Gas and Service

There was a time long ago when a trip to the gas station brought a service station attendant to the driver’s window. It was always a he in my experience and the usual practice was for the driver to say “fill’er up” or maybe, “10 gallons” or something like that. The service station attendant might nod but then usually it was “Check your oil?” The oil check was an option, but they would always clean your windshield. That was assumed.

In the present self service world the gas station attendant has given way to the cashier. However, service station attendant remains as a defined job in the Standard Occupational Classification. In the Standard Occupational Classification a service station attendant may lubricate a vehicle, change motor oil, install antifreeze or replace lights or other accessories in addition to fuel service.

Service Station attendant is 4 to 5 percent of gasoline station employment nationwide. Oregon is one of only several states that does not permit self-serve gasoline stations. A service station attendant must pump your gas. Apparently in the state of Oregon the driving public cannot be trusted to avoid smoking, lighting matches or leaving their car motor running when they fill up. Safety requires a service station attendant.

In 2004 the 50 states average of service station attendants per 100,000 population is 412, but 34 states have 412 or less. The low is South Carolina with 132 service station attendants per 100,000 population. In Oregon it is 2,163 service station attendants per 100,000 population, more than 5 times the national average.

Self-serve gas is a do-it-yourself job for everybody: a true social leveler. In the Washington, DC area it is not uncommon to see someone in fancy business clothes pop out of a shiny BMW and pump their own gas. These people may be going off to important policy meetings with gas on their hands, but not in Oregon. Oregon’s regulation helps us notice the trade off between jobs and social equality. Viva la service.

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Two Caveats in Economic Policy

Economics is more like story telling than most economists admit. There is a close relationship between an economic theory like supply and demand and a story. It is true in all the sciences but especially true in economics. Try this story, which is a true story. Some years ago the Mayor of the District of Columbia decided to raise some tax revenue by increasing the gasoline tax on each gallon of gas. The tax failed and had to be repealed. Interviews with motorists found they were angry about higher prices and so they checked their gas gage and made sure they would never need to buy gas in the District of Columbia. Instead they bought gas in nearby Maryland and Virginia. Gas stations in the District started to go broke and the gas tax was repealed by the City Council. Because all of us are in the habit of saving money, the why in this story is easy to understand. We hear the story and say, “Of course, people want to save money and will pick the lowest price.” The story highlights a general principle: self interest. People will avoid taxes by changing their behavior.

Notice I started with a story and suggested a general principle. Adam Smith’s book the Wealth of Nations is full of stories. In the first chapter he describes his observations in the manufacture of pins. “The greatest improvement in the productive powers of labor, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labor.” He goes on to explain how pin making is divided into 18 distinct operations that increase quantity as a result of improved dexterity, saving of time and the use of machinery devised by the workman. Chapter by chapter stories about his observations guides the reader to general principles including the self regulating character of competitive markets. Adam Smith did not draw demand curves or build economic theories, he was an observer and a storyteller.

It is reasonable to reverse the procedure and start with a theory. Having a theory means stating assumptions and a hypothesis using logical reasoning. For example, assume people act out of self interest. Hypothesize that consumers who can buy the same product at different prices will always choose the lowest price. Now there is a theory and we can tell the story of the DC gas tax as an illustration to show a general point. A theory first and then a story afterwards can illustrate principles that may have many applications.

By definition theories and stories have a point. In the story of the boy who cried wolf or the story of the hare and the tortoise, there is a moral to the story. A story without a point is mostly description and generally boring or unreadable. It also follows that a story that makes a point is trying to persuade you of something. In the child’s story of the hare and the tortoise where the slow tortoise wins the race against the fast hare, the person telling the story is arguing a particular view of life. There is the immediate point that plodding and perseverance can be successful over speed and skill, but in exposing a child to the story the teller may be making another point, this is a good thing; adopt perseverance for yourself.

In the theory of pure competition assumptions are stated and a market process is described. Many buyers and sellers pursuing self interest in markets cause price to find its own level and generates an economy where value is maximized. Presented alone, without stories or evidence, the theory of pure competition appears to be scientific. There is no apparent sign of an argument or persuasion; the description of resource movements sounds very nearly like the flow of electrons through a conductor or a copper wire. Economists like to describe the movement of resources in pure competition as positive economics as opposed to normative economics. Positive economics is said to be the study of what is; normative economics is said to be the study of what ought to be. If someone says, “This country needs better schools,” an economist will classify that as normative economics because it is a suggestion about what ought to be, how resources should be allocated if one group interferes in the market process and moves resources contrary to a natural scientific process. The idea is that economists are no more qualified to enter discussions about normative economics than anyone else because their science does not permit them to make better judgments about things that ought to be.

