Nearly 5 Million US Jobs Depend on Trade with Mexico

Arguments that policies such as NAFTA have killed American manufacturing jobs often ignore the many other American jobs that such deals create and support.

When President-elect Trump talks about scrapping the North American Free Trade Agreement (NAFTA), his argument rests on the notion that the agreement is one of the main culprits of job loss in the states. American companies, critics argue, have used NAFTA to send manufacturing jobs to Mexico—where labor is cheaper—leaving domestic workers unemployed. It’s true that companies have been enticed to send jobs abroad—but often this argument misses the fact that as some American firms moved work across the border, there’s also been reciprocity. Now, millions of American jobs are dependent on trade with Mexico, and Mexican corporations have created thousands of jobs in the U.S.

New research from the Mexico Institute at the Wilson Center, a nonpartisan think tank based in Washington, D.C., found that trade with Mexico creates approximately 4.9 million jobs in the United States. In other words, one out of 29 American jobs depends on preserving an economic relationship with the U.S.’s southern neighbor. Researchers came up with this 4.9 million figure by calculating three economic shifts that would likely occur if trade with Mexico ended: the number of American jobs that are involved in producing exports to Mexico, which would be lost; the number of jobs that would return to the United States to produce the previously imported goods; and the number of jobs that would disappear if the money American consumers and companies saved from buying lower-cost imports were gone.

The impact of those first two shifts will mostly offset each other—with many of the jobs lost in Mexican production returning to the U.S. or moving elsewhere—meaning that most of the 4.9 million jobs lost by gutting NAFTA are those that are tangentially related to trade with Mexico, says Christopher Wilson, deputy director of the Mexico Institute, and author of the report. The model they used— called the Global Trade Analysis Project—analyzed national data on employment, production, imports, and exports in 56 industries. It found that the vast majority of jobs that tangentially depend on trade with Mexico are in the service sector, such as retail, finance, and healthcare. For example, when an American consumer buys a washing machine made in Mexico, he or she can save about $100 since it’s cheaper for American companies to manufacture appliances in Mexico than in the United States. The consumer can then spend that $100 elsewhere, maybe at a restaurant or a clothing store. That money—which is spread across the economy instead of spent on a single purchase—helps keeps people employed in other sectors, according to the report. Though it’s hard for economists to know exactly where consumers spend the extra money that they save by buying cheaper goods, Wilson and researchers at Purdue University calculated the impact at an aggregate level.

The fact that so many jobs would disappear if the United States stopped trading with Mexico shows how much the economies of both countries have become dependent on one another, says Wilson. “There is no longer such a thing as an American-made car, a Mexican-made car, or a Canadian-made car—the car is made across borders,” he says.

The jobs that are dependent on Mexico are not spread evenly across the United States, most are located in California, Texas, New York, and Florida. And while economists tend to view global trade as good for the American economy overall, they also acknowledge that it has hurt some American workers, particularly those in the Rust Belt without college degrees, whose well-paid manufacturing jobs have migrated abroad.

While the ability of American companies to move jobs to Mexico has certainly had both a positive and negative impact, little attention has been paid to the number of Mexican corporations that have opened operations in the United States—creating more than 120,000 jobs. To be sure, American companies create far more jobs in Mexico, but the relationship between the economies is still more symbiotic than is sometimes portrayed.

Take the example of Mexico City-based Bimbo, the world’s largest maker of baked goods. Thanks to the economic relationship between the two countries, Bimbo has opened more than 60 bakeries in the United States, which employ more than 21,000 people. The company owns several recognizable brands found in American supermarkets: Sara Lee desserts, Entenmann’s cakes, Arnold bread, Ball Park hotdogs, and Thomas’ bagels. Other big Mexican employers in the United States include cement-maker Cemex and Mission Foods, both of which employ American workers.

Al Zapanta, head of the U.S-Mexico Chamber of Commerce, says that the future relationship between the two countries is more complex than one moving jobs north and the other moving jobs south. American and Mexican companies are increasingly creating joint ventures, with each player responsible for different parts of the supply chain. Zapanta points out that many fruit and vegetable farms in Mexico are now co-owned by American companies, and workers in both countries are responsible for carrying out different tasks, whether that’s growing, harvesting, sorting, transporting, and distributing the produce that ends up in American supermarkets. “What we are doing is mixing and matching marketplaces and labor forces,” says Zapanta, who says he’s been talking with President-elect Donald Trump’s transition team about ways to improve NAFTA.

