at Starbucks is much more cost-effective.Report

          • Avatar RTod in reply to James Hanley
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            says:

            Interesting anecdote add-on: My wife and I have a friend that owns three independent coffee joints in PDX (great, great coffee). He claims that if you are a coffee shop owner, you wan to be next to or across the street from a Starbucks. He claims that there is greater demand for a Starbucks alternative cup of coffee in a neighborhood with a Starbucks than a cup of any coffee in a neighborhood without a Starbucks.Report

          • Avatar Michael Drew in reply to James Hanley
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            says:

            It’s an even better value for those of us who don’t hate the coffee!Report

    • Avatar E.C. Gach in reply to E.C. Gach
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      says:

      “Actually the dollar over time has generally gotten us more. A television used to cost several weeks wages, now they generally cost a few days wages (unless you absolutely have to have that big screen HD–but if you’re demanding luxury without earning the big bucks, I have little sympathy). Sure, it’s hard to improve the quality of a McDonald’s hamburger so that it becomes effectively cheaper, but for lots of things that matter to us, that’s not true. And the alternative to allowing outsourcing and imports is to stultify the economy, and ultimately for us to be materially poorer.”

      Sorry, didn’t mean to imply I disagreed with that point. Minus the Mcdonalds dig, I’m in agreement with the point about the dollar’s purchasing power.

      “As to how the Starbucks baristas educate themselves–pretty much the way everyone else does. I’m pretty sure a goodly number of them are working at Starbucks to pay for that education they’re working on.”

      So would you be in favor of having the government loan money outright, and increasing the amount cap? Or some other mechanism for being able to afford it? Because I’m presuming the Barista in this case is 3o year old mom with a child, to go along with the theme of workers needed to “retool” for a changing global economy.

      I’m assuming that as labor in third world countries rise, Starbucks will no longer be able to compete on trendiness alone, and will start cutting back on employee pay and benefits.Report

      • Avatar James Hanley in reply to E.C. Gach
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        says:

        1) Starbucks won’t be much affected by third-world labor, because they can’t outsource the job of handing me a cup of coffee to someone in Thailand. Not unless they have really really long arms. Wages and benefits for SB’s baristas will be controlled by local labor markets.

        2) Oddly, for a libertarian-leaning guy, I’m inclined to favor direct government loans for education. The bank-loan market is badly designed, because the loans get sold to a company that has no expectation of loan-holders being a repeat customer, so they don’t treat them as a business would treat a customer they value. The holder of my undergrad loan was a nightmare–I was actually told it was my responsibility to make sure they recorded my check in a timely manner. They regularly received it on time but posted it late and tried to charge me late fees.Report

    • Avatar ThatPirateGuy in reply to E.C. Gach
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      says:

      E.C.

      People like you are why I really shouldn’t post in these discussions. You get to my point but make it better. Thus rendering me redundant.Report

    • Avatar RTod in reply to E.C. Gach
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      says:

      So EC, I liked your post, and want to follow up with some questions. Not to challenge you, but in a hope that you can educate me since we’re in an area where I’m woefully under educated.

      1. What you describe, in terms of people in poorer circumstances needing education/alternate opportunities, seems correct – but also universal and timeless. What about the landscape today makes things different, or more urgent? I ask this question because it seems obvious to everyone that the wheels are falling off America economically; but while I am often persuaded by argument in a conceptual sense, everyone around me seems in pretty good standings with fine prospects for the future. (Compared to other times and places in history that is, obviously not to what they would prefer.) But most of the people I know and see ARE gainfully employed, and doing better now than 5 years ago. (Though their 401ks, which at one time grew without them doing anything to make them grow, have now shrunk.)

      2. Are things really so bad now that retooling everything – and assuming the risks of all the unintended consequences, like the possibility that we will retool for all the wrong things – is better than making incremental changes where and when they are needed, in a more organic way?

