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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

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). For water heating one could also do what I did - use $50 worth of materials and junk to build your own solar water heater that reduces the cost of water heating to almost nothing. (http://www.motherearthnews.com/renewable-energy/1979-09-01/A-Homemade-Solar-Water-Heater.aspx http://www.motherearthnews.com/renewable-energy/1979-09-01/A...)

nhashem 14y ago
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[0], 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[1]. 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." [0] http://www.nytimes.com/2011/12/30/business/us-manufacturing-gains-jobs-as-wages-retreat.html http://www.nytimes.com/2011/12/30/business/us-manufacturing-... [1] http://money.cnn.com/2012/12/03/news/economy/record-corporate-profits/ http://money.cnn.com/2012/12/03/news/economy/record-corporat...
- yummyfajitas 14y ago
  and US labor (depressed because we're still at 8% unemployment) Wages are not depressed. Per-worker wages have increased in both the public and private sector: http://research.stlouisfed.org/fred2/graph/?g=duS http://research.stlouisfed.org/fred2/graph/?g=duS 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).
- sanxiyn 14y ago
  Eh... what is wrong with redistribution or socialism? I am all for them.
jseliger 14y ago
>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/facebook_george_lucas_and_nimbyism_the_idiotic_rules_preventing_silicon_valley_from_building_the_houses_and_offices_we_need_to_power_american_innovation_.html 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.
- pekk 14y ago
  One ambulance trip can easily cost $8,000. Now you are down to $20,000 for the year - hope you didn't have any kids. But the point isn't whether $28k is livable in Nebraska, but how it compares to what people used to get back in the day.
  - WimLeers 14y ago
    Honest question: does that still cost $8,000 under Obamacare?
    - slindsey 14y ago
      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.
      - Spoom 14y ago
        I've always heard that was because medical debt was legally very difficult to collect, true?
rayiner 14y ago
$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).
- stdbrouw 14y ago
  But does that $1,300 support a family?
  - vitalique 14y ago
    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.
  - rayiner 14y ago
    If your spouse also has a similar job, then you make $54,000, which is right around the median income in the US. You can definitely support a family on $2,500+ after-tax, afer-rent income every month.
    - jholman 14y ago
      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.
bathat 14y ago
Sorry to go off on a tangent, but, >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.
- Maakuth 14y ago
  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.
  - bathat 14y ago
    Well, ok, so 30% thermal efficiency at the power station[1], and 10% loss in the transmission lines[2]? 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. [1] Wikipedia claims that conventional external combustion (i.e., steam) power plants have a thermal efficiency of 33%. [2] Wikipedia claims that transmission and distribution losses nationally averaged 6-7% in recent years.
leoedin 14y ago
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.

nhashem 14y ago

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[0], 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[1]. 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." [0] http://www.nytimes.com/2011/12/30/business/us-manufacturing-gains-jobs-as-wages-retreat.html http://www.nytimes.com/2011/12/30/business/us-manufacturing-... [1] http://money.cnn.com/2012/12/03/news/economy/record-corporate-profits/ http://money.cnn.com/2012/12/03/news/economy/record-corporat...

yummyfajitas 14y ago
and US labor (depressed because we're still at 8% unemployment) Wages are not depressed. Per-worker wages have increased in both the public and private sector: http://research.stlouisfed.org/fred2/graph/?g=duS http://research.stlouisfed.org/fred2/graph/?g=duS 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).
sanxiyn 14y ago
Eh... what is wrong with redistribution or socialism? I am all for them.

jseliger 14y ago

>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/facebook_george_lucas_and_nimbyism_the_idiotic_rules_preventing_silicon_valley_from_building_the_houses_and_offices_we_need_to_power_american_innovation_.html 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.

pekk 14y ago
One ambulance trip can easily cost $8,000. Now you are down to $20,000 for the year - hope you didn't have any kids. But the point isn't whether $28k is livable in Nebraska, but how it compares to what people used to get back in the day.
- WimLeers 14y ago
  Honest question: does that still cost $8,000 under Obamacare?
  - slindsey 14y ago
    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.
    - Spoom 14y ago
      I've always heard that was because medical debt was legally very difficult to collect, true?

rayiner 14y ago

$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).

stdbrouw 14y ago
But does that $1,300 support a family?
- vitalique 14y ago
  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.
- rayiner 14y ago
  If your spouse also has a similar job, then you make $54,000, which is right around the median income in the US. You can definitely support a family on $2,500+ after-tax, afer-rent income every month.
  - jholman 14y ago
    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.

bathat 14y ago

Sorry to go off on a tangent, but, >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.

Maakuth 14y ago
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.
- bathat 14y ago
  Well, ok, so 30% thermal efficiency at the power station[1], and 10% loss in the transmission lines[2]? 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. [1] Wikipedia claims that conventional external combustion (i.e., steam) power plants have a thermal efficiency of 33%. [2] Wikipedia claims that transmission and distribution losses nationally averaged 6-7% in recent years.

leoedin 14y ago

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.