What is implied by the distinction economists like to make between positive and normative economics is that there are parts of economic study which are universally true and inevitable, and therefore beyond argument or persuasion. Suppose we hear a lecture by Professor Schwartz, an economist. He suggests that education can be bought and sold like bread and peanut butter. By education he means all of it, starting with pre-school and going through graduate school and professional school. Suppose further that he explains that parents of children would continue to recognize the importance of education and continue to send their children to school. The need to make a living or desire to earn a profit would motivate individuals and groups to start schools and enter education. Tuition would be charged instead of taxes, costs would be covered, profits would be made, competition would result, students would be educated.

In his story of market education Professor Schwartz is trying to persuade his listeners that education through the market place is a good idea, but in doing so he is trying to avoid the notion that it is really his idea. Instead he is trying to get us to think it is science or positive economics or pure competition that justifies such a policy; he is merely an impartial messenger who has learned the specialized science. It is common to avoid the use of first person in writing and speaking in science and economics. Doing so takes the weight of responsibility off the individual and places it on the science. After all, who could argue against the laws of gravity or the laws of economic science?
If I gave a lecture on education I would say that no society has ever achieved a reasonable level of literacy without publicly supported compulsory education. Apparently when the burden of educational cost is shifted to individuals it is such a crushing burden that many parents are forced to make short run decisions and do not invest, or do not invest adequately, in the long run benefits of education. I reach a different conclusion about education than Professor Schwartz. Partly that is because I look at the story first and then see if the theory of pure competition helps see any general principles that apply in education. Most markets have some unique characteristics that make it difficult to apply one theory to many markets without some adjustments or alterations. Professor Schwartz applies pure competition as a universal science while I look more closely at the individual case.

It is not that I am right and Professor Schwartz is wrong. The point is that I am trying to persuade you of one thing and Professor Schwartz is trying to persuade you of another. But that is always true and leads to the first caveat in economics. Economic science, with or without a story, with or without verification, with or without supporting evidence is always trying to persuade you of something. Economic theories are not just science. Beware.

Good stories are usually more persuasive than technical science. Suppose you are a college student sitting in the family parlor with your Uncle Wilbur and in the course of the conversation you talk about your college economics class. Of course you would tell him microeconomics is about price determination and resource allocation, but suppose you happen to mention that monopolists are price searchers who do not have a supply curve but always price in the elastic portion of the market demand curve. If you are on good terms with your uncle he might be impressed with your technical knowledge and feel that your expensive education was really worth it. However, whether or not he is impressed will probably depend on whether you are on a subject that affects his pocket book; an area where he has prior personal experience and feels justly competent.

Suppose he is talking about sales taxes and says the consumer always pay all the sales tax. In answer you reply “No that is not correct Uncle Wilbur, it all depends on elasticities. For all the tax to be shifted to the consumer price elasticity would have to be zero and supply elasticity would have to infinite. That is rarely the case so business does pay some of the tax most of the time.” Now, it will not matter whether Uncle Wilbur is impressed or not, he will not be persuaded. He is likely to say something like “That’s double talk.” Or, How come they always add just the amount of the tax to the price?” Technical material alone will not be successful to persuade Uncle Wilbur or anyone; what you need is a better story.

Try this one. “Ok, lets say we have a 5% sales tax on retail goods. If everything goes up 5% that’s a significant bite out of your budget. Certainly people who get 5% raises spend more money so wouldn’t you suppose a 5% loss would mean less buying? If Corner Drugs sells 2000 bottles of aspirin at a $1.00 a bottle that’s $2,000 for the drug store, but if they add 5 cents to every bottle they will probably sell less even if its only a little. Remember they have to pay 5% to the government so they still only get a $1.00 a bottle. Any fewer sales and they lose revenue and the tax bite hurts.” Now I’m not sure if that would persuade Uncle Wilbur, or even if it is the best story. It is a better story because it does not use technical terms from economics. To persuade someone it is better to have a story with familiar terms.
Remember everyone has personal experience with economic issues and policies. If an economic model contradicts someone’s personal experience, resorting to scientific terms is not likely to overcome long held beliefs. Statements like, “Hey this stuff is complicated, but it really works,” are not persuasive like a good story, but that leads to the second caveat in economics. Good stories are really good science and more persuasive as well.

