The Emperor’s New Jobs

by Jim Lane (Biofuels Digest) Among biodiesel’s amazing growth stats is word from LMC International that the 2.1 billion gallons of biodiesel and renewable diesel used by Americans in 2015 supported $8.4 billion in economic impact across a wide variety of economic sectors. But here was the weird news. There were 47,400 jobs.

It reminds us of a trend in the general economy and especially in the bioeconomy, and that is the death of jobs. Or at least, the dearth of them. Work will go on forever, but I am not so sure about jobs.

Not long ago, a bioeconomy player announced a $250 million project that would convert up to 300,000 tonnes of waste agricultural residue to biofuels and renewable chemicals. There were construction jobs that would come with the project, and work in the design and procurement phase for engineers and suppliers alike, and after opening there would be more work for harvesters of biomass. But there were far less than 100 full time jobs on site. Even with a healthy jobs multiplier that took into account the total economic impact a project has on a community, the ratio of capital to jobs is going to be something like $500,000 to 1. And that does not account for initial inventory and working capital.

Now, the jobs that have been eliminated over the years in the rural sector have generally been the most back-breaking, repetitive and low-paying. The jobs at the biorefinery we mentioned here are almost all skilled, good-paying jobs: operators, engineers, project management, lab techs.

Employment is the only E left standing in the old triad of Employment, Energy Security and Emissions that used to drive support for renewable fuels.

Over the past several months, I’ve been in a series of conversations with friends and sources in the world of IT. Most specifically in the world of automation, which has lately begun converging with agriculture in the form of drone tech, robotics, advanced sensors, 3D printing and the development of advanced logistics. Simplest way to imagine it — a sprinkler system that knows to put three drops of water on this part of the plant at 2pm, and two drops of water at 4pm on the plant next to it.

We have a ways to go before interesting technology is aggregated into solutions, and deployed as an everyday reality in the field by a generation of growers who can realize feasible economic benefit. But you can see the Smart Field coming a mile down the road. It’s a path to enhanced yield and reduced environmental impact — less water, fertilizer, run-off, and so forth. That’s good. But where’s the benefit that reaches the worker – where’s the job, exactly?

But where exactly are the jobs? Let’s look at NAFTA and off-shoring

Recently I spoke with a manufacturer about a planned offshoring move — in the light of NAFTA. Here’s what he had to say.

“It just makes economic sense to move the jobs to where the labor prices are lower. It’s not because of greed. It’s competitive pressure. Those who do not make the move to reduce costs will have to suffer lower margins. Over time, that means less money for investment to modernize a plant or improve wages. In the long-run, the company’s business model will be simply unsustainable.”

Now, we live in different political times. After all, we have a President committed to an America First jobs policy – global free trade be darned and all that. So I asked what would happen if NAFTA were cancelled. Would the jobs stay at home, then?

He said, not in the long-term. Instead of the competition between Mexican and US labor prices, the competition would rapidly become one of US labor prices vs the cost of robotics.

The coming dearth of high-skilled jobs, and a move from the Have / Have Not Society to the Pretty Much Everyone Have Not Society.

There’s evidence all around of the growing separation of the wealthy and the poor, as more and more wealth is being concentrated in the hands of the few. We’ve already seen the rise of the billionaires. There were a handful of them a generation ago. Now they are becoming common enough that they square off in presidential contests – Trump, Icahn, Koch, Cuban, Buffett are household names widely evoked during campaigns, as candidates, surrogates, advisers and financiers.

In the end, there are the four great engines of the economy: interest on capital, economic rent, wages for labor, and the profit that accrues for the risk. Capital, rent and profit seem relatively secure in the advanced economy, but the death of jobs will put great stress on participation in the economy through labor.

We are moving from an income economy to an asset economy — capital, land and intellectual property. READ MORE