Naked Capitalism Link of the Day

Today's link: Employers Spend on Equipment Rather Than Hiring, at the NYT:

Workers are getting more expensive while equipment is getting cheaper, and the combination is encouraging companies to spend on machines rather than people.
“I want to have as few people touching our products as possible,” said Dan Mishek, managing director of Vista Technologies in Vadnais Heights, Minn. “Everything should be as automated as it can be. We just can’t afford to compete with countries like China on labor costs, especially when workers are getting even more expensive.”
Vista, which makes plastic products for equipment manufacturers, spent $450,000 on new technology last year. During the same period, it hired just two new workers, whose combined annual salary and benefits are $160,000.

This is the cost of increased mechanization contributing to increasing productivity.  When my former boss and I talked last fall, this was exactly his prediction, that employers would invest in equipment and not hire workers.  He was dead-on. There has to be some major discussion about where we expect new jobs to be created, and what we expect people to do to make a living.  The loss of good paying low-skill and semi-skilled work has hollowed out the middle-class.  This recession follows two smaller, but long-lasting recessions in 1991 and 2001.  Each of those showed a different pattern of rehiring than other recessions, because the manufacturing jobs were going away and not coming back, as opposed to people being laid off while inventories came down, then brought back quickly, as things happened in the past.  Take a look at this chart from Calculated Risk:

This is the slow transition of the economy from manufacturing to services, and the changes in the labor market need to be discussed, but nobody wants to have that discussion.