All over the country college students study economics in their classes. Many spend hours and hours figuring out functions, graphs and charts because their instructors prefer theorizing over stories or data. Too bad. In the study of economics, theorizing is only half the story.

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Generation Debt

American Job Market wants to advise visitors of a relevant book entitled Generation Debt: Why Now is a Terrible Time to Be Young, by Anya Kamenetz. The author is a 2002 college graduate of Yale University who discusses the current difficulties for young people in their twenties who are trying to make their way into self supporting career employment. The book mixes narrative presentation of relevant economic data with discussion from many interviews of others in their twenties. The group interviewed for the book generally attended college and while many graduated some left college for financial reasons. Their stories paint a picture of a generation with a heavy burden of student debt and credit card debt. Student debt, the use of credit cards, the struggles with low wage jobs and the delay moving into career employment are the beginning and most important topics throughout the book.

In the opening discussion the author argues that economic factors much more than personal factors delay the transition into self-supporting employment and the ability to take on adult responsibilities and independence. This discussion is a transition into the two most important chapters in the book: Chapter Two, titled “College on Credit” and Chapter Three titled “Low Wage Jobs.”

In the second chapter Kamenetz describes the hazards of student debt and it is the longest chapter in the book. Student interviews get the reader to understand the situation of heavy student debts, but the narrative brings in additional commentary on the changing politics of Federal Student Aid programs and easy access to credit cards. While the author is not afraid to put some of the responsibility onto students themselves, the emphasis here is on discussion of the lending industry and Congress. The lending industry regards students as a new profit opportunity. The Congress continues to decrease support for federal student loan programs. Society shows less interest in supporting college education.

The third chapter on low wage jobs continues with interviews, but the questions are about jobs. Discussion about low pay, continuous job search and how to meet student loan payments with low pay take up much of the chapter narrative. The years following graduation tend to be years struggling in restaurants, office work and retail sales. Congress has imposed severe conditions on student loan defaults and these combined with low pay make it much less likely that people 18 to 34 years can be financially independent.

Later chapters discuss the temporary employment market, the lack of health care benefits for those just entering the workforce and issues like federal deficits, social security and Medicare policies. Like the chapters already mentioned these later chapters mix relevant data and political discussion with interviews, but there is less interview material and more citation of academic research and expert opinion. Interview material has more attitudes about society than specific personal situations.

Kamenetz concludes on a more personal tone and topic. She discusses family troubles with a personal emphasis and spends more space and time addressing personal and family conflicts and attitudes that everyone has to cope with in the new economy. This discussion forms the basis for warnings and advice to students and specific suggestions to the older generation. Parents get some specific advice.

The title for the last chapter is “Waking Up and Taking Charge” so student readers have a hint at what to expect. Waking up and taking charge has a reminder that the vote has not been abolished for the struggling 18 to 34 year olds debased or ignored by our current politicians. Too many in that age bracket do not vote. The chapter promotes student activism and refers readers to a growing base of student alliance groups promoting student interests. One such group has taken root at the College of William and Mary in Williamsburg, Virginia. The group is called Virginia21 and I found it on the Internet. There are others that advocate this course of action.

The book maintains a conversational tone, but does so in a literate and readable way. It is not at all an academic tome, but attempts to maintain academic integrity. There is care to make citation of sources and an extensive bibliography allows readers to pick out selected topics and find some further reading. Most of the citations are recent. The Generation Debt citation is Generation Debt: Why now is a Terrible Time to be Young (239 Pages) by Anya Kamenetz, Riverhead Books, a member of Penguin Group USA, New York, 2006, Hardback $23.95, just out in paperback.

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Education and Skill Categories

Free traders, privatizers and devoted deregulators everywhere know job losses in manufacturing make up bad news, which is why they forecast new investment and expansion into sectors with higher productivity and more jobs for the future. They talk vaguely of new high tech jobs, always careful to mention computers and computer technology. They warn these new jobs require technical knowledge or college degrees and so they advise, “Get some training.”

Holding out training and education as the path to better jobs shifts the responsibility for failure, or a menial job with low pay, on to the individual and away from business and government policy. Alan Greenspan, the former Federal Reserve Chairman, was very clever doing that. When he would testify on Capital Hill an inquiring committee member would ask why America has so many low paid jobs. He would answer people need to prepare themselves for today’s new high tech economy. Today’s jobs require high skills, he would say. In other words, people could have better jobs if they would take the initiative to get that training, which means Mr. Greenspan cannot be held to blame for those low paid jobs. Committee members would usually stop their questions following his “Get some training” answer. I cannot recall any time when anyone asked him to provide a count of these high tech jobs, or some data, to go with his optimistic answer. It is time to make a count.