      Again, I don’t mean to challenge – these are two directions that pull at me simultaneously, and I appreciate the insight of those that know more about econ.Report

      • Avatar ThatPirateGuy in reply to RTod
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        says:

        How many people without college degrees do you know? Because people like me with them are doing so much better than those without.Report

        • Avatar RTod in reply to ThatPirateGuy
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          says:

          But again, is that really a new trend brought about by this economy? I’m in my 40s, and when I was growing up getting into college was pushed for exactly that disparity between career and earning opportunities.Report

          • Avatar ThatPirateGuy in reply to RTod
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            says:

            E.C. responding here would be way better. I should be in a welding class. But haven’t we drastically reduce the number of jobs like manufacturing where someone could actually raise a family without my level of education.Report

            • Avatar RTod in reply to ThatPirateGuy
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              says:

              And I think that’s what I’d like to know? Have we? And if so, have those been replaced by other jobs that someone with a similar level of education is qualified for, or not? I honestly don’t know, but suspect someone here does.

              The one caveat I might include is that if you have an instance such as, say, the auto industry – where wages increased to absurd levels of un-sustainability – those career wages probably will never be replaced, but I think that’s just the price of riding a bubble.Report

            • Avatar James Hanley in reply to ThatPirateGuy
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              says:

              Pirate Guy,

              I’m going to give a resounding “yes” answer to your question. Wages are a price–a price the business pays for labor–and so they are determined by the availability of that resource. When labor gets tight, wages go up. I remember in the boom of the ’90s when Sioux City, SD had an unemployment rate of <1%. Businesses that looked into moving there were warned that the legal minimum wage rate was essentially a fiction–burger flippers were getting $2 an hour above the legal minimum wage.

              The employment rate is essentially determined by the Fed (over the long term anyway, if not always during a recession like this). The Fed shoots for an interest rate that balances inflation and unemployment. Somewhere around 5% unemployment seems to be their goal (they don't target it directly, so there's no real precision there). At that rate, there's enough demand for labor that most jobs–except the really unskilled (and non-union) ones–pay enough that a two-income household can successfully raise a family.

              Two caveats: First, I said "two income." I think the days of the comfortable single-income family with a non-educated wage earner is mostly over, and that it was a historical anomaly to begin with. Second, how comfortable that family will be depends on factors besides the wage. More kids, obviously, makes it more difficult. How big a house do you want, and in what neighborhood? Do you go camping on vacation, or do you fly to Disneyland and stay in a hotel? Do you need a new car every year, or do you like driving an old pickup truck?

              A whole heck of a lot of the relevant factors about how financially tight our lives are are under our direct control. Studies of American millionaires have shown that most of them don’t actually earn that much, they just control their spending carefully and invest carefully. (I’m not bragging about myself–I’m not someone who follows my own advice on this matter.)

              So, yes, people will be able to afford to raise families. But they may have to revise their expectations about what’s necessary to get by.Report

        • Avatar Jaybird in reply to ThatPirateGuy
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          says:

          I know two types of people without college degrees.

          One is the guy for whom college was not especially suited. He spent his high school free time fixing cars. He spent his college years working at places like Home Depot that gave him flex time to spend his free time fixing cars. He eventually opened his own garage (which then got squashed, sadly, by the recent recession). I don’t know that him having spent time getting a degree in English or History or (whatever) Studies would have been much of a benefit for him.

          The other is the programmer guy I know who does stuff like write his own Linux core tweaks in his free time. He dreams in C++. I don’t know that a college degree would particularly benefit him either.

          In the case of the former… well, maybe a degree would help him get a job as a drone at Global Conglomerate Incorperated… but that doesn’t strike me as something that would suit him.

          In the case of the latter, he’d do a better job of teaching the courses he’d purportedly be taking. It’d be a waste of time and, lemme tell ya, his resume is a *LOT* more interesting than 90% of those I’ve seen that have “University of” written somewhere on it.Report

          • Avatar Jaybird in reply to Jaybird
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            says:

            (And, to clarify, I’m talking about the two people with whom I have broken bread who do not have a college degree. When I say “I know two types of people without college degrees”, I misspeak. I should have said I know two people without one.)Report

            • Avatar James Hanley in reply to Jaybird
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              says:

              Jaybird,

              Wholly agreed. Some people do great with an informal education. The problem is not them, but the ones who manage to avoid not only the formal education, but any kind of valuable informal education.Report

              • Avatar Mike Farmer in reply to James Hanley
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                says:

                Yes, as far as the job market and income go, it’s what you know, what valuable skills you’ve learned, not where you learned them. Another acecdotal story is of a friend of mine with about an 8th grade educaton who’s now comfortably retired in Florida and takes his mobile home up the east coast each year to search for antique toys which he reconditions and sells on E-Bay — he’s also a skillful artist and photographer who’s won several local awards. He made his money in auto body work, learning the trade, opening a business and becoming very successful — he built one of his homes from the ground up, contracting out only the electrical work. He’s certainly not typical, but an example of learning skills, working hard and becoming successful.Report

              • Avatar ThatPirateGuy in reply to Mike Farmer
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                says:

                For a counterpoint: you can become successful without working hard by having the right parents.

