Thursday, June 4, 2015

The Unhappiest Place on Earth

The New York Times has quite a remarkable story about H1b visa holders literally replacing IT workers at Disney: 
...Disney “made the difficult decision to eliminate certain positions, including yours” as a result of “the transition of your work to a managed service provider,” said a contract presented to employees on the day the layoffs were announced. It offered a “stay bonus” of 10 percent of severance pay if they remained for 90 days. But the bonus was contingent on “the continued satisfactory performance of your job duties.” For many, that involved training a replacement. Young immigrants from India took the seats at their computer stations. 
“The first 30 days was all capturing what I did,” said the American in his 40s, who worked 10 years in his Disney job. “The next 30 days they worked side by side with me, and the last 30 days they took over my job completely.” To receive his severance bonus, he said, “I had to make sure they were doing my job correctly.” 
In late November, this former employee received his annual performance review, which he provided to The New York Times. His supervisor, who was not aware the man was scheduled for layoff, wrote that because of his superior skills and “outstanding” work, he had saved the company thousands of dollars. The supervisor added that he was looking forward to another highly productive year of having the employee on the team. 
The employee got a raise. His severance pay had to be recalculated to include it. 
The former Disney employee who is 57 worked in project management and software development. His résumé lists a top-level skill certification and command of seven operating systems, 15 program languages and more than two dozen other applications and media. 
“I was forced into early retirement,” he said. The timing was “horrible,” he said, because his wife recently had a medical emergency with expensive bills. Shut out of Disney, he is looking for a new job elsewhere. 
Former employees said many immigrants who arrived were younger technicians with limited data skills who did not speak English fluently and had to be instructed in the basics of the work....
I gotta say, I have been skeptical of stories like this. Not anymore, I guess.

48 comments:

  1. This puts Indians in the very bad limelight and not their fault! I am of Indian ancestry here in the USA and I feel terrible that I lost my pharma job as a result of outsourcing my job to India! I understand that it was done for business reasons, but I blame Disney and others for creating this issue. I am sure that Indians are working for a "cheaper" wage!

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    1. "I blame Disney and others for creating this issue."

      Yep, agreed.

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    2. different anonymousJune 4, 2015 at 12:21 PM

      Is business to blame...or does the blame go to the lawmakers who wrote our immigration laws and then turned a blind eye to their exploitation?

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    3. Business is to blame for bribing the lawmakers. In any case, I agree with the earlier comment. It doesn't make sense to blame people who would accept lesser pay for depressing wages; the only one to blame for low wages are the employers themselves.

      -DDTea

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    4. Or is the U.S. voter to blame for being an uninformed idiot (or single issue voters)?

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    5. The U.S. voter is to blame for a great deal, including being an uninformed idiot - but not this.

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  2. CJ:

    This has been going on for a LONG time in IT. I have a close friend who is working for a certain, huge, off-shore, "managed service provider" (who has been in the news - a lot - recently) and he's been seeing it first hand since 2008 when he started there. They pay dirt-poor wages to H1B holders and hold the visa over their heads so they don't complain about it.

    One way to muck up the works is for American workers to keep an eye on job postings and apply for every job that one is even peripherally qualified for, then continue to hound HR with the "Why is this going to a H1B holder when there are ample Americans for the job?" and even lay in a ruse for litigation. Ostensibly, that prevents the job from being filled with the H1B holder, thus mucking up the works for the employer.

    Disney didn't create this issue: Congress did - it's an unintended consequence of the H1B program.

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    1. There's no provision in the law to hire qualified Americans first. Hounding HR does nothing but make their jobs suck that much more.

      HR jobs are being off-shored, too, you know. Do you think they like it?

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    2. Of course, employers never use the excuse of nobody else wanting the job as rationale for hiring visa holders instead of citizens, right?

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    3. @Anonymous 6/4/15 12:55 PM - Surely you typed that with "sarc" on... it's the oldest excuse in American immigrant labor history. Even if it is a load of BS.

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    4. What do you mean, "UNINTENDED."

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  3. A hotel I used to stay at frequently in NYC used to put the country from which each employee came from on their name tag. I always thought it odd that a hotel in midtown would, almost exclusively, be staffed by foreigners. Maybe the hotel just couldn't find staff in America's biggest city? (I guess I left off "willing to work for a low salary").

