Tuesday, March 31, 2015

Fasten Your Seat Belts

A 2013 study by Carl Frey and Michael Osborne of Oxford University estimates that 47% of current jobs in the U.S. economy are at risk of being eliminated by automation and/or computerization over the next 20 years.

The study analyzed 702 occupations in the United States and used a probability analysis to determine how susceptible each is to future computerization. As you might imagine, many of the occupations at the most risk of being disrupted involve low educational levels and low skill levels. However, that is not always the case.

Here are the ten occupations that were considered to have the lowest probability of being disrupted by technology over the next 20 years. The number represents the probability (expressed as a percentage of 100) that the job will be computerized in some fashion.

1.   0.0028   Recreational Therapists
2.   0.003     First-Line Supervisors of Mechanics, Installers, and Repairers
3.   0.003     Emergency Management Directors
4.   0.0031   Mental Health and Substance Abuse Social Workers
5.   0.0033   Audiologists
6.   0.0035   Occupational Therapists
7.   0.0035   Orthotists and Prosthetists
8.   0.0035   Healthcare Social Workers
9.   0.0036   Oral and Maxillofacial Surgeons
10. 0.0036   First-Line Supervisors of Fire Fighting and Prevention Workers

Here are the ten occupations that were considered to have the highest probability of being affected by automation over the next two decades. Note that the study assessed that there is a 99% chance that these occupations will see some dislocations due to technology.

693. 0.99  New Accounts Clerks
694. 0.99  Photographic Process Workers/Processing Machine Operators
695. 0.99  Tax Preparers
696. 0.99  Cargo and Freight Agents
697. 0.99  Watch Repairers
698. 0.99  Insurance Underwriters
699. 0.99  Mathematical Technicians
700. 0.99  Sewers, Hand
701. 0.99  Title Examiners, Abstractors, and Searchers
702. 0.99  Telemarketers

Note in particular that tax preparers and insurance underwriters would normally not be considered low education or low skill jobs today. Watch repairers are skilled workers but where will the watches be to be repaired 20 years from now?

It is a pretty sobering list to review.

Here are a few more occupations that all have a better than 50/50 chance of seeing major disruptions.

.98  Umpires, referees and other sports officials
.98  Models 
.96  Cooks, restaurants
.94  Waiters and waitresses
.92  Retail salespersons
.90  Roofers
.89  Taxi drivers and chauffeurs
.89  School bus drivers
.87  Parking lot attendants
.80  Barbers
.77  Carpenters
.58  Personal Financial Advisors
.55  Commercial Pilots

Umpires? Strikes and balls will no longer involve judgment. Nor will the close call at first base.

Models? Are we headed to a world in which we can create our own holograms of the perfect man or woman?

Cooks? That robot will really know how to flip those pancakes at exactly the right time.

I was particularly interested in how the Oxford study viewed potential disruption in the transportation sector as I had the privilege of attending a speech by Peter Diamandis several weeks ago where he gave his perspectives on the future.


If you are not familiar with Diamandis, he is the founder of the X PRIZE Foundation and was named by Fortune magazine as one of the world's 50 greatest leaders.

His basic thesis is that we are entering a bold, new era of exponential growth fueled by technology, automation, computerization and a democratization process that allows anyone in the world into the room of ideas and innovation due to cloud computing.

The new world we are in is increasingly disruptive that can quickly lead to the demonetization of established industries.

For example, look at what Craig's List did to classified ads in the newspapers, Skype did to long distance calls, Amazon did to book stores or what Uber is doing to taxi fleets.

Diamandis is particularly excited about the potential of Google's "autonomous" car. That would be understood to be a "driverless" car for most of us. He sees it as a real game-changer and he made some rather startling comments around what he saw in the future as a result of this innovation

First off, Diamandis stated that he had two 3-1/2 year old twins. He said they will never learn to drive. In his view we are going to see profound changes in autonomous cars in the next 10-15 years with massive disruptive effects..

He expects the auto insurance business to basically wither away. There will be very few auto accidents once the human element is removed. I guess the same goes for auto body shops.

He believes that automakers and auto dealerships are threatened as people will see no need to buy their own cars as it is incredibly inefficient economically. How often are you using your car?  Most people are not using it more than 5% in a day.

