America’s Factories Are in Recession

Submitted by William Bonner, Chairman – Bonner & Partners

Working Boots no Longer Needed for Work

NORMANDY, France – We needed a pair of good work boots; on weekends we’re fixing up an 18th-century farmhouse. We’ve never found a French-made boot that fits well. So we went online to see if we could get a pair of American boots delivered.

To our great delight, an old favorite – Red Wing – has stores in several cities in Europe; it ships to France. They were absurdly expensive – $299 – but we figured we would have them for the rest of our lives.

red wing bootsAssorted red wing boots. Hip celebrities wear them, so you should too (says Red Wing).

The boots arrived on Saturday and were just like the ones we bought 40 years ago. Same stiff, solid construction. Same rich smell of leather and last. Same Minnesota simplicity.

But something was different. In with the boots was a magazine celebrating the history of the company. It was a stylish advertising piece; we wouldn’t have expected it from such a sweaty, shop-floor boot company. Even more remarkable were the photos. They showed young people in various chic urban settings: Brooklyn. San Francisco. Berlin. They were all hipsters!

Not a single picture shows a man lifting, toting, turning, hammering, or cutting – the things you’re supposed to do in boots like these. Instead, now, they are for hanging out… going to bars… and looking cool. They’ve become a fashion item.

What happened? How come America’s premier work boots are no longer pitched at America’s working men? One reason: America’s working men don’t need them.

Here’s the latest from Alan Tonelson at RealityChek:

“The headline job growth [the aforementioned 271,000 jobs] was overstated due to extraordinary and unreported seasonal adjustment factors.

Also suspect (or at least interesting) is the report that virtually all the job gains were accounted for by workers aged 55 and over. Since 2007, the BLS reports workers 55 and older have gained more than 7.5 million jobs, while workers younger than 55 have lost a total of 4.8 million jobs.”

Employmenjt levelsThose aged 55 and over can no longer afford to retire, while the youngest and least skilled cohort of workers (the 16 to 19 year age group) can no longer find a job (a strong sign that minimum wages have succeeded in pricing them out of the labor market – isn’t socialism grand?) – click to enlarge.

Deeper Problems

But Red Wing has deeper problems. First, buyers can get boots cheaper elsewhere. Foreign made, with man-made materials, the new boots are probably just as good and much less expensive.

Second, American workers may not be able to afford American-made work boots. In real terms, the typical man of working age in the U.S. earns less today than he did in 1975 – 40 years ago. Also, the “labor participation rate” – which measures the number of people employed or actively looking for work – is back to where it was in 1967.

Back then, it reflected that women were much less likely to have jobs. They stayed at home and looked after families. Now, it’s the men who are more likely to be jobless. What they are doing is not clear. But they don’t need American-made work boots to do it.

Under the circumstances, Red Wing seems to have made a good move. Like Harley-Davidson, it has positioned its products as American fashion artifacts – relics of past glories, not modern footwear.

fatboyHarley-Davidson “Fatboy” – an American fashion artifact reflecting past glories?

Chart by: St. Louis Federal Reserve Research