    "Disney didn't create this issue: Congress did - it's an unintended consequence of the H1B program". This is true. The laws were passed by Americans (via our elected representatives) to maximize shareholder returns for everyone who owns a 401k/IRA/broad mkt ETF (Vanguard, State Street, and Fidelity are the top 3 holders of DIS). So the system works! American shareholders demand higher returns for our retirements, which we provide by legislating laws allowing us to exploit imported workers for low wages. Seems win/win to me....

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    1. Maybe Congress was the execution mechanism but I feel it was/is people like Bill Gates who continually advocate demand for such foreign workers to fill a STEM gap that may be artificial or at least partly enhanced by discouraging pursuit of areas because the relative lower wages brought on by such competition.

      The costs of going to Disneyland is now quite expensive and I saw they are seeking to increase with possible peak day higher ticket prices so this info about treatment of IT personnel is just seems another reason to go other places anyway.

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    2. It'd be easier to make the investment argument if investors had substantive control over what companies did, but they don't seem to. (Your company's president can get paid lots of money to suck and you can't do much about it, for example.) If you're a large institutional investor (Fidelity, CalPERS) or an "activist investor", they might listen, but it doesn't seem like investors have any say in how their companies are run (or even, in the case of funds, in what businesses their money is invested). That renders the choice to putting money into savings (because banks are so much more understanding) or under the mattress. Not sure how that's going to work out well for anyone other than who it's working out for now.

      Whether they stop outsourcing depends if anyone cares enough to stop going to Disney (or their movies, which might be a more available route for lots of people) because of it. They may not listen to stockholders because their friends own the voting stock, but if they aren't making money, then the stock isn't going anywhere good. Of course, that won't happen, and that can be more directly blamed on us.

      I guess the good news is that when we're all working for McD's wages, I wonder who will be going to Disney, or buying Beemers. The assumption seems to be that there'll be enough consumers with money left after the purges to support their prices, but I'm not sure what their market is. China? Maybe...until they figure out how to replicate it, and then eat them alive.

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    3. Exactly Hap, every company is playing the prisoner's dilemma. Any one company would love to outsource all employees, but have well-paid Westerners as their customers. How do we get past the short-sightedness and lack of cooperation?

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  4. Let's not let the companies off the hook here so easily. Sure, there's blame to go around, but:
    - do we really think Congress would approve such measures without corporate pressure?
    - just because a company can legally do something doesn't mean they should. And no, before anyone makes the claim, they are not legally required to hire the cheapest workers available.

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  5. How does this situation compare to being a post-doc whose job responsibilities include training a foreign PhD candidate, who will ultimately compete in the job market? Especially since the PhD candidate will have less experience than the post-doc, an hence will command a lower initial salary than will the post-doc?

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    1. It's the institutes that enroll foreign Ph.Ds. Blame the universities.

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    2. Companies which do not recognize BS + experience and MS + experience as PhD equivalent are fueling the universities to churn out low quality foreign PhDs. Many of those are giving grants for research to low tier universities that should be allowed to shrivel up and go under from lack of funding.

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    3. "It's the institutes that enroll foreign Ph.Ds. Blame the universities."

      But aren't they frequently doing so in response to federal mandates and funding quid pro quos from the private sector? Blame the government, industry, *AND* the universities.

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  6. this happens all the time. here is the normal pattern of events:

    - A job will be that typically pays 100k. Salary is listed at 40k.
    - No one will apply or take the job because they can just work a similar job elsewhere for far more money.
    - Company says they can't find any qualified individuals to fill the position and need to hire from overseas.
    - People wanting to come to the US will take the job at the reduced pay rate. Company saves a ton of money.

    Many of my friends in industry complain about management using this strategy. It happens a lot.

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    1. A variant on this strategy that used to be popular, was to list job requirements that are literally impossible to fill. In 2000 this would have been "must have a decade of experience in Java development," or "must have 15+ years experience as Senior .NET developer." I saw a large number of these job listings in the early 2000s.

      Alternately, to list a long and bizarre concatenation of "required" skills that were highly unlikely to be encountered in an individual. In some cases, I'm sure the lists were sort of legitimate, in others, I'm sure the HR person was trying to cover all the bases out of pig-ignorance, in still others, I'm sure it was a tactic to restrict applications and claim, "We can't get the people."

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  7. I honestly want to know whether the statement "Foreign workers are paid less than American workers and therefore companies like Microsoft hire foreign workers in large numbers" has any merit and any solid evidence to back it up.