                See Goldberg, Jonah for an example.Report

              • Avatar Jaybird in reply to James Hanley
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                says:

                They haven’t found themselves in my circle, for some reason.Report

            • Avatar ThatPirateGuy in reply to Jaybird
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              says:

              This is primarily my point. Basing your understanding of the situation on your personal experience is bound to result in an inaccurate picture due to sampling issues.Report

              • Avatar RTod in reply to ThatPirateGuy
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                says:

                Of course. Point well taken.Report

              • Avatar Jaybird in reply to ThatPirateGuy
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                says:

                I have friends in management (until recently, I would have said that I know three people without degrees) at a small manufacturing company who tell me that they would hire a person with a year or two of experience as assistant manager of a Domino’s, Pizza Hut, or McDonald’s before they would hire a person with a bachelor’s degree in “Business” (let alone (whatever) Studies).

                They say this because, and I’ll try to recreate the rant for you:

                “I know that the guy who worked as an assistant manager at Pizza Hut had to deal with all three delivery drivers calling in sick on a Friday night because there was a party, I know that the guy who worked as an assistant manager at Domino’s had to deal with screaming customers at the same time as stoned line cooks at the same time as the phone ringing, I know that the guy who worked as an assistant manager at McDonald’s knows how to tell time, how to count, how to shower, and how to deal with both people who tell him what to do and people that he has to order around. The guy with a degree? I don’t know anything about him except that he can probably outdrink me.”

                I don’t know how representative this is but I was impressed by the rant and it was given to me at a point in his life when he did not (yet) have his (night school) college degree.Report

              • Avatar ThatPirateGuy in reply to Jaybird
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                says:

                Would it surprise you to know that I would likely co-sign this rant?

                Unfortunately I don’t think that attitude has rippled through the business community yet.Report

              • Avatar Mike Farmer in reply to Jaybird
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                says:

                I knew a guy who worked with the unemployed on developing strategies to secure better employment by showing transferrable skills — if your skill set is presented right it can make a lot of sense to an employer who might not even think about the transferrable skills by just reading the resume.Report

              • Avatar James Hanley in reply to Mike Farmer
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                says:

                I had a student who’d written on his resume that he’d worked at a farm, and part of his job was taking feed from a truck, stacking it, then feeding the animals. That doesn’t sound very transferable.

                So I asked him if we was responsible for tracking the amount of feed. He said yes, and I said, “inventory control!” Now that sounds transferable, and in fact is: he just didn’t have the experience to recognize it.

                That’s the only time I’ve managed to do that. That’s why it sticks out in my mind.Report

              • Avatar Lyle in reply to Jaybird
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                says:

                This is also why a non-com (seargant and above) from the military makes a good manager. They have to know both how to give and take orders deal with people and chaos. I would suspect these people having been line managers in the military would make good line managers in business.Report

          • Avatar Rufus F. in reply to Jaybird
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            says:

            My brother-in-law is mechanically gifted in ways that are totally beyond my abilities. He can ride in my car around the block and tell me from listening if anything needs repair well before I notice the slightest sound, and then we can usually get the thing fixed (me as grease monkey and him as head mechanic) before dinner. He races cars (that he builds) and has won countless trophies. He is the head engineer designing parts for a company in Toronto, but is now taking a year to do the same at a parts company in Australia.

            Anyway, all of that is a lead-up to saying that, indeed, he found university not for him and only completed a few courses, and then, with very pointed irony, adding that “he was never the brainy type”.Report

            • Avatar Rufus F. in reply to Rufus F.
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              says:

              (That was for Jaybird. Also, I haven’t read the rest of the thread so I was really just agreeing with him.)Report

            • Avatar ThatPirateGuy in reply to Rufus F.
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              says:

              I am starting to notice that the discussion we have on this site don’t seem to consider the lot of people who are genuinely bad at pretty much any job they could find. I don’t see much recognition of the existence of a bell curve for laziness/high energy.