Over the years the inquiring minds at the Bureau of Labor Statistics started to wonder what skills and what training go with what jobs? They decided it was an important topic because they assigned many of their staff to study skill levels for the more than 700 United States standard occupations. They interviewed employers and employees to find out what someone has to know and do to qualify for employment in each occupation. They went to colleges and universities to learn about the curriculum for degree training. They studied state regulations to know licensing or certification requirements.

Categorizing education and skills training for occupations is on going work, but the BLS skills taxonomy reflects the current education and training associated with data reported within its occupational categories. This taxonomy appears in the Table below. The first six BLS categories give the minimum of formal college degree education that is required for entry and work in an occupation.

List – BLS Educational Training and Skills Categories
1. First Professional Degree-Entry into a job in this skill category requires 2 to 4 years of degree study beyond a baccalaureate degree. Almost all professionals must pass state licensing exams or private board certification exams to enter practice. Physicians, veterinarians, dentists, lawyers, pharmacists are all examples. Ministers are generally included here although there is not ordinarily board or state certification.

2. Doctorate Degree-Entry into a job in this skill category requires a doctorate following completion of a baccalaureate degree as minimum education for entry. College teaching at four year colleges is an example. A doctorate is also required for many science and medical research positions. Many require licenses and board exams. Medical and biological researchers, physicists, and astronomers are other examples because employment is mostly in research and these require doctorates.

3. Master's Degree-Entry into a job in this skill category typically requires license, certification, credentials or registry in a specialized skill area that requires work beyond a BA degree, leading to a master's degree. Health care professions such as physical therapists, speech-language audiology or pathology, counseling are examples. Librarians are now also included.

4. Master's or Bachelor's degree combined with previous experience-Entry into a job in this skill category requires formal education, but these jobs are usually not accessible without experienced practice in the field at an entry job. Health Services managers usually have experience working in health care in addition to degrees and credentials. Some businesses now require work experience and an MBA before jobs are accessible for entry. Almost all of these jobs have manager in the SOC title.

5. Bachelor's Degree-Entry into a job in this skill category requires a BA or BS degree. In some cases a BA degree in any field is satisfactory to establish reading and computational skills necessary to begin a job. Other jobs need a BA in a particular major to establish skills, credentials or obtain a license.

6. Associate Degree-Entry into a job in this skill category usually requires some formal education such as an educational internship, or co-op program, but leading to an associate's degree. Some employers require graduation from an accredited two year community or junior college program in order to take required licensing exams. Health technician occupations are examples. Some skill types have professional associations with certification or accreditation to help establish skill levels for job entrants. Dental hygienists, licensed practical nursing are examples.

7. Post-secondary vocational training-Entry into a job in this skill category requires pre-employment skill training and often a license from a state agency. Barbers, hairstylists, office machine repairers, computer repair specialists and technicians are examples. Employers may provide some on-the-training but entrants must arrive with the skills and certification to do their job.

8. Work Experience in a Related Occupation-Entry into these jobs usually requires that applicants show a high level of skills. These skills can be acquired through degree training, but long term practice, and specialized talents acquired as part of a career in the field are necessary. It is a separate category because degrees and training do not assure entry into these occupations. First line supervisors, police detectives and investigators, adult education instructors are examples.

9. Long-term on the Job Training-Entry into a job in this skill category typically requires skills acquired from work experience that takes longer than one year. The additional skills needed for the job are taught on the job, through an apprenticeship or employer sponsored classroom instruction or training, and the skills required take a long time or a lot of effort to learn with training of over a year. Actors, athletes, dancers, electricians, carpenters and mechanics are examples. Entry into these jobs are not open to those leaving a degree program or skills training. Prior job relevant skills are necessary for advancement into these positions. For many of these positions a high school degree maybe sufficient but entry is not available to high school graduates. Entry skills are high school plus on the job skills and experience.

10. Moderate-term on the job Training-Entry into these jobs usually requires basic reading and language skills learned in high school or a GED program, but additional on-the-job training is usually necessary. Additional skills can be learned quickly, but 1 to 12 months can be needed to acquire additional skills. Medical assistants, dental assistants, social and human resource assistants are examples.

11. Short-term on the job Training-Entry into these jobs usually requires basic reading and language skills learned in high school or a GED program. Work that can be learned from written or verbal instructions, or carried out successfully after a demonstration are classified as high school skills. Additional skills can be learned quickly, typically a month or less of on-the-job experience or instruction. High school degree skills can also be thought of as general skills employment.