Most economists believe that trade deals always create winners and losers. The question then is who will wind up profiting or suffering from the new administration’s policies. Zapanta is optimistic that the new administration will renegotiate the trade deal to better reflect the complexities of the modern economy, which is more integrated than ever before. He cited Trump’s book, The Art of the Deal, as a glimpse of what could happen with trade between both countries. The key takeaway from the book—and for Trump as president—he says, is making sure that all sides at the negotiating table walk away feeling like they won.

By Alexia Fernandez Cambell – www.theatlantic.com – December 9, 2016

Mexico’s Minimum Wage Rose Nearly 10% on January 1

New York – Mexico’s minimum wage increased by almost 10% on Sunday, in a jolt to the system meant to stoke the poorest workers’ buying power, which has been eroded by recessions and past bouts of high inflation.

But the prospect of higher earnings is doing little to dent pessimism among consumers, who head into the new year facing rising fuel costs, higher interest rates and a weakening peso that closed 2016 near record lows against the U.S. dollar.

Labor, government and business leaders on the Minimum Wage Commission agreed to raise the daily minimum wage to 80 Mexican pesos, or about $4, from 73 pesos, a break from a years-long custom in which annual increases were roughly in line with inflation.

The commission split the increase into two parts: Four pesos a day to restore purchasing power and on top of that 3.9%. Authorities hope the 3.9% will be used as the benchmark for other wage negotiations, avoiding the so-called lighthouse effect where minimum-wage increases fuel demands across the board and threaten an inflationary wage spiral.

Both the wage and fuel increases are inflationary, although overall prices shouldn’t go up enough to wipe out the “very generous increase” in the minimum wage, said Alberto Ramos, chief Latin America economist at Goldman Sachs. With inflation likely to be somewhat above 4% in 2017, the lowest wage earners would still see a 4 percent to 5 percent pay raise, he added.

The minimum-wage increase followed several years of studies and discussions on the effect it could have on productivity, employment, and inflation.

By Anthony Harrup – The Wall Street Journal – January 2, 2017

What The Trump Immigration Ban Means For Business

Approximately 15 minutes before the close of business on Friday (Eastern time), President Trump signed an executive order (full text here) to bar Syrian refugees from entering the U.S. and suspend all refugee admissions for 120 days. His order also blocks citizens of Iran, Iraq, Libya, Somalia, Sudan, Syria, and Yemen—all Muslim-majority countries—from entering the U.S. for 90 days, regardless of whether they’re refugees or not.

The order sparked protests at airports across the country and spurred business leaders to speak out against the administration.

The pushback shouldn’t surprise anyone. As Angelo Paparelli, a partner in the Business Immigration Practice Group of Seyfarth Shaw LLP, explains: “These orders strike at the core of their operations, and at their commitment to civic engagement, and the rule of law.” Paparelli notes that all of these businesses run on human capital, and that employers’ ability to immediately deploy vital personnel anywhere on the planet, wherever business calls, without regard to place of birth or nationality,” is vital to the creation of new jobs and for the U.S. to continue to lead the world economy.

Data from the National Foundation for American Policy (NFAP), a nonpartisan public policy research organization focusing on immigration and related issues, finds that a little more than half of U.S. businesses valued at $1 billion or more have been started by immigrants. NFAP also found that immigrants make up over 70% of the key members of management or product development teams at these companies.

WHAT THIS MEANS FOR FOREIGN WORKERS CURRENTLY EMPLOYED IN THE U.S.
Paparelli anticipates the added procedural hoops and bureaucratic delays will arise from the executive order. As the New York Times reported, White House Chief of Staff Reince Priebus said that “border agents had “discretionary authority” to subject travelers, including U.S. citizens, to additional scrutiny if they had been to any of the seven countries mentioned in the executive order, but it was not clear what that would look like in practice.”

Paparelli says that the last thing business leaders of U.S. multinational companies want to hear is that their green-card-holding employees cannot board a plane and be swiftly cleared by U.S. Customs & Border Protection. That’s because at this point, they’ve “reassured their nervous workers who have a choice of countries in which to work, who spent millions in lawyers’ fees, government filing fees, advertising for labor-market recruitment tests, and relocation expenses to comply with our complicated immigration laws,” he says.

HOW THIS COULD IMPACT FUTURE HIRING
Paparelli also observes that the executive order instructs federal agencies to study and issue a report on whether to require more in-person interviews at U.S. consular posts and immigration offices in the U.S., while also adding a nebulous requirement that they evaluate the “likelihood of [an employer-sponsored foreign worker] becoming a positively contributing member of society and the applicant’s ability to make contributions to the national interest.” The order does not specify how employers need to prove this.