              Why not discuss the non-exceptional mediocre people too? Surely they are a part of the real world?Report

              • Avatar RTod in reply to ThatPirateGuy
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                says:

                No, I actually was thinking of them earlier. It’s just that I’m not sure that they didn’t exist before this new economy, or that they’re worse off now than before. (They might well be, I don’t know.)

                And if retooling could help, than it seems well worth it to me. But there’s still a part of me that pessimistically worries that retooling, or growing locally, or creating a different infrastructure, or whatever great sounding ideas I often hear won’t eliminate the problem, just reshuffle the deck of lower class and lower middle class in certain places.

                The other point I was trying to make is that it seems like being poor and unemployed in 2011 American sucks it out the ass – but is still way, way better than being poor and unemployed in almost any other time and place in history. It certainly is not like the places I used to go to with Medical Teams NW.Report

              • Avatar ThatPirateGuy in reply to RTod
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                says:

                If I am poor an unemployed in England I don’t have to worry about healthcare for me or my theoretical children. Benefits are better and people speak in british accents. You would be better off in almost any western european country.

                Compare that to being poor and unemployed in Mississippi.Report

              • Avatar Rufus F. in reply to ThatPirateGuy
                Ignored
                says:

                We’re freer because we don’t have to speak with British accents.Report

              • Avatar James Hanley in reply to Rufus F.
                Ignored
                says:

                And we have cold beer.Report

              • Avatar RTod in reply to ThatPirateGuy
                Ignored
                says:

                On the healthcare issue you are, of course, correct.Report

              • Avatar North in reply to ThatPirateGuy
                Ignored
                says:

                Ah, Pirate, but you should consider the size of their homes, the odds of their owning an automobile and other factors. I’m not going to say that it’s worse for poor people in one modern country vs the other but there are significant trade offs. On health care, though, I gotta agree that most of the rest of the west provides better non-emergency care for their poor.Report

              • Avatar Mike Farmer in reply to ThatPirateGuy
                Ignored
                says:

                Even unexceptional people can learn a skill and get a job, use the advice and counsel of others with more knowledge, invest wisely and one day retire with dignity and comfort. Plus, they may be exceptional in other ways that bring joy to others and to themselves in non-monetary ways. Or, they might just be lousy at everything — what can you do?Report

              • Avatar Rufus F. in reply to ThatPirateGuy
                Ignored
                says:

                I just hadn’t thought of it. What do you consider lazy? My experience is that most people can be very productive for about four hours a day, but most workplaces ask for more.Report

              • Avatar RTod in reply to Rufus F.
                Ignored
                says:

                “My experience is that most people can be very productive for about four hours a day, but most workplaces ask for more.”

                Fucking Man, always asking me to work two hours…Report

              • Avatar ThatPirateGuy in reply to Rufus F.
                Ignored
                says:

                As with most things it is spectrum.

                with totally lazy being: “move my arm for me it is in an uncomfortable position”

                lazy is usually defined as closer to the former. 🙂

                Way to hard charging: “I just got done working 72 hours straight, time for my shower and thirty minute nap before getting back to work.”Report

              • Avatar James Hanley in reply to ThatPirateGuy
                Ignored
                says:

                Re: People at the low end of the bell curve.

                If people are truly incapable of learning any kind of skill, they’re screwed in the job market. But I tend to think those people are ones who have actual disabilities, so that I don’t mind being taxed to care for them.

                I’ve seen people who lacked skills gain them, just by working. In the boom of the ’90s, I suddenly saw all the familiar faces at my local Dairy Mart disappear, to be replaced by what I snobbishly took to be the dregs of society. Among the new hires was a guy who I still would bet good money was fresh out of drug rehab, and a woman who I’m convinced had been a housewife without a wage-paying job for two or three decades. They were so damned incompetent it drove me crazy. I was literally cursing the strong economy and thinking I was more than happy to let people that incompetent just “leach off us good god-fearin’ taxpayers” by collecting welfare. (When you’ve waited in line while it takes the clerk more than 5 minutes to figure out how to sell a lottery ticket, you begin to think how unfair it is that your growing temptation would be labeled a “senseless” act of violence.)

                But over the course of a couple months, they all steadily improved, until they were just as good as the people they’d replaced. Not a one of them was probably management material, certainly not above, say shift-supervisor, but they were perfectly competent employees who would be able to move on to other jobs because they’d have practical experience and probably a good recommendation. It was a good lesson for a snobby grad-student like I was at the time.