Diamandis seems to foresee something akin to a SuperUber where you just get a car to take you where you need to go when you need to go. Of course, all those Uber drivers will need to find something else to do (as well as the school bus driver, chauffeurs and truck drivers).

With fewer owned cars we also might not need as many parking lots. If you don't own a car you don't need to park it or garage it. The average suburban shopping mall uses up about three times the real estate for parking as it does for the retail shopping. What is the impact on real estate if this could be cut in half?

This is just one limited example of the cascading effects of one piece of automation and how it might affect the world we live in.

These are the technological areas that Diamandis sees as having the most potential for exponential growth in the near future.

1. Infinite Computing
2. Sensors & Networks
3. Robotics
4. 3D Printing
5. Synthetic Biology
6. Digital Medicine
7. Nanomaterials
8. Artificial Intelligence

The world has seen major economic and technological changes many times before and made the necessary adjustments. It has always resulted in a better standard of living and an improved way of life despite the inevitable individual economic dislocations. However, the changes have never been this rapid. Could it be different this time because of the exponential speed of new developments such that there is not enough time for the potential mass of humans that might be affected in so many sectors of the economy?

This entire subject is the theme of a recent article in The Economist which cites the Oxford study.

This is what Michael Rendle in The Huffington Post had to say about The Economist article.

Almost half of all jobs could be automated by computers within two decades and "no government is prepared" for the tsunami of social change that will follow, according to The Economist.
The magazine's 2014 analysis of the impact of technology paints a pretty bleak picture of the future.
It says that while innovation (aka "the elixir of progress") has always resulted in job losses, usually economies have eventually been able to develop new roles for those workers to compensate, such as in the industrial revolution of the 19th century, or the food production revolution of the 20th century.
But the pace of change this time around appears to be unprecedented, its leader column claims. And the result is a huge amount of uncertainty for both developed and under-developed economies about where the next 'lost generation' is going to find work.

In order to adjust and compensate for what is coming workers will need much greater technological, cognitive, creative and social skills.

However, with that in mind, consider these facts about educational attainment in the United States which I wrote about several years ago in my blog post, Arts and Sciences, Supply and Demand.

  • 25% of students who begin high school in the United States do not finish.  Fewer students who start high school today graduate than they did 40 years ago.  79% finished in 1971 but only 75% are graduating today despite the fact that the world and the economy is far more complex and education and skills are far more important in securing a good paying job. 
  • In fact, the United States is the only developed country in the world where a higher percentage of  55 to 64 year olds has a high school degree than do 25 to 34 year olds.
  • The percentage of college graduates for American citizens aged 25-34 is no higher than the percentage for those aged 55-64 - 41% of both age groups have a degree.  30 years ago that was good enough to lead the world.  We now rank 16th!

We may be seeing exponential growth in technology and automation but humans are not even evolving at linear levels. In fact, our education levels in the United States may actually be regressing.

This is a slide that Diamandis used to show the disruptive stress (or potential of opportunity) between an exponential trend and a linear trend.

Credit: Peter Diamandis

I see the opportunity.

However, you can expect a whole lot of disruptive stress along the way if you consider the educational stats cited above.

The road ahead in our autonomous cars promises to be exciting but there will be more than a few people run over in the process. That looks like a dead man's curve for those who don't adapt.

Is it time to fasten our seat belts? Or do I even need to in an autonomous car?

Follow the lead. of these modern Millennials. It is always better to be safe rather than to be sorry.

Put your feet up (and buckle up) in your autonomous car 
Credit: zedie.wordpress.com

Thursday, March 26, 2015


What is it about 47%?

This percentage keeps coming up in the news.

Of course, 47% first received a lot of attention during the 2012 Presidential campaign when Mitt Romney made this statement to a group of wealthy supporters.

"There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it -- that that's an entitlement. And the government should give it to them. And they will vote for this president no matter what. ... These are people who pay no income tax. ... [M]y job is not to worry about those people. I'll never convince them they should take personal responsibility and care for their lives."

The 47% that Romney referred to in his remarks came from the fact that in the 2009 tax year, 47% of tax returns filed owed no federal income taxes. As of 2013, the most recent year for which data is available, that number is now 43%.

However, 47% is not disappearing from the headlines.

There really seems to be something about that number.

A few examples from recent headlines.