This executive order did not specifically call out those workers who hold H-1B visas, one of the largest guest worker programs in the U.S. Others include international student work visas, business traveler visas, and visas for international students completing U.S. degrees. However, another memorandum from the White House issued last week suggests that the president may be close to signing another executive order aimed at limiting these skilled guest-worker programs.

Between 2005 and 2014, the U.S. government granted the top 10 IT outsourcing businesses 170,535 new H-1B guest worker visas, according to Ron Hira, associate professor of public policy at Howard University and a research associate with the Economic Policy Institute. These are jobs, Hira argues, that should be filled by U.S. citizens. However, research from the NFAP counters that their data show that for every H-1B position requested, U.S. technology companies increase their employment by five workers.

WHAT EMPLOYERS SHOULD DO NOW
CEOs and managers should keep communication open with their staff, and Paparelli recommends that employers let workers know that nothing is yet clear about the legality and scope of the orders. “There’s no immediate need to panic or take brash action,” he maintains. But he suggests that evaluating alternative options under the immigration laws or considering fallback options for employment if your company has a foreign office in a country whose immigration laws are more hospitable are good first steps.

Paparelli advises employers to stay on top of the latest developments, directly or through legal counsel. Next, he says, they must develop a new corporate policy or revise existing policy on the sponsorship of foreign workers affected by the executive order. “The policy should also include existing green card holders and other foreign citizens with temporary work visas or work permits who may be hurt by the Trump executive orders,” he says, and communicate it clearly to staff.

It’s possible, he says, that employers of especially valued or long-tenured workers might decide to sponsor them for other immigration benefits or participate (or encourage the employees to participate) in individual or class action litigation to challenge the orders in court. In some cases, though, Paparelli points out, the employer may be required to terminate a worker if the executive order or its interpretation or implementation under the immigration laws requires it.

By Lydia Dishman 02.02.17 5:00 AM – www.fastcompany.com – February 2, 2017

These Are The Top 5 Workplace Trends We’ll See In 2017

According to Glassdoor’s economist, crazy perks and the gig economy will slow down while automation will speed up.

This was a “remarkable” year for hiring, according to Glassdoor’s chief economist, Andrew Chamberlain. He says that the U.S. added an average 180,000 new jobs per month, well above the “break even” pace of job growth of 50,000 to 110,000 economists estimate the economy needs to keep Americans fully employed.

Pay is also on the rise. Median base pay for U.S. workers was up 3.1% from 2015, the fastest pace in three years. Can we top all that in 2017?

According to Glassdoor’s newest report on job trends, there are also a record number of unfilled jobs—5.85 million as of April—which represents the most since the BLS started tracking job openings in 2000. That’s compounded with the fact that every employer is hiring for tech roles, Chamberlain observes, and there are just so many talented candidates out there.

2017 JOB TREND #1: HR WILL TRANSFORM ITSELF

Which is why he’s predicting that 2017 is going to be the year human resources transforms itself into “people science.”

Chamberlain argues that the rise of big data has infiltrated and transformed everything from product design to finance. As businesses generate more data from their employees and customers, good analysis of that data can lead to smarter decisions, shorter project time lines, and happier consumers.

Unfortunately, HR and recruiting have been largely absent from this evolution, says Chamberlain. Data scientists, one of the most in-demand positions for the past two years, haven’t been much of a presence in HR-related tasks. But as Chamberlain points out, “Using data science in HR to make even small improvements in recruiting, hiring, and engagement has the potential for huge benefits to organizations.”

A good place for HR to start is by tapping into workforce analytics that can track every stage of an employee’s progression through a company from on-boarding, through training and promotions. These are available at low cost through a number of third party providers.

Another solution is to use a sentiment tracker to gather feedback in real time. Amanda Moskowitz, founder of the startup leadership sharing resource Stacklist, told Fast Company in a interview[/url] that founders of companies that don’t have formal HR departments are using tools like Glint and Small Improvements. Other available tools include platforms for A/B testing to experiment with different methods of workforce management. Chamberlain points out “there are many low-hanging fruit today for better data science in HR” and they don’t cost much.

2017 JOB TREND #2: MANY THINGS GET AUTOMATED BUT WE DON’T LOSE OUR JOBS

There’s a lot of talk about automation and how much its advancement will make human workers obsolete. Chamberlain cites research from the Journal of Economic Perspectives that indicate mass layoffs due to automation are unlikely. This correlates with findings from the McKinsey Global Institute (MGI) on the potential for automation across 54 countries and more than 2,000 work activities. The report found that the number of jobs that can be fully automated by adapting currently demonstrated technology is less than 5%. That number could go as high as 20% in some middle skill categories.