The term required has a broad use. In some occupations the degree is absolutely necessary and a candidate will not be considered without the required degree. These include occupations where licensing is required by the state or by a private association empowered by the state. Registered nurses must have at least an associate's degree from an approved nursing program to be able to take required state exams. Without this credential entry is blocked.

In other occupations, a college degree is not strictly required but the skills needed before entry are such that a degree is strongly preferred by employers and candidates without a degree are much less likely to be considered, much less employed. Categories emphasize the sources and length of training preferred by employers. Training might be post-secondary vocational, college, postgraduate or professional education. The duration of training could range from a week or two to many years.

Prior experience and on the job training are part of the skills taxonomy. Category four is work experience plus a bachelor's or higher degree, an MBA degree for example. Someone with an MBA in finance will probably be expected to have employment experience before being considered for a managerial position. The bachelor degree plus work experience skill category amounts to a managerial skill category. Add up all management jobs at all establishments across the whole economy, and be sure to include management analysts, business agents and managers of artists, performers and athletes, producers and directors of artists, performers and musicians, judges and magistrates and the total comes to 97 percent of jobs requiring a bachelor degree plus work experience in the skills taxonomy.

The people at BLS who study jobs and skills and maintain the skills taxonomy appear to have a general consensus that managers should have work experience before they become managers. They nearly agree that a BA degree is required. I say nearly because a few managerial types – lodging manager, gaming manager, food service manager – fall in skill category 8, which is work experience in related occupation. A BA degree is not considered necessary for management in these industries.

Categories eight and nine describe skills learned through long-term on-the-job training, or work experience in a similar or related occupation. These jobs do not require a degree beyond high school, but are generally not entry-level jobs. For example, a first line supervisor of retail sales workers, or a supervisor of construction workers will need experience in retail sales or construction to be eligible for a job as a supervisor. These jobs require long term on the job training, meaning more than 12 months of experience. Therefore, entry level skills are a high school degree plus skills learned in another job or lower level job.

Categories 10 and 11 are moderate term and short-term on-the-job training. Moderate term on the job training is classified as skills which take 1 to 12 months to learn on the job while short term on the job training is classified as skills which take up to 1 month, but might be less. Moderate term and short term on the job training skills can be classified as general workforce employment. Therefore, entry-level skills into these occupations are a high school degree.

In the government’s Standard Occupational Classifications professional employment is separate from managerial employment. A civil engineer does professional work in a professional career but a manager of civil engineers has managerial employment and not professional employment, at least if we use the terms and definitions applied at BLS.

Despite the official terminology, we have to expect civil engineers who are managers of civil engineers will think of themselves as professionals. Suppose we asked a civil engineer working as a manager of civil engineers, “What is your profession?” He or she would be likely to say they are engineers rather than managers. If we ask the same person, “What is your job?” they would be likely say they are managers of a department of civil engineers. Their profession is engineer; their job is manager.

Lots of managerial jobs are filled with people moving up from professional jobs. Not always and American does have career managers, but moving up from below is an important way to enter the management ranks. The more managers promoted from the professions, the more professional openings there will be for entry positions in the professions: engineering, architecture, law and so on. As graduates from America’s colleges enter the workforce they will want to find jobs using their degree skills. If all or most of those with professional skills and experience stay in their jobs until retirement it would be harder than it already is for new college graduates in the professions to start a career. Openings come sooner when older professionals move into management ranks.

Almost all of America’s jobs that use college degree skills are in the professions or management. If we total all of the jobs where a four year college degree or master’s, doctorate or professional degree are required in the BLS skills taxonomy, the total comes to 25.3 million, which is 19.4 percent of the May 2005 Occupational Employment Survey total of over 130 million jobs. If we subtract all the managerial jobs that require college degree skills so that we have non-managerial jobs needing college degrees the total is 20 million, which is 15.4 percent of the May 2005 Occupational Employment Survey total.

Suppose we add up jobs for a list of professions. Take a list with teachers, professors, lawyers, engineers, architects including landscape architects, doctors including physicians and surgeons, dentists, pharmacists, and optometrists. Lets not forget accountants and auditors jobs that need CPA’s and all the professional counseling and social work jobs that require master’s degrees. Add all the professional computer jobs that require BA or higher degree skills. These are software engineer and hardware engineer, database manager jobs and a few others. All of these together total 12.5 million jobs. The total is a count of jobs, not people. Lawyers working as managers or politicians, or retired are not counted in the total of lawyers, just lawyers working at jobs that require lawyer skills. Neither is it a count of all the people who can rightfully call themselves engineers or architects because they have an engineering or architect degree. It includes only engineering jobs that require the skills of an engineer or architect.

