Broken promises: The reality of high paying jobs in a competetive market

 

One can’t attend an economic development forum, technical college recruitment, or any chamber of commerce meeting without hearing the mention of high paying jobs in South Carolina.

I’ve heard comments like, “Attend a trade school; get a two-year degree in welding and you can make $80K per year.” “Kids that attend a technical school and get a two-year degree can have a high paying job for life in aerospace.” Sounds great and should be a big draw for students and others looking for a good career path.

We all want to improve our standard of living. The promise of high paying jobs is an attraction. But is this realistic to expect when we participate in a world economy? Let’s consider some facts.

Remember your high school economics classes. I dare to say that most of us studied capitalism, Adam Smith, Laissez faire economics. For those who may have forgotten; Laissez-faire is an economic system where free trade occurs between individuals or other parties without interferences such as government regulation, tariffs or subsidies.

In this type of free market, the law of supply and demand will dictate the price. Consider how you manage your family purchases. We rush to our favorite source (internet, big box store, local shops), shop for the lowest price, and make our purchase. When a product is rare, or there are limited producers, we are willing to pay more.

In fact, the seller can get a much higher price if there is demand for a product in short supply. In the not too distant past, consumers had limited access to products. Usually, purchases were made at a local store or by mail order through a catalog sale. The internet has made worldwide shopping possible. And, with two-day free delivery, there is nothing to stop a buyer from shopping a nearly infinite number of sources.

But does this have anything to do with high paying manufacturing and STEM related jobs in South Carolina? After all, these high paying manufacturing jobs produce products that are not commodities readily available on Amazon or eBay. Do our higher paying manufacturing jobs and STEM related services compete in a world market? You bet!

Yes, the US still has some of the best manufacturing and engineering talent in the world. The American worker has a heritage of hard work, technical competence, and ingenuity. We are the only country to land a man on the moon. Post WWII, America was built into an economy that makes us the envy of the rest of the world.

But now, we see more and more work leaving our shores. More manufactured products are coming from overseas. Products that should be manufactured by people filling those “higher paying jobs” in the US. Is it lack of capacity in the US that enables the foreign manufacturer to sell these services/products? Or is it that US manufacturing and technology is too expensive in the world economy?

Our “high paying jobs” don’t pay as well overseas. For example, engineers and manufacturers in some European and Asian countries make pennies on the dollar of a comparable person in the US. Pricing on products manufactured in those countries is less than the US. In fact, in some cases the pricing is so much lower that the US companies can’t compete. Labor and materials are often the two highest controllable costs.

As a services provider, the single biggest controllable cost at KTM Solutions is labor. When our business competes with engineering providers in the Asian and European market, we often don’t do well unless we are offering a service that is unique and not attainable overseas. I venture to say that a good qualified welder in Mexico will not make the same wage as a good qualified welder in the US.

So, are these “high paying jobs” so unique that the same services can’t be attained overseas? Perhaps, but I’m willing to wager that there is a day of reckoning coming. The welding job that will pay $80K annually that is also available from a source overseas for $40K will eventually see the product they manufacture move to the lower cost provider.

The engineering job that is normally performed by a $90K engineer will go to a competent senior engineer in Europe making $40K per year. Laissez-faire. Either the foreign prices will need to rise, or the US cost will need to decrease.

Are these proposed high paying jobs a reality or a pipe dream? You decide.

About the Author:

PAUL V. KUMLER, P.E. (President KTM Solutions, Inc.)

Paul V. Kumler has over 30 years engineering and senior management experience.  Mr. Kumler spent the majority of his career in the aircraft industry with experiences at Cessna Aircraft, The Boeing Company, and Lockheed Martin.  He currently serves as president of KTM Solutions, Inc, a mechanical engineering services company he founded in April 2005. Mr. Kumler received a degree in Mechanical Engineering from Louisiana Tech University. He also completed several graduate engineering courses at Wichita State University. He is a registered Professional Engineer in the state of South Carolina.  Outside of the office, Mr. Kumler participates in numerous volunteer activities, primarily through his church. Mr. Kumler is married and the proud parent of a son and daughter who are currently pursuing their own career paths.  Mr. and Mrs. Kumler currently live in Simpsonville, South Carolina.