Says Chamberlain: “The jobs that will be most affected by automation are routine jobs that need to be done the same way and that don’t require much flexibility or much creative judgment.” As such MGI found that about 60% of all jobs have a least a third of activities that could be automated based on current technology such as answering email or scheduling meetings. “Workers increasingly need to build skills that are complementary to technology—learning to run the machine, not doing the same work the machine automates,” Chamberlain observes.

2017 JOB TREND #3: NONTRADITIONAL BENEFITS WILL BECOME LESS POPULAR

From assistance with paying back student loans to unlimited food and beverages, the benefits packages at many companies have altered the standard health insurance and 401(k) matches. However, Chamberlain sees a move away from the more exotic perks and benefits.

That’s because Glassdoor’s research revealed that perks such as gym memberships, charitable giving, and other nontraditional offerings don’t boost employee satisfaction as much as health insurance, 401(k) matches, and paid time off. If the goal of the compensation package (including both pay and benefits), says Chamberlain, is to “serve as a targeted investment, delivering great employee engagement, and keeping talent on board long term,” then companies should be rethinking their offerings in 2017.

2017 JOB TREND #4: WE’LL MAKE PROGRESS NARROWING THE WAGE GAP

Chamberlain believes this is the year the gap will narrow because we’re at a tipping point. More data is available than ever, transparency is a core value for many companies, and business leaders are recognizing that equal pay isn’t just a compliance issue, it’s a necessity to retain talent.

Sixty seven percent of U.S. employees said they were not likely to apply for a job at a company where men and women were paid unequally for the same work, according to Glassdoor’s research. Expect to see wider adoption of building analysis into companies’ pay practices in the coming year, says Chamberlain.

2017 JOB TREND #5: THE GIG ECONOMY WILL SLOW DOWN

Chamberlain expects the growth in the gig economy will taper off in 2017. He offers three reasons for the slowdown.

Despite the visibility of Uber, Lyft, Airbnb, Task Rabbit and others, their impact is still quite small. A J.P. Morgan Chase Institute study found only about 4.3% of U.S. adults had ever earned income from an online “gig” platform as of June 2016, a figure that’s been declining over the last three years. Another study from the EPI made a similar discovery, that the freelance economy isn’t growing as much as we think. Gig work is inherently based on demand, and in times of less demand, those gigs dry up, further gutting potential growth.

Another limit to growth is that gigs by nature have to be simple and discrete projects or transactions. As Chamberlain notes,

“The fastest growing jobs today are ones that require human creativity, flexibility, judgment, and ‘soft skills.’ That list includes health care professionals, data scientists, sales leaders, strategy consultants, and product managers. Those are exactly the kind of jobs least likely to function well in a gig economy platform.”

Therefore he says, it’s not likely that you’ll be able to get legal, financial, medical, engineering, or other services through a gig platform in 2017 and beyond.

It’s a great time for both employers and workers to set themselves up to take advantage of the opportunities represented by these trends, says Chamberlain, so “Invest in skills and technology now while times are good.”

By Lydia Dishman – www.fastcompany.com – December 15,2016

Despite Fears, Mexico’s Manufacturing Boom is Lifting U.S. Workers

From: Natalie Kitroeff from www.latimes.com | August 21, 2016

Enrique Zarate, 19, had spent just a year in college when he landed an apprenticeship at a new BMW facility in San Luis Potosí, Mexico. If he performs well, in a year he’ll win a well-paid position, with benefits, working with robots at the company’s newest plant.

Within a decade or so, most of the BMW 3 series cars that Americans buy will probably come from Mexico, built by people like Zarate.

“When you start with such little experience, and get such a big salary, it’s unbelievable,” says Zarate, whose father is a taxi driver and whose mother is a housewife.
Enrique Zarate, 19, at a BMW training facility in San Luis Potosí, Mexico. (Joy Tirado / BMW)
Mexico is in the throes of a manufacturing boom.

Exports from Mexican factories have jumped 13% since 2012. The country already ranks as the seventh-largest producer of cars in the world, and Chrysler, Honda and Volkswagen have major operations there. Over the next five years, another wave of big automakers, including Ford, Audi and Toyota, plan to bring new plants online.

And it’s not just cars. Bombardier, Cessna and Hawker Beechcraft have opened aircraft assembly lines in Queretaro and Chihuahua, Mexico. Plastics and iron and steel exports have steadily risen.

In the process, workers like Zarate are being lifted into the middle class by the thousands.