                If someone is truly just too damn lazy, then (I say as a fairly lazy person–who right now is doing a great job of avoiding real work) screw ’em. Laziness isn’t a disability, it’s a personal problem.Report

              • Avatar ThatPirateGuy in reply to James Hanley
                Ignored
                says:

                As a Lazy person who is totally gets away with it I feel guilty saying screw em. They are my people after all.Report

              • Avatar Rufus F. in reply to ThatPirateGuy
                Ignored
                says:

                I worked for a while at a small grocery store in the stock/produce. When they were short-handed, they often put me on a cash register, so I learned that. The result is that my view of grocery store cashiers totally changed.

                I used to think it was a mindless job. But, in order to do it, you have to memorize dozens of four-number codes to ring through all the produce items that get sold by weight.
                http://www.innvista.com/health/foods/plucodes_abc.htm

                At the huge grocery store we shop at now, there must be at least 50-60 of these items, and that’s not considering the purely seasonal items that only show up for a few weeks. Also, I soon found out that you learn all these codes on the job, which means that you look like a total idiot having to look up the codes for, say bananas (4011, if I’m not mistaken), for about the first month or so. Then, when they were really short-handed, it would be me on the only open line trying to recall every number to get everyone through quickly.

                Anyway, I’m a much nicer grocery shopper than I used to be.Report

              • Avatar DensityDuck in reply to Rufus F.
                Ignored
                says:

                That sounds great, but the local grocery store gave up on memorizing codes; register-bangers now just look at pictures to figure out the code for the item you handed them.

                My only real interaction with checkers, in the past five years, has been when I try to buy beer in the self-checkout line and one has to check my ID.Report

              • Avatar Rufus F. in reply to Rufus F.
                Ignored
                says:

                No, we had the picture book too. That’s how you learn the codes. They hire you and immediately stick you on the register, but you have the book there to learn the codes from, while on the job. It’s no doubt infuriating for the customers, and they make that pretty clear, but the fact that you’re pissing people off is pretty good motivation to learn it as quickly as possible and go off-book. I just wrote them all down during the slow times and brought the list home to study. It still took me about two weeks or so to master it, and until then, people thought I was an idiot for having to use the picture book. So, usually, when I get some cashier reading from the book, my first thought is, “ah, new hire”.Report

              • Avatar Johanna in reply to Rufus F.
                Ignored
                says:

                Actually Density has it somewhat right – most produce now has code stickers on them but of course when they don’t, the checker still has to know what the item is and look up the code. When I started checking we had to take and pass a code and produce identification test before being allowed to touch the register. Even after over 20 years I do recall a few codes and I still prefer to bag my own groceries when I have a full cart.Report

              • Avatar Rufus F. in reply to Rufus F.
                Ignored
                says:

                Oh did you have it good Johanna! I had to piss off my friends and neighbors for two weeks in order to learn. And, you’re right- in my day we had no stickers to speak of! These kids with their stickers!

                But I do think that a lot of them are still memorizing the codes. The women at our grocery store do it without looking- half the time they’re talking to the baggers- and they seem to get it all right.Report

              • Avatar Pierre Corneille in reply to Rufus F.
                Ignored
                says:

                When I worked at a grocery store, I was a graveyard shift stocker, but had to check out the occasional customers, and remember some presenting me with produce I had never even seen or heard of before. (A few people did all their grocery shopping at the early morning hours.) We had some sort of guidebook, but it was embarrassing to ask the customers what the names of whatever kind lettuce they had. So I just asked them what the price was and entered in what they said. In short, I agree, it’s not an easy job.Report

              • Avatar Michael Drew in reply to James Hanley
                Ignored
                says:

                So you would favor some official way of separating the lazy from the disabled in welfare policy then?Report

              • Avatar Jaybird in reply to Michael Drew
                Ignored
                says:

                Perhaps we could reclassify “lazy” as some form of mental illness (“acedia”, perhaps?) and find some way to quarantine them in such a way to minimize their harm to themselves but also to us, as a society.Report

              • Avatar DensityDuck in reply to Jaybird
                Ignored
                says:

                Sounds like the “slines” from Anathem.Report

              • Avatar James Hanley in reply to Michael Drew
                Ignored
                says:

