The Future of Poverty & Jobs

Posted by David A. Peterson on 15. December 2016 in Economics, Issues, Jobs |

The Time For Vocational School Is NOW


In the 2004 football movie Friday Night Lights injured star running back “Boobie” Miles (played by Derek Luke) is sitting on his porch contemplating his future. Up rolls a garbage truck and 2 men jump off the back to collect the neighboring cans. You can see it in Boobies eyes, he’s just realized that he has no skills and football may be over.

In another scene after Boobie cleans out his locker he famously says to his uncle (Grover Coulson), while crying and distraught “What am I gonna do if I can’t play football? I’m not good at nothin’!”

Flash forward to trash day 12/7/2016 and I’m following the garbage truck out of the neighborhood. I realize nobody jumped off the truck, then I see it… the robotic arm jumps out the right side of the truck, dumps the can’s contents into the truck and gently places the can back down.

As I see this I’m actually thinking about Boobie Miles, that in 2016 he wouldn’t have a chance at a job on the back of a garbage truck. The only worker left on the truck is the driver and there should be no doubt in anyone’s mind that the driver will also be replaced by automation very, very soon.

Think about the low skilled jobs already lost. When was the last time you stopped at a toll booth? The last time you paid a parking attendant? The last time you skipped the ATM to actually go into a bank? The last time you actually went into the bank to help you balance your checkbook? The last time you had film developed? Etc.

In addition here are low skilled jobs soon to be lost: Truck drivers, cab & Uber type drivers, fast food counter personnel, grocery store check-out clerks, UPS/FedEx drivers and sorters. Warehouse pickers, forklift drivers, etc, etc.

Just to pile on, it’s not only the low skilled worker that will be facing job losses. We won’t need automobile insurance salespeople if the car’s onboard computers keep the cars from wrecking. We won’t need near as many mechanical or electrical drafters in the building industry since some of their work is “rules based” and could be automated, etc.

I’m not as worried about the drafters and salespeople falling into poverty. As the higher skilled, professional, even those on today’s automated factory floor are replaced they will seek out & accept retraining and advance their careers in a direction the modern economy will be heading.

It’s not all bad news there are jobs being created, good paying highly skilled jobs. But low skilled jobs will soon be extinct. With the loss of these jobs poverty will spike. We are already seeing it. Older factory workers that used to work on a production line have been replaced by automation. Now the same older worker is working at 2 and 3 different low end jobs just to make ends meet. Back in the day teenagers bagged groceries, or worked at the McDonalds counter, now it’s middle aged and older holding these entry level jobs.

I think all of us saw the unemployment rate for the young increasing, however initially it just happened so slowly it was hard to put a finger on it. The Bureau of Labor Statistics pegs the summer youth labor participation rate in 1989 at 77.5% in the summer of 2016 it was at 60.1% (Source: http://www.bls.gov/news.release/youth.nr0.htm)

During this time most of those youth employment positions were not actually lost. They just moved from them to older workers. In addition so many low skilled working jobs have been lost to automation that now it’s not just the young getting hurt. It’s now low skilled, low waged families.

Want a staggering statistic? The total number of people receiving food stamps (SNAP Program) today is over 45 Million! (Source: http://www.fns.usda.gov/sites/default/files/pd/SNAPsummary.pdf) Here’s a reference point for you; at the turn of the 21st century the number on food stamps was 17 Million! Clearly poverty is advancing.

So low end jobs are becoming extinct and poverty is the outcome. We’re not going to stop automation, it’s only going to accelerate. This means that in the short term we can’t slow down the advancement of poverty. But can we stop generational poverty? In my opinion the answer is yes – and if as a nation we are to compete with the world it’s going to be a must.

High paying 21st century jobs are being created by the millions. To get these jobs low skilled workers will need to be trained to operate the new machinery. Notice I didn’t say “retrained.” Automation hasn’t advanced enough to allow many of today’s low skilled worker the ability to operate the new machines. These machines are just to complicated. Too much math, and/or technical skills are needed by today’s skilled workers to operate the average machine. Many of these high paying 21st century jobs are probably being filled with H1B visas today.