That sounds like an exported version of the American dream, circa 1965, in places such as Dearborn, Mich., or Marysville, Ohio. Indeed, the influx of those types of jobs to Mexico has enraged Ford employees in Wayne, Mich., and the makers of furnaces in Indianapolis.

Donald Trump called the North American Free Trade Agreement “the worst trade deal in history.” Bernie Sanders said that an American company moving to Mexico is “the kind of corporate behavior that is destroying the middle class.” Even Hillary Clinton, who once praised the pact with Mexico, has expressed increasing skepticism about trade deals.

But despite what you might have heard on the presidential campaign trail, Mexico’s manufacturing surge has not been an unalloyed disaster for American workers.

U.S. manufacturing production, it turns out, is rising as well. Factory output has nearly reached its all-time high this year, and is up more than 30% since 2009.

Partly thanks to automation, factory jobs are still way off from their peak of more than 19 million in 1979. But they have been climbing slowly since the end of the Great Recession in 2009. Over the last six years, U.S. manufacturers hired 744,000 new workers, an uptick of 6%.

The bottom line, say economists and company executives, is that what’s good for Mexico’s factory workers is good for some U.S. workers too.

That’s because the chain of goods that supplies Mexico’s factories is very different from the one for China. Simply put, Mexico needs to consume a chunk of U.S. goods in order to make its own.

Around 40 cents of every dollar that the United States imports from Mexico comes from the U.S., compared with just 4 cents of every dollar in Chinese imports, according to the Woodrow Wilson Center. The influx of auto factories in Mexico might sustain hundreds of supplier jobs in Deforest, Wis., or Calhoun, Ga.

“Instead of thinking of Mexico as a separate part of production, it’s now part of our manufacturing process,” said Raymond Robertson, an economist at Texas A&M University. “Mexican companies aren’t just producing products that rival ours, they are producing parts of our products.”

The evolution of factory work in the United States, Mexico and China is illustrated by Evco Plastics, a family-owned, Wisconsin-based plastics maker.

Dale Evans, the owner of Evco Plastics, is not ashamed to admit that recently he’s been hiring more people in Mexico than in Wisconsin — or Dongguan, China.

In the last two years, Evco has added 100 people to its three Mexican plants, and has been hiring more slowly in its five U.S. facilities. Meanwhile, the company is shrinking two Chinese plants into one.

But Evans says that being able to give clients the option of getting their plastic parts made in Mexico more cheaply has allowed him to move much of his 500-member staff in Wisconsin and Georgia to higher-skilled tasks, such as programming robots.

“The easy things — people picking things up and putting them in boxes — that [work] left,” said Evans. It’s too expensive for him to employ rote manual laborers in America.

He has instead invested in training his employees to maintain huge, potentially dangerous robots handling plastic parts. “The difficult things you can do with machinery, that stayed.”

The shift is driven in part by labor costs.

Evans says he used to pay Chinese workers $1 an hour, but now pays them closer to $3 per hour. In Mexico, he says, he now pays a typical plastics assembler around $4 per hour, which is just a dollar more than what he paid when he first set up shop there in 2001.

“It’s just gotten cheaper in Mexico,” Evans said.

One of the workers who has benefited is Tania Berenice Salazar, a 25-year-old from Monterrey. The single mom was working as a cashier earning about $1.60 per hour before she got an entry-level job packing up plastic materials at Evco in 2012.

Now she supervises other packagers and makes about $1.80 per hour, even as the peso has plummeted. That’s significantly above the minimum wage in Mexico of around $4 per day.

“I feel that this is a step forward. I am rising, I am not stuck,” Salazar said.

As she spoke, two nearby plastic injection robots were loudly stamping out pieces of dashboards for Mexican-made Kia sedans and lamp fixtures. The drab Evco factory floor in Monterrey sounds like the inside of a washing machine.

U.S.-supplied raw materials account for 60% of the cost of the plastic incubators and ATV parts the company makes in Mexico. For Evco’s China plant, the figure is just 15%.

Evco’s experience supports the findings of several studies on the effects of NAFTA, which 22 years ago loosened barriers to trade among the U.S., Mexico and Canada.

Whereas China’s prowess in electronics and textiles appears to have made a lasting dent on U.S. manufacturing — costing up to 2.4 million jobs from 1999 to 2011, according to one study — trade flows with Mexico have been more balanced.

Multinational manufacturing companies hire an extra 250 U.S. workers for every 100 employees they bring on in Mexico, according to a 2014 study by researchers at the Peterson Institute for International Economics, a nonpartisan organization.

