Friday, February 15, 2013

Is the United States Experiencing Institutional Failure?

I returned to the United States in June 2011. Although I earned a PhD, published research, and taught in a variety of universities across the world, I would accept any position in the United States. I will admit old age has caught up with me, and I am getting too old to be lugging heavy suitcases from university to university, from airport to airport, from country to country. Subsequently, I returned to the United States, willing to accept any job, even a position at the bottom rung of the social ladder. Then I noticed and discovered observations about the U.S. economy that have far-reaching consequences. The United States is suffering from institutional failure. Unfortunately, the institutions in the United States have failed us, giving us the eternal gift of a stagnating economy and weak job growth.

I returned to Conway, Arkansas in 2011. Conway is a small, prosperous community approximately 40 miles north of Little Rock. During the summer of 2011, employers advertised roughly 300 to 500 jobs within 25 miles of Conway. However, no one is hiring. Why is this? I thought deeply about this conundrum, and realized the United States has six problems.

Problem 1: Hiring new employees scare employers. Unfortunately, if an employer terminates a new employee, the employee could collect workman’s compensation or unemployment insurance, or even file a lawsuit against a company. During good economic times, another employer may inadvertently hire the bad employee. Thus, the bad employee never files for unemployment or workman's compensation or hires an attorney. After the 2007 Great Recession struck the U.S. job market, a bad employee could be unemployed for a long time. Consequently, the terminated employee has an incentive to retaliate against a former employer. Finally, the President Obama's Health Care plan looms on the horizon. Many companies do not know how their costs will change once the law comes into force. Hence, the employers refuse to hire anyone.

Problem 2: Employers have extraordinarily complex procedures to hire new employees. When I entered the workforce in the late 1980s, everything was much simpler than today. Several times, employers hired me immediately after a successful interview, and I started the next day. Employers rarely check criminal records (difficult to check court records outside the employer’s county before 2000) and drug testing did not exist before the 1990s. Our modern life has become complicated, and consequently, an employer needs months to hire a job applicant. Most employers perform background checks like criminal records, driving records, drug testing, skill-level testing, and my personal favorite, the 80-question personality assessment test. An online university in 2011 viewed my credit record from Transunion after the first interview. I guess if I have a poor credit history would imply I am a terrible teacher. Of course, poor credit implies I need a job because I cannot pay all my bills. I can understand possessing poor credit would pose a problem for handling cash or working at a bank, but to teach? (By the way, I do have good credit, at least at this moment). Thus, these complicated procedures make employers leery to hire new workers. Employers do not want to take a chance on someone. Consequently, institutional failure causes jobs to be available, but employers do not hire.

Problem 3: During my quest for a job search, I noticed employers do not train workers anymore. An employer wants the job applicant's experience and education to match the new job perfectly; otherwise, the job applicant would have no luck. I first saw this when I applied for a data entry position for a truck parts company in 2011. I did data entry for a music company in the late 1990s. However, the interviewer stated these skills are not transferable. The trucking company has a fast-paced environment, and they do not have the time to train me. I noticed this particular job remained vacant for quite a while. I guess this employer could not find the perfect applicant. This example illustrates a key point. If employers do not train new employees, social mobility freezes. How can an employee move up an organization? Instead, employers would poach talent from their competitors. Thus, the employer boosts salaries and benefits to hire employees from its competitors. Unfortunately, as the companies eliminate training, a crisis strikes the employers once skilled workers retire. The retired workers do not pass their training and knowledge to the next generation. Consequently, institutional failure freezes social mobility, and knowledge and skills become lost. Then for the select few with the right skills, their salaries and compensation would continue to soar.