The teaching and education professions have the largest number of U.S. professional jobs requiring college degree training. Add just the professional staffs, and total college professors, primary and secondary public, private and parochial school teachers, nearly 390 thousand educational administrators, more than 200 thousand counselors and 90 thousand school librarians. The total comes to 6.2 million. No industry or profession has anything close to the number of professional jobs in education, but the 6.2 million is out of over 130 million jobs.

Get some training makes terrific advice for you, your brother and your uncle Dwight. At current rates of college enrollment, college degrees will pay. Just hope that not too many of the 20 million working in jobs with 90th percentile annual wages less than $30,000 get the same idea. It might not be good either if large numbers of the 16 million working as cashiers, security guards, fast food cooks, servers, waiters, waitresses, dishwashers, janitors, maids, landscapers, grounds keepers, child care workers, tellers, receptionists, and parking lot attendants decide to up grade their skills along with you. Get some training. Now you know.

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Customer Service Representative

Customer Service Representatives are one of several important marker office and administration jobs with employment in every sector of the United States economy. There are now almost 2.1 million total jobs as customer services representatives, which is the 9th place job among America’s jobs. The largest share of Customer Service Representatives, or just over a quarter of them, work in the Finance and Insurance sector. Customer Service Representatives handle customer inquiries and resolve customer complaints. Specific work will vary some depending on the industry. In finance they may access a computer to look up account or loan information or resolve customer complaints. In insurance, they may help with policy applications, or answer questions about policy coverage and reporting claims. At utilities they most explain and handle service accounts. Automated computerized voice mail systems do some of the routine customer service work, but not enough to decrease employment because the number of jobs keeps growing, up more than 175 thousand since 2000. These jobs are going up and not down.

Customer Service Representative jobs do not require college degree training, but they are not walk on jobs like a cashier. For starters, people in these jobs need to speak clearly and grammatically. They have to explain many varied service options and service plans that are increasingly complex and the job requires computer skills since they routinely access computer database information. The skills required help keep the pay higher than most office-based employment. Like so many office occupations beginning salaries are low with 46 states reporting 10th percentile wages less than $20,000 for May 2005. The beginning salaries are only slightly higher than jobs as clerks or receptionists. However, successful work as a Customer Service Representative assures advancement and pay in the 90th percentile rises into the high forties and as much as the low fifties in some of the states and metropolitan areas. Receptionist pay does not rise that fast so there is little opportunity for advancement as a receptionist but there is as a Customer Service Representative.

Unlike autoworkers, who have to be at the auto plant to do their work, Customer Service Representatives can be anywhere they have a computer and a telephone. Working from home saves commuter costs and space on already clogged highways. Telecommuting saves business the expense of providing office space, which gives incentive to increase their staff working at home at least some of the time.

In addition, office space for Customer Service Representatives could be moved to low rent small towns, rural areas or abroad to work, but as of 2005 over 80 percent of Customer Service Jobs are in metropolitan areas. The claim is made that business is transferring Customer Service jobs abroad, but it is unlikely their numbers would be steadily increasing if many of these jobs were being moved abroad. Given the complexity of America’s many service plans in loans, credit cards, telecommunications, health care and other areas Customer Service work will not be decreasing anytime soon. The annual compounded growth rate has been 1.6 percent since 2000. There is good reason to think it should continue at about the same rate. A continuation of that rate means an increase of about 400 thousand of these jobs over the next 8 to 10 years. If employment in these areas begins to decline then it will be a blunt message that these jobs are being moved abroad.

Given the importance of the work, the skills necessary and the importance of on the job experience, wages should remain relatively high compared to other office administration and support employment. If wages decline for Customer Service Representatives, or fall relatively to other office work, it will reflect a much larger surplus of labor than anyone expected.

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Circuit City Jobs

The caption on the Washington Post article from March 29, 2007 reads “Circuit City Cuts 3,400 ‘Overpaid’ Workers.” Job cuts came out of 40,000 in store jobs, or 9 percent of the company’s in store workforce. The firings were not related to job performance, the company announced, but came as part of an effort to cut costs and improve the bottom line.

We learn later in the article that the chief executive officer of Circuit City earns a salary just over $1.4 million dollars, and one of 11 “overpaid” employees fired without notice at the Ashville, North Carolina store was overpaid at $11.59 an hour. Adults with jobs often have experience with a particular type of supervisor, manager or boss, who always manages to act like they are doing employees a favor by handing out some jobs. They act like your job is their personal gift to you. Never mind the work you do.