47% of American households save nothing

47% Of All Jobs Will Be Automated By 2034, And 'No Government Is Prepared' Says Economist

Almost half of all jobs could be automated by computers within two decades and "no government is prepared" for the tsunami of social change that will follow, according to the Economist.
The magazine's 2014 analysis of the impact of technology paints a pretty bleak picture of the future.
It says that while innovation (aka "the elixir of progress") has always resulted in job losses, usually economies have eventually been able to develop new roles for those workers to compensate, such as in the industrial revolution of the 19th century, or the food production revolution of the 20th century.
But the pace of change this time around appears to be unprecedented, its leader column claims. And the result is a huge amount of uncertainty for both developed and under-developed economies about where the next 'lost generation' is going to find work.

Poll: 47% of Unemployed Have 'Completely Given Up' Looking for a Job

“This survey shows that millions of Americans are at risk of falling into the trap of prolonged unemployment, and it should give policymakers a greater sense of urgency to focus on the singular goal of creating jobs," said Bob Funk, CEO of Express and a former Chairman of the Federal Reserve Bank of Kansas City, in a release. "We can take heart that in these difficult times the American spirit of confident hopefulness endures, but we can’t accept this status quo—not for our country, not for our unemployed neighbors.”
Some of the key findings:
47 percent agree with the statement, “I’ve completely given up on looking for a job.” (7 percent said they “agree completely,” 7 percent “agree a lot,” 15 percent “agree somewhat,” and 18 percent “agree a little.”)  

Obama Approval Rating At 47% 

Poll: Only 47 % Think Obama Loves America

A new poll shows that a substantial number of Americans doubt President Barack Obama loves the United States. According to YouGov, fewer than half — 47 percent — say that the president loves America. However, one third — 35 percent — say the president does not.   
The poll also asked respondents whether they loved the country. For Americans over the age of 45, upward of 90 percent expressed love for the U.S. and virtually none reported they do not love America.
However, younger Americans are less certain.
“Only 71 percent of under-30s also say that they love America. Fifteen percent of under-30s say that they do not love America, while 14 percent aren’t sure,” YouGov reports. 

47% believe the country is less safe than it was before the Sept. 11, 2001, terrorist attacks

ISIS on people's minds.

Would You Believe That 47% of the U.S. Has No Residents

47% of Americans Say The New England Patriots Are Cheaters

They still won the Super Bowl.

47% of adults couldn't last a day without smartphone

Nearly half of U.S. adults -- or 47% -- said they wouldn't last a full 24 hours without their smartphone, a survey by Bank of America found.

Smartphones fall below only the Internet and hygiene when ranked by level of importance to people's daily lives, according to the survey. Ninety-one percent said their phone is as important as their car and deodorant.

Perhaps more concerning is that most Millennials deem mobile phones more important than deodorant and a toothbrush, the survey says.

Report: 47% of Meals Are Eaten Alone at Restaurants

They don't eat alone. They are with their smartphone.

I don't know about you, but if someone asks me the odds on something today, I am going to answer 47%.

Monday, March 23, 2015

Rolling on a River of Debt

We live in a world awash in debt.

There is over $100 trillion in outstanding debt in the world today.

$30 trillion in global debt was added in just the six years between mid-2007 and mid-2013 according to this Bloomberg Business article.

Over the same period, the value of global equities fell by $4 trillion to $54 trillion.

Looking at it in financial accounting terms, the world's debt equity ratio has soared from 1.2 in 2007 to 1.85 in 2013 ( a 50% increase).

It is not much different anywhere you look.

For example, look at the debt that has been taken on by Ohio's public universities over the last ten years as reported in a recent article in The Dayton Daily News.

Total debt outstanding at Ohio public universities
Borrowing at Ohio's 14 public universities more than doubled over the last decade. Most spending was for building construction and renovations.
The Ohio State University$814,606,000$2,605,528,000
Miami University$93,151,622$641,065,000
Wright State University$16,484,121$101,957,190
University of Cincinnati$894,596,000$1,236,000,000
Central State University$2,535,821$17,781,501
Youngstown State University$13,680,000$70,710,037
Northeast Ohio Medical University$0$40,649,167
The University of Akron$204,729,516$487,101,792
Bowling Green State University$84,400,000$147,100,000
Ohio University$171,300,000$332,900,000
The University of Toledo176,097,000$332,549,000
Kent State University$279,351,000$506,455,000
Cleveland State University$54,487,124$205,581,517
SOURCES: Provided on request by universities to The Dayton Daily News

Ohio State University's  debt outstanding has more than tripled to more than $2.6 billion.