                Michael Drew,

                Ideally I’d favor it. Whether it’s pragmatically realistic to do so, I have no idea. If not, there’s probably not that much total cost, in the big picture. I think most people prefer to work, even if they don’t really want to work very hard.Report

              • Avatar Michael Drew in reply to James Hanley
                Ignored
                says:

                In reality, of course, there isn’t much of a safety net to speak of for childless individuals in either group short of food stamps and a bit of housing assistance. Much of that actually does have something of a laziness filter on it as well, where you have to show that you’ve looked for work to get food stamps for example, though it’s of course easy to do that without putting in any really serious job-hunting work.Report

      • Avatar E.C. Gach in reply to RTod
        Ignored
        says:

        “2. Are things really so bad now that retooling everything – and assuming the risks of all the unintended consequences, like the possibility that we will retool for all the wrong things – is better than making incremental changes where and when they are needed, in a more organic way?”

        I totally agree, I mean, do we ever not want something to be “organic.” I was thinking more along the lines of making the funding available, or programs affordable and available, so when someone get’s dumped from an industry. Not something that would be done all at once, or to everyone. More like part of an employment placement program or education assistance loan. I mean, the country as a whole has an interest in workers being better educated/trained in order to fill in where ever the demand is, so making low interest loans available seems like a good idea, at least in the basic sense of it.

        “But most of the people I know and see ARE gainfully employed, and doing better now than 5 years ago.”

        I guess maybe we just know different people. Increased part time workers, increased unemployed workers, wages that don’t match productivity gains. I mean, if I’m working in an office, and three other people get have a job doing what I do, and two get fired, and now me and another person are doing twice the amount of work, why shouldn’t we see at least a 20% increase in our wage? Prof H would probably say something about supply/demand curves and excess labor. That’s all great, but it does little to make me feel better about the redistribution and increasing concentration of wealth.Report

  2. Avatar Rufus F.
    Ignored
    says:

    I wonder how it varies according to region. I lived for a while in Buffalo and, understandably, there were lotsof people there who really believed that American manufacturing has come to an end. But their image was understandably skewed. Manufacturing didn’t even come to an end in Buffalo; it was just that Bethlehem Steel was such a big employer in the region that the removal of that one domino felt like the others were collapsing too.Report

    • Avatar RTod in reply to Rufus F.
      Ignored
      says:

      I remember back in the 80’s when the Timber industry was shrinking in the Pacific NW there was the assumption by most that unless timber companies employed the robust numbers it had in the past, the region could not sustain itself.Report

      • Avatar Rufus F. in reply to RTod
        Ignored
        says:

        Yeah, I think it has a lot to do with where you live. I should also mention that I hope my comment didn’t sound glib- Bethlehem Steel employed something like 200,000 people, so when it left, that profoundly altered Buffalo. If I’m not mistaken, the population there has halved since 1983 when the plant closed. But, again, there are probably places in the country that have a very different opinion of the healty of US manufacturing from that held in Buffalo.Report

    • Avatar Jaybird in reply to Rufus F.
      Ignored
      says:

      Reagan’s potshot at Carter contained an interesting take where “a recession is where your neighbor loses his job, a depression is when you lose yours.”

      When you and everybody you know loses a job within the same short period of time?

      I mean, in 2005ish, 2006ish, we were supposedly doing *GREAT* as a country… but I was being outsourced to Singapore and everybody I knew was scrabbling to get or keep the IT job that had been pouring money into their pocket for the last 10 (or more) years.

      The country was going great and unemployment was minimal.

      Me and mine thought it was the end of the world.Report

      • Avatar Rufus F. in reply to Jaybird
        Ignored
        says:

        I had a thought while in Paris that I considered making a post, but it seemed too weird and meaningless. So, I’ll put it here where it will seem probably moreso!

        I was in the Paris subway system, griping to myself about how overcrowded it can be, when it dawned on me that, of course, the system was overwhelmed- it was built for a different generation, in order to serve the needs of that population. But the population has increased greatly in numbers. So the system seems as if it’s poorly constructed, while for it to appear well-constructed, it would have had to be built to suit the needs of several generations into the future with a greatly increased number of people. Pretty much every system will be overwhelmed within a few generations, if not one. And it’s like this with everything.