Dean Baker, the co-director of the left-leaning Center for Economic and Policy Research, was an early critic of NAFTA and continues to believe that “it put downward pressure on manufacturing wages” in America.

Still, he acknowledges that the pact had benefits, at least for U.S. corporations.

“It helped the competitive position of our automakers,” he said. NAFTA was “bad, but not as bad for U.S. workers as China.”

None of that research is any comfort to Frank Staples, who will lose his gig supervising an assembly line when Carrier moves 1,400 furnace-manufacturing jobs from Indianapolis to Monterrey, Mexico, by 2018.

Staples, who has worked at the company for 11 years, blames the move on “corporate greed.”

“I think NAFTA was one of the biggest screw-ups that has ever been put in place,” he said.

The 37-year-old father of three has been working with his hands — in demolition, then in warehouses, and now at Carrier’s factory — since graduating high school two decades ago. Now, for the first time, he’s genuinely worried about how he’ll support his family.

Staples said that anyone who says trade comes with more pros than cons has no idea what it’s like to be on the losing side of that equation.

“People can say what they want to say [about trade], but they aren’t experiencing it firsthand,” Staples said.

United Technologies, which owns Carrier, says the move reflects “the steady migration of the company’s competitors and suppliers to Mexico, as well as ongoing cost and pricing pressures driven in part by evolving regulatory requirements.” The company said it would pay for four years of traditional or technical education for laid-off employees.

The trade pact hit low-skill factory jobs hardest. Many garment manufacturers deserted Los Angeles for border maquiladoras in the 1980s and ’90s. Starting in the 2000s, though, some aircraft builders and carmakers, which were already firing up plants in the U.S. Southeast, followed in earnest.

Today, the United States has a $67-billion trade deficit with Mexico in cars and car parts, according to the National Assn. of Manufacturers.

There are no firm estimates on the total number of jobs that have migrated to Mexico. One study, from a liberal think tank funded by unions, found that a total of 851,700 positions were lost to Mexico in the wake of NAFTA. But several other nonpartisan reports have found that after factoring in jobs created by increased trade, the pact had little to no effect at all on employment.

Some factory work is returning to the United States, but jobs aren’t necessarily following. New generations of robots can do the work faster and more precisely than humans can.

Even in Mexico, with its lower labor costs, machines are replacing people.

At a new Kia factory in Nuevo Leon, Mexico, robots dominate the vast production spaces where the skeletons of Forte compacts take shape. The facility occupies an expanse of arid land that would comfortably accommodate three plants the size of Tesla’s main hub in Fremont, Calif.

In a welding area at the center of the assembly line, more than 300 automated machines work in concert with one another to fuse sedan doors to roofs and attach trunks to bumpers.

The towering robots are fenced off in playpen-like areas; workers rarely interact with them.Even when people are using their hands to, say, install a car hood, they are actually just guiding a machine holding the steel to the front of the car and pushing it forward until the piece slots in.“It’s so he doesn’t tire his back,” explained Victor Aleman, a spokesperson for Kia, watching as a welder pushed a massive machine toward the shell of a future Forte. Going forward, virtually all of the Forte sedans and hatchbacks purchased in the United States will be produced at this plant in Mexico, Kia said.“We are really happy because these workers don’t complain,” Aleman said, gesturing toward a sea of yellow robots that help this Kia facility produce a car every 54 seconds.A Mexican autoworker at the Kia plant earns $3.75 per hour, the company said. A typical auto manufacturer in the United States makes about $40 per hour, according to data from the Bureau of Labor Statistics.

But cheap labor south of the border hasn’t derailed Bernie Degenhardt’s career.

The father of two started working at Evco Plastics headquarters in Deforest, Wis., in 1986, when he was a sophomore in high school. He never left.

Degenhardt began as a machine operator, making about $5.50 an hour plucking plastic parts from an injection molding machine. He quickly realized that the influx of robots onto the factory’s floor might pose a threat.

“You want to be managing the new automation and technology, and not worried about ‘something is going to take my job away,’” Degenhardt says. So he got an associate degree in electronics, and then in 2006, a bachelor’s in mechanical engineering.

Today, Degenhardt earns around $120,000 per year as the plant’s automation manager, supervising about 20 people.

At Evco’s Wisconsin plants, robots do the work Degenhardt once did, pulling just-made plastic from its mold.

“The robots do my [old] job, and I am managing people that manage them,” he says.