Miami University's debt is up almost seven-fold from a measly $93 billion to where it now ranks third in total debt outstanding in the state at $641 billion.

The University of Cincinnati has over $1.2 billion of debt and Kent State and Akron each have approximately $500 million.

Bowling Green is the only major Ohio state university that seems to have been conservative with its debt load---it only has $147 million of IOU's.

The trend is the same across the nation.  Most public universities have at least doubled their debt load over the last decade according to Moody's Debt Service.

Where has the money gone from all of this borrowing?

Some went for new classroom buildings and technology upgrades. However, a lot of the debt has been taken on to pay for student amenities such as rec centers, student centers, food courts, hip residence halls, climbing walls and lazy rivers.

In recent years, colleges have embarked on a massive facilities binge in a competition to attract students that is reminiscent of the old-fashioned defense arms race between the U.S and the U.S.S.R. Dorms that resemble the TajMahal, recreation centers that look like they could be an Olympics venue and dining halls that are fit to serve meals straight from The Food Channel.

It all costs money and tuition and fees need to go up to pay for the luxuries and the added debt. Bucking the trend is career suicide to the college administrators should they fail to enroll the necessary numbers to fill their incoming classes.  After all, nobody wants to lose a good student and the tuition money that comes with her because they did not have a rock climbing wall in the rec center.

However, the reality is that the university borrows the money for the facility upgrade, it passes the cost on to the student, who has to take out a federal student loan to pay the tuition and fees, and the federal student loan program is, in turn, funded by additional federal government borrowings (or Federal Reserve QE)!

It is debt, on top of debt, on top of more debt, when all is said and done. Of course, all backed up by the full faith and credit of the U.S. government (translated " the American taxpayer".)

What is especially troubling about all of this additional debt is that we are entering a demographic period when we will be seeing declining numbers of high school graduates across most of the nation. This is particularly the case in Ohio which, along with most other Midwestern states, will experience some of the biggest declines in prospective college students over the next few years.

This chart depicts the changes in high school graduates between 2008-2009 and 2019-2020.

         Credit:Western Interstate Commission for Higher Education

Of course, that is also why all of this money is being borrowed and spent. Faced with declining numbers of potential students, no university wants to fall behind. They can't afford to not borrow and spend even if they can't afford it.  So they borrow and spend to protect their turf and their jobs.

And the big wheel of borrowing and spending keeps turning.

And we keep rolling, rolling, rolling, down the river of debt.

Monday, March 16, 2015

Potential Pension Pain

I came across some interesting data on retirement assets lately provided by the Investment Company Institute.

As of the end of the third quarter, 2014, total U.S. retirement assets were $24.2 trillion. To put that in context, U.S. GDP for 2014 was an estimated $17.7 trillion.

U.S Total Retirement Market
(trillions of dollars)
Credit: Investment Company Institute

Retirement assets have increased by $10 trillion (+71%) since 2008. GDP in 2008 was $14.7 trillion. Therefore, U.S. retirement assets have increased by $10 trillion in six years while the total economy has only increased by $3 trillion. This is a clear indication of the Federal Reserve QE program that has inflated the value of financial assets.

Another way to look at it is that retirement assets equal about 1.4x GDP today.

In 2008, these assets only represented .7x of GDP.

For perspective, in 1985 retirement assets were .5x of GDP, in 1995, .9x of GDP and in 2005, 1.1 of GDP. Some of this increase is due to the aging of the population but a large amount of the increase is the result of the inflated value of financial assets due to QE.

Since the financial assets in retirement plans are largely a claim on future income and earnings of the economy, you have to wonder how reliable those asset values are right now looking to the future.

Anyone saving for retirement should not be too comfortable with their account balances right now. I would expect rougher waters ahead.

What I also found interesting is that IRA's (Individual Retirement Accounts) have more assets than company-sponsored defined contribution plans today. IRA's are now also approaching the same amount of combined assets as are in government and private sector defined-benefit pension plans.

By comparison, in 2000 defined benefit plans had nearly double the assets ($5T to $2.6T) that IRA's had. That is a pretty significant change in the space of fourteen years.

All of this is remarkable when it is considered that IRA's were first introduced in 1975 and Roth IRA's were not enacted until 1997.