The wage disparity together with the firings implies that Mr. CEO regards selling merchandise on the floor as a marginal activity compared to the worth of one who hires and fires. He should have called me. I could tell him a few things about retail jobs.

Retail Jobs – a few things to know

Retail jobs in 2006 came to 15.3 million of America’s jobs at firms and businesses, 11.2 percent of total establishment jobs. Combine retail with wholesale and the total comes to 21.2 million jobs, more than any other sector except the government, which has even more, but that is another story.

Both wholesale and retail trade have growing employment but at growth rates so low that wholesale and retail jobs have a decreasing percentage of total employment. Retail was over 12 percent of employment in 1990, but now it is 11.2 percent. Using computer technology in trade, especially for barcodes and inventory management increases labor productivity. Retail and wholesale sales volumes per work hour are up and sometimes at rates comparable to productivity in manufacturing. Higher productivity in trade limits job growth, but so far not enough to decrease employment, only the rate of increase.

Employment data by state or metropolitan area tells the same story. The percent of retail jobs by state cluster tightly around the 11 percent range and the percent variation above and below is the smallest of any sector employment, usually less than a percent above or below. Because retail jobs remain at roughly the same percentage of total employment the only way to have more retailing jobs is to have a bigger population to serve. For anyone in local government or a chamber of commerce who wants to boast local employment by luring in a big national retailer, the plan will not work. Before much time goes by the new retailer displaces existing retail jobs and its back to 11 or 12 percent.

Circuit City is part of retail trade in a sector titled Electronics and Appliance Stores. It is one of 12 retail sub sectors, but definitely one where sales depend on salesmanship. Other retail sectors include gasoline stations and grocery stores, but salesmanship is not important for their products compared to Circuit City. Jobs at gasoline stations have fallen continuously since 1990. Grocery store employment is down since the late 1990’s and about the same as employment in 1990. However, Circuit City buyers may need to learn about available products and how they work before they make up their mind. Retail Salespersons do selling, which means explaining the product, answering questions, and knowing warranty terms or other product information. Explaining and selling take time and so more retail sales jobs are needed at electronic and appliance stores than gasoline stations or grocery stores. The need for salesmanship also helps increase employment at clothing stores, home stores, garden centers, sports, hobby and music stores, but especially at electronics and appliance stores. While these differences might appear obvious to many, they apparently were not to the management at Circuit City.

Retail Occupations

We can help Circuit City management if we look at the two occupations that dominate retail trade: retail salesperson and cashier. Retail Salesperson has more jobs than any other job in the United States; 4.3 million and over 90 percent of them are in trade. Another 1.1 million are area sales managers who manage sales workers most of their jobs in trade. There are a few retail sales jobs scattered around in other sectors: a hospital may have a gift shop, schools have book stores that sell sweat suits and teddy bears, but roughly speaking retail salesperson jobs are in trade.
For the second biggest job in the United States, we have Cashier with 3.5 million jobs and over 80 percent of those in trade. Cashiers jobs are not the same as retail salespersons. Cashiers run a cash register, take money and make change but they seldom do selling as the term describes the work of Retail Salesperson.

The difference in retail salespersons and cashier shows up clearly in the staffing of the different retail sub sectors. At gasoline stations more than 60 percent of jobs are cashier, but virtually no retail salespersons. At Electronics and Appliance Stores retail salespersons and retail supervisors make up over 40 percent of the jobs. Customers do not need sales help for a tank of gas, but they do want sales information for electronics. At grocery stores right around 33.3 percent of jobs are cashier, but only 3 percent are retail salespersons. At clothing stores nearly 75 percent of jobs are retail salespersons or retail supervisor, but only 8 percent are cashier.

The Washington Post correctly reported the average annual nationwide wage for retail salespersons at $11.14 an hour for the May 2005 Occupational Employment Survey. However, the amount is misleading and does not reflect the true circumstance of Circuit City or retail sales work. Selling skills have value reflected in the pay patterns of cashier and retail salespersons.

The Bureau of Labor Statistics publishes a percentile wage range within their Standard Occupational Classifications. For both cashier and retail salespersons they report wages for the 10th, 25th, median, 75th and 90th percentiles for the national economy, but also all the states and metropolitan areas.