Credits: Lily Mihalik and Andrea Roberson

Help Companies Navigate International Hiring Challenges

By: Veronica Scrimshaw, NPA Worldwide

Today’s guest blogger is Narissa Johnson, the global brand and content manager of SafeGuard World International. For nearly a decade, organizations around the world have relied on SafeGuard World for their global HR needs, specifically around payroll and employee compliance. SafeGuard World is an Alliance Partner of NPAworldwide.

To succeed, companies will come to recruiters like you to find and hire the best talent, no matter where they live. Successful recruitment of global talent means finding the right talent and ensuring your client is able to get them working quickly. You are in a unique position to inform your clients of the risks involved with international hiring.

Social Costs
Social costs are usually made up of statutory benefits and insurance. Statutory benefit requirements, such as healthcare, vary by country. To employ legally, you must understand the required level of benefits.

The range of social costs differ drastically from country to country. If operating in the UAE, for instance, they are around 0% and in Brazil, employers pay from 60% to 120% of an individual employee’s total compensation (collective bargaining agreements, full private healthcare or full life insurance).

Liability Insurance
An employer’s liability insurance provides protection for their workers. While not all countries have a state-mandated plan, companies generally set up their own liability insurance to protect the worksite and workers. This ensures the company’s legal protection but also impacts its culture, assuring employees that they are being treated equally and fairly, regardless of where they work.

Minimum Wage and Collective Bargaining
As with most issues of remuneration, minimum wage is measured differently depending on the country. In Germany, minimum wage is measured hourly, while in Taiwan it’s measured annually.

Collective Bargaining Agreements (CBA) contain terms and conditions that set HR and payroll standards for workers. CBAs vary widely – when recruiting in foreign markets, it’s essential to understand these differences.

Paid Time Off
Paid time off (PTO) is particularly challenging when hiring internationally. For example, some countries federally mandate minimum PTO. However with CBAs, some positions may have additional requirements. Offering additional days off can also be a useful recruiting tactic. Having the right local knowledge will inform your PTO pitch.

Paid Family Leave
Family leave requirements aren’t consistent across the globe and the amount of leave may differ depending on the employee’s position and seniority. Your client shouldn’t only satisfy legislative requirements but also conform to local customs and expectations. Again, this is an opportunity to leverage leave in offer negotiations.

Termination Policies and Practices
Outside of the U.S., “at-will employment” is rare; companies operating in foreign markets must be aware of the differences in termination policies to avoid non-compliance. While finding the perfect candidate for your client is important, understanding unique termination policies and practices will protect them from the unforeseen.

While the world isn’t getting smaller, our ability to erase international borders certainly makes it feel that way. This is good news for recruiters and companies that understand the best talent isn’t always in their home country. Understanding global employment issues will ensure companies can make smart hires and focus on their core business.

5 Steps to Rev Up Your Job Search in 2016

By: Challenger, Gray & Christmas

The job market is expected to keep improving in 2016 thanks to strong growth across many sectors, including health care, technology, manufacturing and construction. However, the fact that many metropolitan areas are already approaching full employment does not mean that finding a job will be easy.

In its annual job market outlook, global outplacement consultancy Challenger, Gray & Christmas, Inc. indicated that 2016 would continue to see high levels of workplace churn, meaning increased hiring amid ongoing layoffs.

“Workforce reductions are a part of the employment fabric now. We see layoffs even when the economy is flourishing. It could be a single industry, such as energy, which saw several years of expansion only to reach a point where there was more oil than we needed, leading to a massive price drop followed by widespread job cuts. It could be a single company going in a new direction or streamlining its operations,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

“At the same time, we are seeing a very strong hiring environment in the coming year. Many industries are growing, companies are replacing retiring workers and new businesses are being established. Each month, about five million Americans are hired and employers report that there are still more than five million openings. There is tremendous potential out there,” he said.

“But, even in the strongest economy, finding a job is never easy. Those who believe they can simply send out a bunch of resumes and sit by phone waiting for it to ring with offers will be sorely disappointed. The job search requires a lot leg work to uncover the best opportunities. It requires networking, cold-calling, interviewing and the ability to persist in the face of rejection,” said Challenger.

For those entering the job market for the first time, those reentering the market, as well as for those in-between jobs or seeking to change jobs, Challenger offered the following steps to improve your chances for job search success in the new year.

Get involved with community service group. This is a great way to build your network as well as hone your professional skills.

Join a professional/trade association. These organizations can provide training and education opportunities and most hold several networking functions every year. The dues are worth their weight in gold if you meet a person at an event who can help you find a new job.