Another interesting chart from the ICI data compares retirement assets with unfunded liabilities. This chart is downright scary and should serve to be a cautionary tale as to why politicians and the governments "they manage" should not be allowed to offer defined benefit plans. Politicians make the promises and the taxpayers have to write the checks for the inevitable shortfalls.

U.S. Total Retirement Entitlements
(trillions of dollars)
Credit: Investment Company Institute

Please note the unfunded liabilities as a % of retirement assets for the various defined benefit plan sponsors.

Private Sector        2%

State and Local     24%

Federal                 57%

Of course, defined contribution plans and IRA's are always fully funded. They will only pay out what the assets are worth in the long term. The participants takes all the risk of market declines.

Unfortunately, most of the participants in DC plans and IRA's are also assuming the risks for market declines in the assets of governmental DB plans as well. Any underfunded amounts will be made up in increased taxes on the private sector in the future in order to make the pension promises to government workers. And these plans are already significantly underfunded right now.

If retirement asset values drop, expect a lot of pain and pent-up anger. It will not be pretty.

Federal Reserve Charts on Historical Levels of Underfunding of DB plans.

Private DB Pension Funds
Unfunded Ratio

State and Local Government DB Pension Funds
Unfunded Ratio

Federal Government DB Pension Funds
Unfunded Ratio

Notes on this chart from The Federal Reserve: Federal government DB pension plans were largely unfunded for several decades, as illustrated above by an unfunded ratio of close to 90 percent of total liabilities of the sector in the 1970s. In the 1980s, the FERS--which was designed to be essentially fully funded--was introduced to gradually replace the CSRS, leading to a decrease in the unfunded component of federal DB pension liabilities. Additionally, in recent decades, the Treasury Department has been required to make "catch-up" payments to the federal DB pension funds from its general fund in order to gradually close the funding gap in federal DB pensions. As a result, the unfunded component has decreased from about 90 percent to about 58 percent of total DB liabilities of the sector.

One important difference between federal and S&L (or private) DB pensions, however, is that federal DB pension funds are invested almost exclusively in special-issue, nonmarketable Treasury securities. As a result, unlike private and S&L pension funds, the "asset holdings" of federal DB pension funds are not assets that can be sold in private markets in order to fund future benefits. Instead, they represent claims on the Treasury, and therefore the balances of the federal pension funds are available for future benefit payments only in a bookkeeping sense.

Sunday, March 8, 2015

Time Lost, Time Gained

I am traveling this week so I thought I would republish a post from two years ago on Daylight Saving Time. All you ever wanted to know on the subject as you try to recover from the hour of sleep you lost last night.

Originally published Saturday, March 9, 2013

Daylight Saving Time is upon on and I thought I would provide a little perspective on the subject. My first memory of DST is when I about 5 years old.  We lived just outside of Akron, Ohio and my grandparents lived in Cleveland.  Cleveland was on DST but Akron was not so there was always a lot of discussion about what time is was whenever we planned a visit.  Even to a 5 year old that was very confusing.

This confusion reigned across the United States in the 1950's and 1960's because each locality could adopt, start and end DST as it wanted to.  In fact, on one bus route between West Virginia and Ohio, passengers had to change their watches seven times in 35 miles.  In Iowa, 23 different pairs of DST start and end dates were in effect in one year.

All of this chaos finally led Congress to pass a law in 1966 establishing set rules for observing DST nationally.  This law established DST as the national standard beginning on the last Sunday of April and ending on the last Sunday in October-exactly six months in duration.  However, it permitted any state to exempt itself from DST by passing a state law.  This was later amended to allow any state to make this distinction based on time zones in the state.  This resulted in Indiana (part Eastern and Central time) to split between standard and daylight time until the state finally went to DST uniformly in 2005. Right now Arizona and Hawaii are the only states that do not observe DST.

The main purpose of DST is to make better use of daylight.  DST allows for an hour of daylight to be moved from the morning to the evening.  Since people are generally more active and are doing more outdoors in the evening it has proven popular in many societies around the world.

Today I Found Out provides some of the background on how the idea for DST came about.
Ben Franklin often gets credit for being the “genius” who came up with daylight saving time.  Interestingly though, the letter he proposed something like what we now call daylight saving time and which was eventually published in 1784 under the title, An Economical Project, was actually a witty satire meant to entertain some of his friends, not to be taken seriously on any account.