One day (soon) the machines will become so advanced that low skilled help as we know it today will no longer be needed. At that point this group of workers will need to be lifted out of poverty with some form of national living wage program.

Today we have generational poverty with no where near enough wealth for a national living wage program. We need years of machine generated productivity increases to create the wealth needed to establish the national living wage program. In the meantime today’s patchwork of Food Stamps (SNAP), Housing Assistance, Educational Assistance, Unemployment Insurance, Healthcare Assistance, etc. will continue to leave (i.e. leave – not lead) low skill workers into poverty and this is happening at an accelerated pace.

In my opinion the only way to stop generational poverty is through education. I’m specifically talking K-12. One mans way out:

To advance our society and help break generational poverty all kids should be placed into educational buckets based on ability at an early age. Fundamentally the buckets will be based on those attending college and those tracked for vocational training.

Segregate by Ability

Before everyone gets fired up, we already do this with “gifted” students. They are assigned to special classes as early as 1st and 2nd grade. By middle school they have already taken the SAT, and are assigned to AP (advance placement) classes in high school. In some cases they are doing dual college/high school enrollments. This group is clearly projected to attended college and beyond.

It’s the rest of the kids, which is the vast majority of children, who get lumped together in classrooms across the nation. They’re expected to go to college but that thinking is so 1990s. It’s this group that needs to be segregated. I’m also contending that most of this group should be moved toward advance vocational schools.

I say advance vocational schools because basic vocational instruction should be taught throughout K-12. Computer programming, solar installation, wind turbine maintenance, electronic repair, etc.,etc., etc., should be taught and taught early alongside traditional shop classes like carpentry, and auto mechanics. Give the kids the exposure and let them choose a profession in the advanced vocational schools.

If we segregate the classrooms based on educational ability we can tailor the education to fit the kid. Example: Art & music classes will be available to those show aptitude and that lean towards those professions. I see elementary, middle, and high schools based on future professions not just the 3R’s.


There will always be a big blow-back from parents who know their child is the smartest kid that ever lived. With that being said I believe that parents should have the right to push their kid into the right bucket for the family, just as they do today with AP classes. They will fight to get their child in those classes. None of this happens in a vacuum parents are going to want a say in their child’s future.

But as a nation we have to realize that you don’t need to go to college to learn how to code. You never went to college to become a machinist yet this type of job is changing and will need advance vocational education. As a nation we have to get behind the need for 21st century jobs. Individual parents may have the right to push their individual child into a bucket but as a nation the vast majority of children need to be directed towards a vocation.


Education is the key. Today students are lumped into a giant vat, the end goal is high school graduation. But today’s graduates are not walking right into jobs like their grandparents did. The shame of it is jobs are available.

Placing kids into buckets will allow them to be in classes with their educational peers. They will be competing for A’s in classes suitable for their success. Their self-esteem will be high knowing from an early age they are training for a job in the 21st century not being left behind because they don’t understand English literature.

In the short term poverty from automation is going to increase. There’s not much we can do about that. However if we act fast and reform our educational process I feel that within a generation we have the ability to turn the situation around.

In conclusion poverty will not be completely tackled until we get a national living wage program. But today we do have the means to help break down generational poverty by preparing our youth for the 21st century. I propose a substantial increase in vocational training by segregating children by ability.  In the long term it’s either help break generational poverty or substantially increase the number of H1B visas; somebody in America has to work in the 21st century. Why not try to help Americans first?

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Obamacare 2017

Posted by David A. Peterson on 28. November 2016 in Economics, Health, Issues, Opinion |

Over the years I have written several opinionated blog posts on Obamacare. Now that the Republicans control the Legislative & Executive branches of government it’s time for them to govern on this subject.

ObamaCare needs to be repealed and replaced.

As I wrote in October of 2013 (see article below) Obamacare has permeated the healthcare community. History will write the official demise of this legislation, but it’s safe to say that sick people enrolled, healthy young people did not.

Secretary Sebelius to Testify

This sick vs. well led me to the main opinion of the 2013 post in which I wrote:

“We need to start looking at Plan B – How does the nation fund (subsidize) insurance for people that desperately need it?”

What the Obamacare exchange has effectively done well was to gather up all those that desperately need health insurance and gave them a central place to purchase this vital medical instrument.