        Not sure if that makes any sense here either, but it’s been much on my mind when trying to determine if large man-made systems can be working but seem to the individuals in them to be failing.Report

  3. Avatar North
    Ignored
    says:

    Thank you James for this. When I hear the tired canard about how “The US doesn’t manufacture anything and all our jobs are just symbol manipulation” my eyes roll so hard I almost break my own neck.Report

  4. Avatar tom van dyke
    Ignored
    says:

    Exc stuff, Dr. Hanley.Report

  5. Avatar Michael Drew
    Ignored
    says:

    I agree with everything here. Great post. Matthew Yglesias is repeatedly at pains to make very similar points.Report

  6. Avatar Pat Cahalan
    Ignored
    says:

    > We like to think that everyone deserves a living wage, but it can’t
    > be a one-way street. People need to be contributing value to
    > society to expect to get value from society.

    I more or less agree. There’s a problem, though.

    One question that does exist: these high value, high knowledge requirement jobs actually have prerequisites that aren’t entirely trainable. You can’t train me to be Michael Jordan… but I can’t train about 90% of the population to do my job well either. Maybe 5% can be good. Maybe 10% can be baseline competent. Much more than that, you’re talking dead weight.

    The average IQ in the country is 100 or so. Now IQ is granted a weak metric for actual intelligence, but in my experience about 1/3 of the people that I see taking even medium value, medium knowledge jobs aren’t capable of doing them effectively. My (redacted) both work in an average-complexity office environment, and more than half of their coworkers are blithering idiots. They can’t be fired not because CA has particularly onerous labor laws (although that’s a side issue), but because the odds that you’re going to get someone actually better as a replacement are actually pretty bad.

    If we get rid of manufacturing jobs, we can’t necessarily free up that labor to do something else. It has to be retooled. And all of the educational opportunities in the world aren’t going to turn someone who has even average intelligence into a decent lab chemist. They might make lab assistant, but that’s it.

    So, in the long term sense, if we get rid of low-skill jobs by industrial advances, and medium-skill jobs by information technology advances, what do all the non-geniuses in the country do for a living, if doing something for a living is still required to make ends meet?Report

    • Avatar James Hanley in reply to Pat Cahalan
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      says:

      There will always be low end jobs, because some things just have to be done that are too boring and/or otherwise unpleasant. They just won’t pay as much as assembly line work.

      And an important thing to keep in mind is that the market for labor, broadly speaking, is defined by the size of the consumer market. The more people, and the more wants they have (and a basic principle of economics is that our wants are essentially unlimited), the more tasks will have to be done, hence more jobs available. Driving a garbage truck doesn’t require much intelligence (although, oddly, my cousin who is quite intelligent enjoys that job), being a janitor, moving freight in a warehouse, loading luggage at the airport, etc.

      Heck, as long as we keep “enhancing” our airport security we’ll have plenty of jobs for those too skill-deficient to do anything remotely productive.Report

      • Avatar Pat Cahalan in reply to James Hanley
        Ignored
        says:

        For the record, I worked in a slaughterhouse during a summer and didn’t find the job particularly unpleasant for the pay (it paid pretty well), but I didn’t like the cap.

        What I see here, James, is a centrifuge problem: the high paying, desirable jobs will slowly migrate to a dwindling percentage of the population (those with the brain power to do them), the middle will be filled with technology and equipment, and the other jobs will go down to everybody else.

        People got pissed off enough when the underclass was designated by racism. I’m not so sure that consigning an increasing percentage of the population to “jobs that smart people generally find too boring or offensive to do” is going to produce a stable long-term society. Sure, there’s enough exceptions to the rule (I know plenty of smart people who are perfectly happy hauling garbage or cleaning restrooms, too) to make the outcome in doubt; I’m not claiming certainty.

        But I’m also not particularly happy with the idea of trying to build an economy on those grounds. It might be economically very efficient, but I just don’t think it is stable.Report

    • Avatar E.C. Gach in reply to Pat Cahalan
      Ignored
      says:

      Will those low end jobs, at some time t in the future, have increased pay in absolute terms (while remaining stagnant relative to others), or will there always be some condemned to make relatively little?

      Someone(s) by definition have to be at the bottom. Will we have people with the comparable education of a current doctor struggling to make ends meet hundreds of years from now? I’m wondering what the end game is, or at least the future one.

      Where do all these productivity gains ultimately go? Will we (human race) ever have competed enough in the rat races to have a future where our children can have their needs met while only working part time at the “low end” job? Or will does every productivity gain inevitably lead to firing one person, giving another a raise, and capitalist pocketing the rest?Report

      • Avatar James Hanley in reply to E.C. Gach
        Ignored
        says:

        will there always be some condemned to make relatively little?