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    1. Dunno about the former statement, but here's indication of the latter: http://www.myvisajobs.com/Visa-Sponsor/Microsoft/356252.htm

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    2. Check out the research conducted by Dr. Norm Matloff (Computer Science, UC Davis - has an E.E. doctorate):
      http://www.epi.org/publication/bp356-foreign-students-best-brightest-immigration-policy/

      Patrick Thibodeau writes a lot about the impacts of the H-1B program for Computerworld.
      http://www.computerworld.com/article/2507602/technology-law-regulation/h-1b-pay-and-its-impact-on-u-s--workers-is-aired-by-congress.html

      Vivek Wadhwa also frequently makes statements to this effect.
      http://www.cio.co.uk/insight/change-management/the-next-wave-of-globalisation-offshoring-rd-to-india-and-china/

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    3. U.S. Senator Jeff Sessions on this issue:

      http://www.sessions.senate.gov/public/index.cfm/2014/7/sessions-remarks-on-tech-layoffs-and-how-the-h-1b-visa-displaces-american-workers

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  8. There are mass hiring of foreign "interns" in the summer by companies who are cutting thousands of staff members.

    The only way we can influence is to refuse to participate in these programs. If you are offered an intern when people are losing their job, say HELL NO this program is ethically wrong. If your coworker discriminates against the former employees of the company by hiring interns during layoffs refuse to participate in any intern program. If the intern gives a poster don't go. If the intern gives a talk don't go. If the intern has a welcome breakfast don't go. If they ask you for help refer them to the lazy idiot who requested them.

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    1. "There are mass hiring of foreign "interns" in the summer by companies who are cutting thousands of staff members."

      link please

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    2. Links are much easier to get in intern hiring seasons. Most internships are fully underway now. Perhaps your website has the data you seek.

      Think of companies which have a lot of layoffs. (Pretty much any major chem employer in the US). Cross check with google search of "Company X" and "layoff." Most heavy offenders layoff many every year.

      Then see how many of those companies have intern/Coop pages or job postings for STEM interns in the winter or spring. Remember interns enrolled in school can use their academic visa thus do not require sponsorship.

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    3. Indeed, Anon 7:31 has a valid point about internships. I have noticed a number of such positions being advertised. For example:
      1. BASF does this a lot, both in North America and Germany.
      2. Just this week, an advert appeared on CraigsList from a pharma company in the LA area, which was also advertising this.

      On the other hand, since the BASF internships are usually posted in German, not English, my conclusion is that this is aimed at the domestic audience. While the doctorate-level advertisements are uniformly in English. As far as the CraigsList advert is concerned, who knows? Does anyone know a domestic PhD who would work for $ 40 K/year in LA out of desperation?

      While I agree with the sentiments aired on this string, a lot of it could be more productively targeted. For example, why not "name-and-shame" the specific companies, as I have just done?

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    4. Here is one specific example of a company in southern California which is cashing in on cheap interns, instead of hiring full-time employees:
      http://solarmer.com/about-seep/
      This second link shows that they even have the chutzpa to CHARGE the interns $ 700 for the summer:
      http://solarmer.com/moreinfo/

      If you look through the "leadership" page then you will get an idea about how they can get away with this, and the sorts of folks who they hire on a regular basis.

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    5. multiple people in one group may lose their positions. yet there are multiple interns running around and getting in the way for people doing the real work of trying to get things wrapped up. wonder what the interns will do when all the people they are supposed to be learning from have their jobs disappear.

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    6. This...

      https://www.youtube.com/watch?v=HksE-7aYmIw

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  9. Really not too much different from what I anticipate what will happen to me when I lose my job at my RO1 University when the grant runs out and I simply cannot compete with Chinese and Indian PhD's who will post-doc for 30 K a year....

    I blame the university and globalization. Its a race to the bottom.

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    1. Kicker is that Chinese and Indian PhDs with postdocs selectively hire Chinese and Indian PhDs with postdocs. I doubt there is an example of a posting with a requirement of a postdoc or 2 which was filled by someone that did not require visa sponsorship.

      Funny thing is the more postdocs a PhD has indicates how unemployable they were after their PhD!

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    2. "Funny thing is the more postdocs a PhD has indicates how unemployable they were after their PhD!"

      This is true but a stigma, however fair or unfair. One thing for certain: if Universities didn't produce and import so many foreign PhD''s then employers would have less reason to use this stigma to reject your application.