The modern day version of DST was first proposed by the New Zealand entomologist George Vernon Hudson in 1895.

The credit though for the modern day DST system is often incorrectly given to William Willett who independently thought up and lobbied for DST in 1905.  He was riding through London one day in the early morning and noticed that a good portion of London’s population slept through several hours of the sunlit summer days.  Willet lobbied for DST until his death in 1915.  Ironically, it was one year later in 1916 that certain European countries began adopting DST.

It has been argued that energy conservation is another benefit of DST since there is more energy consumed in homes with lighting, televisions, computers and appliances in the evening compared to the morning.  After all, if you are able to be outside enjoying the daylight you are not using power inside the home.  In fact, during the Arab Oil Embargo in the early 1970's, Congress moved up the effective date of DST to early March to conserve energy.

A recent study has called into question whether DST actually results in any energy savings today. The increased use of home air conditioning in the warmer evening hours compared to the cooler morning hours may be the reason.

Scientists from the University of California, Santa Barbara, compared energy usage over the course of three years in Indiana counties that switched from year-round Standard Time to DST. They found that Indianans actually spent $8.6 million more each year because of Daylight Saving Time, and increased emissions came with a social cost of between $1.6 million and $5.3 million per year.

Commentators have theorized that the energy jump is due to the increased prevalence of home air conditioning over the past 40 years, in that more daylight toward the end of a summer’s day means that people are more likely to use their air conditioners when they come home from work.

Daylight Saving Time is not really necessary as you get closer to the equator as the days and nights are 12 hours each throughout the year.  It is only as you get further away from the equator that you get variations in the amount of daylight during the year.  In summer, daylight hours exceed darkness and the opposite is true in the winter with extremes being experienced the further you get from the equator.

You can see this graphically in this world map that shows which countries have adopted DST at some point compared to those that have never done so.  You can see that very few countries near the equator are using DST currently.


By the way, the way I found in researching this post that it is "Saving Time" not "Savings  Time". Daylight saving time uses the present participle "saving"as an adjective, as in "labor saving device". I had been saying it wrong for all these years. You learn something new everyday.

I still am confused about one thing.  Since we now have adopted Daylight Saving Time beginning the second Sunday in March through the first Sunday in November each year, it is actually more standard than our Standard Time.  We are using it the majority of the year. Doesn't it than make sense to make Daylight Saving Time the standard and rename Standard Time to Daylight Lost Time?

Enjoy the extra hour of daylight and don't forget to take a nap to make up for the lost hour of sleep.

Credits for the DST facts in this blog post:



Monday, March 2, 2015

Minimum Wage, Maximum Leverage

The issue of illegal immigration continues to divide Washington, DC. We saw it again last week when Congress could not agree on a bill that would fund Homeland Security and also prevent funding President Obama's "executive action' to legalize 4 million illegal immigrants.

We will see more headlines this week as Congress kicked the issue down the road for another seven days.

The argument we have heard most often for immigration reform in the past is that the United States does not have enough workers.

In fact, when President Obama announced his "executive action" in December he said the following.

"Part of staying competitive in a global economy is making sure that we have an immigration system that doesn’t send away top talent, but attracts it.” 

President Obama has supplemented this argument with a "humanitarian" view in his latest action in that generally those illegals that would be allowed to gain "legal" status through his use of his "executive authority" are the parents of U.S. citizens. In other words, if you came to this country illegally and had children that were born here, that then becomes your ticket to stay in this country. President Obama would call it keeping families together.

It would seem logical to me that if this is the case why wouldn't a minimum requirement also be that the parents should produce evidence that they also fully paid for the hospital costs involved with the birth?  If they did not pay or the costs were paid by Medicaid, why would we not require the newly legalized workers to be required to pay these costs back as a condition of their work permit status?

As an example, a vast majority of births in a number of hospitals in Texas are to illegal immigrants. At Parkland Hospital in Dallas (yes, the hospital in which John F. Kennedy died in) births to illegal immigrants have made up almost 75% of total births in recent years. Over half of the births at LBJ Hospital in Houston have been to illegal immigrants in recent years. Nationally, it is estimated that almost 1 in 10 births in this country today are to an illegal immigrant. A large portion of the costs for these births are paid by Emergency Medicaid or the costs are just absorbed as a loss by the hospital as these illegal immigrants do not pay anything for the birth.