I agree ahead of time that we didn’t have to blow up the entire insurance industry to make this happen. However… We badly need a bipartisan bill. We can’t replace bad legislation with more crap. Republicans have to lead, but they must find some leaders within the Democratic party to help repeal and replace the bill.

To bring the Democrats and Republicans to the table I propose:

  1. For Democrats: The new bill be named the 2017 Barack Obama Affordable Health Care Act. Give the man his due, he tried, he just doesn’t have a strong business acumen.
  2. For Republicans: The new bill should be stripped down to the following six items. This will leave us with a passable replacement bill and will allow substantial issues that are extremely partisan for the future debate.

3 items I think both Republicans & Democrats will accept:

  1. Kids staying on parents plan until age 26 or longer.
  2. Allow health insurance providers to sell across state lines.
  3. Keep the exchange format and possibly the current platform.

3 items I believe that through negotiations the bipartisan participants will compromise on:

  1. Pre-existing conditions for the unhealthy to be firmly addressed through a national high risk pool.
  2. One size fits all insurance plans to be scraped; new health plans including HSAs to be created by the marketplace.
  3. The new Act be truly revenue neutral – sorry Republicans this will require some form of tax. You can’t be both conservative and for an unfunded mandate.

Once these six items are tackled and the new Act becomes law the hard part begins. Health care is a mess, costs are rising, and were rising even before the original Obamacare.

Core Issues:

Future bills, after Obamacare 2017, of which there will be several should be tackled in a piecemeal manner. This will allow an up/down vote on specific core issues. Cost control, healthcare inflation, tort reform, fraud, abuse, Medicaid & Medicare, and much more needs attention.

To show the difficulty of just one of the core issues, I would like to touch on the economics of rising costs – i.e. Healthcare Inflation. Something doesn’t quite make sense.

Now that we have had 4 solid years of Obamacare throttling costs, there must be some good data out there. As an example we know that out of pocket expenses, especially deductibles, have gone up significantly. Shouldn’t we have seen a serious reduction of medical services by those on company plans or those healthy people on Obamacare?

The simple economic rule is that as cost rise usage of the service should fall. In this case cost didn’t just rise they shot up.

A deeper look into those on Obamacare should reveal that those who are sick used the program to the fullest. While those healthy individuals should have avoided procedures. With the loss of millions of medical procedures such as EKGs, MRIs, Knee Replacements, medical tests, etc., the costs for all these services should be dropping like a rock.

What happened? Was there a drop in services used? Or did we (taxpayers) actually cover the additional deductibles so the increase was a  Net-0 for the end user?

Here’s another way to look at it; if all the really sick people are now on Obamacare shouldn’t private and/or company insurance, in which the deductibles also rose through the roof, seen costs drop?

If fewer people are going to the doctor because they are basically well and they have high deductibles, then the number of all office visits requiring deductibles being met should be dropping.

If deductibles had gone up only 5% then maybe these costs were absorbed somewhere else. But that’s not what happened. Deductibles went way up, example: For individuals the amount rose from $500 to $1,500 per year. Family plans (again just examples) $1,500 to $6,500 a year.

An average family can’t absorb an additional $6,500 a year, that’s 3 to 6 months of mortgage payments or 1 to 2 years of car payments. That’s 8 months worth of groceries! That money isn’t laying around. And if it is not laying around it can’t be spent on healthcare.

…and we’re talking yearly family healthcare expenses with just rising deductibles we haven’t mentioned the increasing premium payments.

If we are not spending the money on healthcare then there should be less dollars in the overall healthcare system. Why isn’t there or where is the deflationary spiral in the health care system?

I hope I have shown just how complicated just one core issue, healthcare inflation, will be to tackle. The original Obamacare Act should have produced enough empirical data over the past 4 years to lead us to some conclusions on at least this one core issue.

I believe the core issues are all very complicated and need to be addressed in a piecemeal manner. My advice: Write and pass a stripped down Obamacare 2017 that both parties can agree on then, and only then attack the core issues. Please don’t blow up the entire system again. Bring to the table those that have the business acumen, that can speak to the issues and please do it in a bipartisan way.

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