      Japan protects its labor market, I wish our country (the US) would protect ours.

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    3. Japan's labor market is pretty sad, has been for decades. Not sure how much protection the workers actually have, given the high quantities of foreign labor resident there.

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  10. In case anyone is interested, then someone just started a petition to against Disney:

    http://www.change.org/p/walt-disney-the-walt-disney-company-stop-outsourcing-jobs-to-immigrant-workers-for-lower-wages

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  11. Read all sorts of things about Disney being an "evil" employer. Anyone seen that story a while ago about how they tried to dismiss and cover up sexual harassment of an employee by another employee?

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  12. I blame greed of people who don't believe in meritocracy. I blame the folks who bought more house than they could afford and had to have the taxpayers bail them out. I blame all the students who took on 100K in loans to get drunk and high while being handed unemployable degrees and now want to have loans forgiven. I blame the Walmart employee who thinks they deserve $15/hr when a BS chemist might make $18-19/hour. I blame those who went out and bought $50K cars with other people's money. I blame the bleeding heart liberals who steal from the working class to give free food and medical to the bums.

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    1. Not sure that the students paying 100K in loans are to blame for the assessed tuition costs. As far as I can tell, the university in general hires lots of administrators with political connections, gives money to Democrats, implements programs to ensure that illegal immigrants get to attend for free, and then hikes tuition across the board. The housing market fiasco of the last decade - which was created by government, by the way - ensures that rents are generally up. The Fed's easy money policy ensures that we have more inflation than we admit to. All of this tacks on expense.

      The students took out the loans, but their alternative is to make do with their high school degrees or go to CC. Nothing wrong with this, but these will only take you so far. As for college, the degrees have remained relatively consistent - it's the attitudes of the employers that have changed. I notice there is a lot of employer whining about lack of appropriate skills (despite the fact that today's average student does their own word-processing and is more computer literate than students from just 30 years ago), but I also notice that no-one is re-starting training programs for new hires, which went away in the 80s and never came back. What did come into vogue was interminable rounds of unpaid internships, getting possible hires to do firm work *under the guise of assessing employment readiness,* and offshore outsourcing. Those unemployable degrees now include microbiology, chemistry, physics, and other "impractical subjects." Are the students to blame? In many cases, I doubt it.

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    2. Also to blame for those inflated tuition bills, I suspect, are the extremely high levels of international students paying in-state rates. This phenomenon is partly a function of the department, partly a function of the institution, partly a function of the federal government, and partly a function of local industry. My last graduate program (engineering) had two pages of student payroll names - on which only three of the students were citizens. I can't help but suspect that turning large numbers of de facto out-of-state students into "in-state" students for tuition assessment purposes creates a shortfall that has to come out of someone's pocket.

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    3. Last year, Walmart advertised 600 open positions at a given location, and got 23,000 job-seekers. The chances of any individual landing one of the coveted positions were therefore something like 1 in 38.33.

      I recall an earlier post that said something along the lines of, "becoming a professor at an R1 is chasing the dream, but working as a professional chemist in industry? That's not supposed to be an out-of-reach dream." ("Chasing the Dream," 4/5/11). Looks now like working at Walmart is the new dream.

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    4. Dear Anon 5:52,
      Why is the US the only western country which does NOT guarantee a living wage for all of its citizens? I have no problem with shopping in WalMart and seeing their employees receiving $15/hour. On the subject of greed, I blame the greed of the US companies which are not willing to pay a BSc chemist a decent salary. I blame the stock market traders whose sole concern is share holder value. I blame our our fellow citizens who have no clue about how the rest of the civilized world works in terms of social cohesion, and probably have never even left the US in their lives. I blame the people who try to put others into simple, little intellectual boxes with labels such as "bleeding-heart liberals", "iPhone users", "socialists", etc. Because they have no perspective. :-(

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    5. With regard to your first question, I am not at all sure that this is the case. Perhaps it depends on how "western country" is defined, or where the demarcation is. There are a lot of OECD countries in which the minimum wage is less than in the US currently (including Japan, surprisingly) and only about nine with minimum wages higher than in the US. Of the nine (Oceania and Europe) several have issues with high levels of youth unemployment (e.g. France). One difficulty with providing a 'living wage' clearly is that the economy responds in an undesired way when attempts are made to assure one. I am also convinced that the 3rd most populous nation in the world - with perhaps more characteristics in common with India and China than say, New Zealand, even if we don't care to admit this - will run into great difficulties with respect to such an undertaking.