Have lunch with at least one new contact each week. Obviously, networking is an essential part of finding a job. But blindly adding new people to your LinkedIn contacts list, where they will likely just collect dust, is entirely ineffective. It is vital to meet with people on a regular basis. Lunch or even over coffee is an ideal setting, because it is more relaxed. Building these relationships may help you in your job search.

Rev up your skills. Employers want to know that you are up on the latest skills, trends, advances, etc. While some employers will foot the bill for continue education, the number who do so is shrinking. And, if you are between jobs, no one but yourself can ensure that your skills are up-to-date. Explore online courses and local certificate programs to broaden your industry knowledge, increasing your marketability to a variety of employers.

Look beyond your industry. Just because you have been working in the same industry for a certain number of years, does not mean that you must stay in that industry. Your fundamental job function is the primary skill set you are selling to employers, not your knowledge of a specific industry. Your skills as an IT professional in the financial industry are certainly transferable to the health care industry, for example. Job seekers can greatly expand their chances of success by expanding the number of industries in which they seek opportunities.

More Hiring, Fewer Layoffs Forecast for 2016

By Roy Maurer (www.shrm.org) – 12/29/2015

The labor market experts at Challenger, Gray & Christmas Inc. forecast fewer layoffs, more hiring and increased wages in 2016.

U.S.-based employers announced 574,888 job cuts for the year through November 2015, already far surpassing the 2014 year-end total (483,171) and setting up for the largest year-end total for job cuts since 2009, when 1.2 million job cuts were announced.

The rise in job cuts this year was due primarily to the dramatic decline in oil prices and heavy downsizing in the public sector, according to John A. Challenger, chief executive officer of Challenger, Gray & Christmas, based in Chicago.

Falling oil prices resulted in 102,738 job cuts through November, representing nearly 20 percent of job cuts announced in 2015. Military cutbacks claimed another 57,000 personnel.

“With oil prices expected to remain low for the foreseeable future, we could continue to see the industry workforce shrink in 2016, though probably not at the rate we saw in the first part of 2015,” Challenger said.

Challenger is predicting that fewer layoffs in the energy sector will result in an overall slowdown in downsizing activity in 2016. He’s also forecasting increased hiring and wages.

The nation’s payrolls grew by an average of 210,000 jobs per month in 2015 through November, according to the Bureau of Labor Statistics. That’s down from the 260,000 new jobs averaged per month in 2014.

“Part of the slowdown in job creation last year may have been related to a weakened energy sector, which was one of the strong growth areas in 2013 and 2014. However, another contributor to the slower job gains this year may have been a shrinking supply of available talent,” said Challenger.

The national unemployment rate is 5 percent, which many economists consider full employment. When broken down to include just those ages 25 and older, the rate drops to 4.1 percent. For those with a four-year college degree, the rate is 2.5 percent.

“An unemployment rate of 2.5 percent means that employers seeking college-educated, experienced workers are really struggling right now to find candidates to fill openings,” Challenger said.

According to the latest Bureau of Labor Statistics data on labor turnover, the nation’s employers hired 5.1 million new workers in October 2015 and there were still nearly 5.4 million job openings at the end of the month.

“We expect this heavy churn to continue in 2016,” Challenger said. “Around 10,000 Baby Boomers hit retirement age each day. That doesn’t mean they are going to leave the labor force. However, many will change jobs, others will cut back hours, and some may leave the workforce for a while and come back.”

All of this churn creates hiring opportunities. “Employers will have to increase their recruiting efforts to find the best candidates,” Challenger said. “They will have to rely more heavily on referrals from current employees. They will have to be more open to considering candidates who might have longer-than-desired gaps on their resumes or whose skills and experience do not perfectly align with the job opening. We could see starting salaries increase, as well as the salaries of existing workers, as employers try to attract and retain the best talent.”

Roy Maurer is an online editor/manager for SHRM.

Follow him @SHRMRoy

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When it comes to where to site a factory for manufacturing competitiveness, be prepared to throw the old stereotypes out the window.

Over the past decade, the U.S. and Mexico have become “rising stars” among the top 25 export economies while China and Brazil are among the countries that have seen their cost advantages erode significantly, new analysis by the Boston Consulting Group shows. Overall costs in the U.S. are 10% to 25% lower than those of the world’s 10 leading goods-exporting nations with the exception of China. Continue reading

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Brazil Economic Growth Slow in 2014: IMF

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The international lender lowered its annual growth forecast to 1.8%, compared to 2.3% in January.

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Making the Most of Expat Assignments

Companies lack an effective process for maximizing the benefits of international work. For best results, tie talent management and global mobility together.

Michael Kannisto has his house in order when it comes to expats.

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