The 10th percentile wage for cashier is $5.98 an hour from the May 2005 Occupational Employment Survey. The 10th percentile wage for retail salesperson is $6.54. In other words 10 percent of those with jobs in these occupations work for less than the 10th percentile wage and 90 percent earn more. The retail salesperson only earns about 9 percent more than a cashier at the low end of the wage scale. If we look at the 90th percentile wage for cashiers it is $11.20, but the 90th percentile wage for retail salespersons is $17.91, which is 60 percent more cashiers at the top of the pay scale.

The difference of the wage structure for the two jobs reflects the different possibilities for advancement where on-the-job experience can significantly increase the value of an employee. A cashier has little room to improve job performance because taking money and making change is the same today as it is tomorrow. Effective selling on the floor of Circuit City or elsewhere takes some time and effort to learn, which is reflected in the national 90th percentile wage of $17.91 an hour for retail salespersons.

The Washington Post article cited above informed us that Circuit City put a cap on pay for its sales staff, reported at $15.50 for computers. Anyone above the cap was regarded as overpaid and among the 3,400 dismissed as overpaid. So not only did Circuit City stupidly throw away its most effective employees doing harm to itself and its stockholders, it failed to understand who or how many are overpaid. There appears to be only one. Now you know.

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White Collar Rules

The Bush administration decided to make a change in America’s work rules intended to harm managerial employment and lower business employment costs. They decided to abolish over time for management or managerial employees. “The exemptions do not apply to manual laborers or other “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy.”

The Federal Government already gets right in the middle of the wage and effort bargain with the Fair Labor Standards Act, which for many years required pay at time and a half for work over 40 hours a week. Probably managers have always put in some uncompensated overtime, but the Bush cabal decided to change the rules here so the Department of Labor drafted “White Collar Rules” governing over time. The term White Collar Rules is not my term. It comes from the BLS web site.

These new rules abolish overtime pay for executive managers who manage an enterprise or customarily manage a department or division of at least 2 or more full time employees. To be in the executive category a manager must customarily and regularly direct work and have authority to hire and fire other employees.

The rules above are for executive managers, but to give the rules broad application, other types of managers are also defined and described. Some other categories like administrative employees, learned professionals, creative professionals, computer employees, and outside sales employees were included in the “White Collar Rules.” Administrative manager rules specify that employees only need to be paid on a salary basis of $455 or more a week with work that is office work or non-manual work. Their work only needs to include “the exercise of discretion and independent judgment with respect to matters of significance.”

In the learned professional category employees only need to compensated on a salaried basis at $455 a week or more and have “advanced knowledge defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment.” There are a few more categories but you get the idea. We can only speculate what work Bush appointees might argue fits these definitions.

Leaving out hourly rated manual laborers and “blue collar” workers from the regulations outlined above is not a concession. It gives the impression of a concession for political and public relations purposes, but employers can cut off individual hours before paying time and a half as overtime. Putting welfare mothers in the workforce as America does, the continued immigration of Mexican labor and the needs of adolescents and college students for part time work guarantees plenty of walk on applicants for part time jobs.

Encouraging overtime, paid or unpaid, assures more people will be looking for jobs. However, pressuring the managerial ranks to give up overtime compensation turns cost into profit since free work from managers makes it cheaper to employ someone. The 40-hour work has been the standard full time workweek for more than eighty years, but managers working 50 or 60 hours a week assures fewer people in the managerial ranks. Two managers working 60 hour weeks equals 3 managers working 40 hours a week. Rigging the rules to coerce people into unpaid over time assures a drop in managerial ranks.

Just in case you doubt the drop in the managerial ranks we can take a peek at the Occupational Employment Survey published by the Bureau of Labor Statistics. BLS reports a drop of 1.9 million establishment jobs for managerial occupations in its Occupational Employment Survey. That is 7.8 million in November 2000 but just under 6 million in May 2005. General and operations managers, administrative service managers, financial managers, food service manager, all down. The only categories with more managerial staff are education administrators and social and community service managers, both categories employed by government and often paid with tax dollars.

The totals above are for establishment employment, meaning they are job totals at firms, non-profit associations or government. Managerial employment has the highest wages of America’s occupational classifications. Even though the managerial ranks continue to decline, managerial wages go up and they go up faster than the rate of inflation. Some of the former managers move into self-employment as consultants or into consulting firms where they sell managerial advice on an as requested basis. Some move back into the professional occupations they started in before moving into management: engineering, law architecture, and so on. The decline in managerial ranks creates a surplus of older applicants for professional jobs requiring college degree skills and helps explain some of the difficulty college graduates are having moving into career employment.

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