      I have no issue with Walmart paying its employees $15/hour. I do have an issue with making a $15/hour minimum wage a federal mandate, or even a state mandate, because there are undesirable consequences from creating and enforcing such a mandate, not least of which is a reduction in economic activity and resulting unemployment.

      I feel the practices of US companies have not been in accord with good long-term management principles - stewardship, if you will - and there are certainly individuals who have profited unduly at the expense of others. I leave the traders out of it, with a few exceptions (e.g. investors/political activists who spell their last names the same forwards as backwards, say, and investors/activists who are known to have profited through political contribution, whose initials are W.B., to cite two examples).

      As for your fellow citizen, one consideration I have learned to have is not to expect too much. Having spent some time knocking around other parts of the planet, I've found that insular people exist everywhere, and people who have 'no clue about how the rest of the civilized world works' are just about as likely to be found anywhere else as here (and even more likely in a few places). I may not care for some of the attitudes that I run across from time to time, but I do have some sense of how surprisingly and depressingly ubiquitous they really are.

      As for putting people into little boxes, it's something I'd like to think I at least try to avoid, however, I generally find I'm making more of an effort than most of the people that I disagree with. It would be nice if the US could become a more civilly argumentative society, but I'm afraid more people on all sides would really have to work at this, and I am increasingly convinced that many of them are congenitally incapable of being civil in the first place. I think it's far more likely that political and social forces will continue to be brought to bear to restrict free speech. Seems like an awfully high price to pay for an incapacity to respect other or contrary opinions.

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    6. "There are a lot of OECD countries in which the minimum wage is less than in the US currently (including Japan, surprisingly"

      It strongly depends on the exchange rate. A couple of years ago, Japan's minimum wage was a lot higher than that of the US. The yen is really weak right now, making the minimum wage look bad.

      In any case, your comparison isn't really on the mark. Japanese workers get commuting subsidies (even low-wage workers) by custom, mandatory paid vacation (two weeks per year minimum, pro-rated for part-timers) and super-cheap health insurance. Low-wage Japanese workers are *way* better off than their American counterparts, as what are typically a person's #2 and #3 expenses (transportation and health care) are minimal for most low-wage Japanese.

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    7. I did restrict myself to considering minimum wage in the OECD, rather than make a broader based comparison that ultimately would mean even less given the profound differences (recent historical, geographical, and racial) between Japan and the US. Actually what's compared is USD purchasing power parity (PPP) in 2013 constant prices, rather than at 2013 US $ exchange rates, although that too is an option with the OECD dataset.

      For example, commuting subsidies make much more sense when you live on an island (i.e. 本州 ) with extensive rail networks that have been in place for decades - rather than a continent-spanning nation that mostly ditched commuter rail decades ago. Subsidized commuting also makes more sense when urbanization is more dense than sprawling, rather than the other way around.

      Japan has also had different spending priorities than the US. When you don't have to spend vast amounts of money to protect allied nations (e.g. all of Western Europe, the Philippines, the R.O.C., the R.O.K, and Japan, *just to name a few*) for decades on end, it frees up money that can then be spent on other goodies. When you don't have big cities where the inhabitants go a*e-sh*t every few years ostensibly just because they want to go discount shopping or 'take it out on the man' (who more than likely is Asian or of Middle Eastern descent), or *horror of horrors* - suck the Federal tit dry by threatening more of the same until the payola wagon comes 'round, it frees up substantial resources that might actually be applied to improving lives. When the US federal government ceases to enforce US law on immigration, that's tens of billions of dollars a year in providing social services, ESL education, and law enforcement issues that might have gone to other things. When the US federal government intervenes in the housing market, the banking system, the education market, and the health-care system, this all occurs at a profound cost with respect to other issues (and apparently drives costs up for everyone). The US has different priorities, and that yields different outcomes.

      Japan, incidentally, is one of the countries with youth employment problems - and that's been true for close to a quarter-century now.
      http://www.japanfocus.org/-Kosugi-Reiko/2022/article.html

      In fact, a closer look indicates that the Japanese model causes problems for many of its workers:
      http://www.japanpolicyforum.jp/en/archives/economy/pt20140120140815.html

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    8. ...and here's another example... 50 IT workers in Florida let go, told to train their replacements.

      http://www.myfoxtampabay.com/story/29402790/catalina-marketing-it-jobs-being-outsourced

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