Under Obama's "executive action", if an illegal immigrant has to produce a birth certificate to prove they are the parent of a U.S. citizen, shouldn't they also have to produce evidence the birth was not paid by U.S. taxpayers or was a bad debt of the hospital?

And shouldn't they be obligated to pay this money back since the birth is, in effect, their ticket to access the U.S. jobs market? The amount owed could be withheld from their future wages on an installment basis. The money could also be allocated specifically to fund Obamacare costs. This would be the logical way to handle this issue if President Obama's "executive action" is allowed to stand. Or does that make too much common sense?

Let's also examine the argument that we need the workers.

Hotels, restaurants, construction and a number of service industries argue that there are not enough Americans willing to work at lower paid jobs. They argue we need to provide opportunity to low-skilled foreign-born workers to enter the United States to do these jobs that will result in an overall benefit to the economy

On the other end of the education spectrum, high tech computer companies in Silicon Valley and other industries that covet STEM college graduates (Science, Technology, Engineering and Math) are big supporters of opening the borders for these graduates arguing we are developing enough native-born citizens with these skills.

What are the facts?

I thought this chart from The Washington Post that shows unemployment rates by college major was particularly interesting on that score.

Note that the current unemployment rate of recent high school graduates in the U.S. is almost 18%. The unemployment rate for experienced high school diploma holders is 9.9%. The unemployment rates for high school drop-outs is traditionally even higher. Where is the need to bring in more unskilled labor? There are already millions of Americans without jobs.

Notice also that the unemployment rate for recent college graduates is higher for Computers, Statistics and Mathematics majors (8.3%) than for Communications and Journalism majors (8.2%). If we can't employ nearly 1 out of 10 recent college graduates in Computers, Statistics and Mathematics, why do we think there is a need to bring thousands of additional foreign workers here. Why don't we get these young Americans employed first before bringing in additional immigrants?

The truth is that many of our political leaders and business interests keep calling for "immigration reform" when they really just want to increase the numbers of "legal" immigrants despite the fact that our economy can't provide enough good paying jobs to native born citizens as it is.

We are already providing legal "Green Card" status to over 1 million immigrants per year. No other country in the world provides more legal immigration each year than the United States already does.

The reality is that immigration reform is not so much an economic issue as it is a political issue. Democrats need the votes. That is all they seem to care about.

Corporate interests want to keep wage costs down. The labor unions should be anti-immigration but are more concerned with the success of the Democrat party than their own members.

Republicans in Congress are caught between the monied interests who want the cheap labor supply and their rank and file voters who fervently oppose illegal immigration. It is all about political interests and has very little to do with the best interests of this country, the American people, or especially, the American worker.

For the average American worker, the higher the immigration levels are, the lower their wages will be. That is basic economics. It is simple supply and demand.

That is why I would like to see the Republicans turn the tables on President Obama and the Democrats and combine an increase in the federal minimum wage with defunding of Obama's "executive action".

Pass the Homeland Security funding bill as a clean bill. Immediately thereafter, have the House of Representatives pass a bill increasing the federal minimum wage from $7.25 to $7.50 and defund Obama's executive action on immigration in the same bill and send it to the Senate

Failure to pass this bill requires Democrats in Congress and the President (if it passes and he vetoes it) to admit that 4 million illegal immigrants take priority over American workers.  And it also puts Democrats on the spot in that they have consistently been calling for an increase in the minimum wage for years. They suddenly don't want it if it means we can't legalize more illegal immigrants. That is a tough position to defend in anyone's home district or state.

Bear in mind that 29 states already have minimum wage laws in place that are in excess of the federal law. That should lay to rest fears that the GOP would be selling out on a major adverse economic issue.

Such a move could also be used by the Republicans to show that they are "working for the American worker" and are also "willing to compromise" on issues.

Sure, the Democrats would argue that GOP is just playing politics. However, I would much rather be on the Republican side of that political issue than be accused of trying to shut down the government or holding Homeland Security hostage to get the illegal action of the President de-funded.

What about you?

(Note: It goes without saying that the strategy I propose would have those on the Hill arguing it could not be done because it would violate some aspect of the Budget and Appropriations process. In other words, it would be illegal. However, when did that stop President Obama?  My advice to Speaker Boehner and Majority Leader McConnell? It is time to start playing the game the way the other side plays the game.