        Yes. Because there will always be some with relatively little economic value to offer. (Note: that’s not to say they’re value-less people. I’m strictly referring only to economic value, not personal or inherent value or value to friends and family–those things the market doesn’t measure well.)

        Will we have people with the comparable education of a current doctor struggling to make ends meet hundreds of years from now?

        Seems dubious, unless somehow that education loses its economic value. I mean, right now we have some people with PhDs struggling to make ends meet, because despite their education there’s no demand for their services. Nothing drives a PhD holder more crazy than to realize no one’s going to automatically reward them for their hard work and knowledge gained, but if there’s more PhD holders in, say, history than the market demands, it’s incumbent upon them to figure out how their skills transfer. But as a general rule, all or most really well educated people struggling to make ends meet? I can’t see what would cause that.

        [Will] our children can have their needs met while only working part time at the “low end” job? Or will does every productivity gain inevitably lead to firing one person, giving another a raise, and capitalist pocketing the rest?

        But it’s not just the capitalist pocketing the rest–it’s the consumers. And every laborer is a consumer, too. Beyond that, I can’t say just how it will work out. I do know that as a pure thought experiment, the world where nobody has a job but all our needs are met is what we normally call paradise, or heaven. Conversely, the world where we all have more work than we want, but none of our needs is met matches up very well with some popular conceptions of hell. All I can really say is that I hope we do move toward that conception of heaven.

        But if you are content with the standard of living of the 19th century’s middle class, you could probably do that while working half time right now. That’s an off the top of my head guess. I think I’ll have to do a little research and see if that holds up.Report

      • Avatar E.C. Gach in reply to E.C. Gach
        Ignored
        says:

        “But it’s not just the capitalist pocketing the rest–it’s the consumers. And every laborer is a consumer, too. Beyond that, I can’t say just how it will work out. ”

        So by your accounting, x amount of productivity gains should amount to x drop in commodity prices, minus nasty things like sticky prices, etc.? Has a lean and mean GM led to higher paid workers or cheaper cars?Report

        • Avatar E.C. Gach in reply to E.C. Gach
          Ignored
          says:

          It seems like what even you are getting at is that there should be some steady state, where productivity gains amount to a certain increase in workers wages, cheaper product prices, and higher profits. Am I leaving something out?Report

          • Avatar James Hanley in reply to E.C. Gach
            Ignored
            says:

            Well, now we’re starting to get out of my league, unfortunately. No, I definitely don’t believe in a “steady state,” at least as I understand the term, because I think a market will always be dynamic, changing in ways we can’t predict, so long as it’s not too rigidly regulated.

            But as to that trifecta of results, the one that I find least likely is higher profits, at least over the long term. A productivity increase for a single business in an industry reflects some kind of economic innovation, and will allow them to temporarily capture above-normal profits. But if there are other competitors in that market, they’ll catch up again, and then prices will be competed back down to natural profit levels again. Only in a market where there’s no (or not much) competition can profits remain above normal.

            I haven’t looked too closely at GM lately, and it may be too early to tell (I think it’s not entirely certain yet whether they’ve really changed their failing corporate culture). But I’d say pay attention to what they do over the next couple years, and we should be able to tell. From the little bit I’ve noticed lately, the Chevy Cruze is being reported as their best small car ever, and it’s not too expensive. Higher quality at the same price is a de facto price reduction, because you’re paying the same amount and getting more (the same reason I love an overtime sporting event).Report

  7. Avatar steve
    Ignored
    says:

    Great post! Always stuck at work when the good ones go up. Couple of points. First, our schools are probably performing on par with the rest of the world. Hope you saw this post.

    http://super-economy.blogspot.com/2010/12/amazing-truth-about-pisa-scores-usa.html

    Second, given how frequently people are changing jobs, and will continue to change, they need to learn how to learn. We probably need more community college type schools that teach specific skills when job markets change.

    Last of all, I am recruiting for two new physicians. Nearly all applicants are of foreign origin so far. As far as I can tell, the top of the class of American born kids all went off into the finance sector or law. On the flip side, the competition for American kids to get into top schools is quite fierce as I suspect you know. (Son is a senior)

    SteveReport

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