Problem 4: I noticed employers are extremely fussy. As applicants form long queues for every job, the employers shift through all applicant's personal information. If they find one speck of dirt on an applicant's record, they reject the applicant immediately. For example, after an interview with a temp agency in Little Rock, the recruiter stated if anything comes up during a criminal history search, an employer stops looking at the applicant. Unfortunately, this problem has three implications. First, everyone assumes the criminal record is accurate. Thus, the private company correctly entered the information into their database and matched the record to the correct person. Second, many countries around the world do not have large computer databases filled with criminal records. Thus, immigrants to the United States would not worry about past transgressions because employers would never discover an immigrant's criminal history if it happened outside the United States. Finally, our society has tossed out the Christian notion of forgiveness. A criminal history becomes a lifelong shackle that a person can never remove because a criminal record exists forever. Our society will throw good people away, even for minor crimes such as trespassing and curfew violations. Consequently, nearly 65 million Americans possess a criminal record. Even though, these Americans were employed before the 2007 Great Recession, they become unemployable after their employers lay them off. What will these people do to earn a living? They could return to criminal behavior, and become part of the underground economy. Consequently, institutional failure leads to a growing, thriving shadow economy.

Problem 5: After the 2007 Great Recession, employers believe unemployed people have something wrong with them. The longer a person remains unemployed; the employer is less likely to hire him or her. Unfortunately, employers lay off millions of good, hard-working people. Nevertheless, employers resent unemployed people. The employers believe the skills of the chronic unemployed degrade rapidly, and the employers do not want to train them. Consequently, institutional failure leads to a rising class of chronic unemployed as millions of people become unemployable.

Here, I am still unemployed, but somehow I hold onto a glimmer of hope. Then the words from conservative talk show hosts echoed through my mind. If you cannot find a job, then you can create your own job. I live in the freest country in the world whose greatness was constructed on a foundation of capitalism. I remembered the stories how Michael Dell started his company in his dormitory room at the University of Texas. Steve Jobs and Steve Wozniak built the first Apple computer in their parent's garage in California. Then the richest man in the world, Bill Gates, started Microsoft in a rundown hotel in New Mexico after dropping out of Harvard University. Then reality sets in, and I remember this happened over thirty years ago, in a different legal climate. Has our legal climate changed? Does institutional failure penalize the entrepreneurs?

Now I hear stories of self-employed people clashing with different institutions in our society. For example, my sister started a thriving daycare business in her home in Indiana in the late 1990s. After she had complied with the state's numerous regulations, the homeowner's association closed her business down. The association claimed ten additional cars traveling through her neighborhood twice a day, created a nuisance for the neighbors, reducing home values. I experienced another instance while living in Texas. I wanted to pay a mechanic to teach me to change a timing belt on a Honda. Once the Code Enforcement of the City of Bryan discovered the mechanic fixing cars at his home, the inspector threatened to fine him $500 per day if he repaired any more cars. (Although Texas does not have a state income tax, it collects taxes and fines aggressively). Then I read stories how kids who started a lemonade stand found trouble with the city government. The kids need a business license while the state government wants to know and approve all the ingredients in lemonade, which is water, lemon juice, and sugar – the last time I checked. Of course, the same officials become silent when the food industry develops genetically modified animals and plants and dumps preservatives and chemicals into our foods.

Problem 6: I am good with computers, and I thought about starting a computer repair business in my home. However, I know I will clash with some government agency because local governments dislike home-based businesses. Furthermore, I must comply with numerous rules and regulations. One simple, honest mistake can land an inspector at my door as the state demands compensation for my transgression. Then I realize starting my own business may not be a good idea. Consequently, institutional failure hinders the creation of new businesses, although small and medium size businesses drove the economy during the 1980s and 1990s.

My options are severely limited in the United States. What else can I do? I do not want to return to school. I already earned a PhD. Do I need two or more PhDs to become employable in the United States? I do not want public assistance. Although I would enjoy the free time to write blogs and draw pictures, I want to be a productive member of society. The only option remaining was to leave the United States. I had to go where the jobs are, and the jobs are in Asia. I can only dream someday I can return to my homeland, the United States, and settle down in a good community with a good future. Nevertheless, I know Americans must reform their institutions before the American job machine turns on and begins cranking out jobs again. Therefore, I can only wait until this day happens.