July 27, 2010
-- by Dave Johnson
Simple question: have we reached a point where machines and computers leave us with less work to do? If so it can mean a lot of people are left without jobs and incomes, losing their homes and health, while the rest have our wages dragged ever downward. Or we can make some changes in who gets what for what, and every one of us ends up better off.
Cake or death? Which will it be? (*explained below)
Somewhere around one in five of us is un- or under-employed while at the same time so many of the rest of us, still employed are stressed, tired, doing the work of those laid off. With too few employed many stores, restaurants, hotels and many other businesses are falling behind. As Bob Herbert puts it today, "Simply stated, more and more families are facing utter economic devastation: completely out of money, with their jobs, savings and retirement funds gone, and nowhere to turn for the next dollar." The government has stepped in with stimulus to pick up some of the slack in demand but that can’t go on forever and we need to find long-term solutions.
Is it structural?
There are signs that the jobs crisis may now be structural, or built into the system. This means that the usual solutions are not going to "restart the engine" and trigger a return to an economy that had where almost everyone can find a job, (even if it is a menial, boring time-suck).
Our unemployment emergency may really be about less work to do. Hale "Bonddad" Stewart writing at 538.com, Labor Force Realignment and Jobless Recoveries concludes, (click through for gazillions of charts and full explanation)
The "jobless recovery" is in fact a realignment of the US labor force. Fewer and fewer employees are needed to produce durable goods. As this situation has progressed, the durable goods workforce has decreased as well. This does not mean the US manufacturing base is in decline. If this were the case, we would see a drop in both manufacturing output and productivity. Instead both of those metrics have increased smartly over the last two decades, indicating that instead of being in decline, US manufacturing is simply doing more with less.
So it may be that machines and computers are doing more of the work that people used to have to do.
Robert Reich sees signs of structural unemployment as well, writing in The Great Decoupling of Corporate Profits From Jobs,
... big U.S. businesses are investing their cash in labor-saving technologies. This boosts their productivity, but not their payrolls. [. . .] The reality is this: Big American companies may never rehire large numbers of workers. And they won’t even begin to think about hiring until they know American consumers will buy their products. The problem is, American consumers won’t start buying against until they know they have reliable paychecks.
So what do we do?
Maybe we need some changes in who gets what for what. Right now we have an economy that is structured to send most of its benefits to a few at the top, while the rest of us -- the help -- sink ever downward into less and less security. People with power and wealth benefit when they figure out how to cause other people to receive lower pay -- or just lose their jobs. Eliminating jobs brings bonuses to the eliminators -- a perverse incentive if ever there was one. If someone can figure out how to cut your pay and benefits or just get rid of you (“eliminate your position”) they get to pocket what you were making, and you get nothing (and conservatives say you're lazy). If you don't own the company you're out of luck.
In the past this perverse incentive was mitigated by people banding together in governments and/or unions and forcing the wealthy and powerful to share. But modern marketing science has been successful at making people believe that government and unions are bad for them. This was also mitigated by the ongoing need to find people to do the jobs that needed to get done. But with continual improvements in technology this need is reduced. We're living the result.
Also, this perverse incentive structure assumes an infinite pool of customers to sell to, ignoring that the transaction of benefiting from eliminating a job also eliminates a customer. But modern business has become so efficient at job elimination that this comes into play. Who will be able to buy theTVs that the employee-eliminating factory makes, if all the employees are eliminated and have no income?
These are structural problems that we can change. Let me just brainstorm a few possibilities for structural changes into the mix here:
The other obvious way to provide a quick boost to the economy is by giving employers tax incentives for shortening their standard workweek or work year. This can take different forms. An employer who currently provides no paid vacation can offer all her workers three weeks a year of paid vacation, approximately a 6% reduction in work time.
These are just a few ideas for restructuring the economy in ways the help all of us instead of just a few at the top. Please add your ideas in the comments.
We have a choice. We can continue with the system we have, and most of us -- the help -- will just get poorer and poorer while a few at the top take home more and more. Or we can change who gets what for what, and everyone comes out ahead.
*So which will it be, cake or death?
Posted by Dave Johnson at July 27, 2010 1:52 PM
The middle class was built on the 40 Hr work week when industrialization dramitically increased productivity. That way the employees shared in the products of increased productivity.
With the dramatic increase of productivity in the last 25 years exclusively going to management and finance the employees have been left behind and our middle class is vanishing.
It is time to set the rules of business to balance out the strangle hold that the financial elites have on other 98% of our citizens.
32 Hr work week. Make overtime prohibitive for employers with exceptions for seasonal ( i.e. retail etc Xmas) pushes. High estate taxes to help prevent the inherited elite that the founders of the US warned against.
Rebuild the safety net to include housing health care, food and internet access.
Cut the defense budget by 2/3 with the money going into infrastructure, education and energy retooling.
I'm sure that this agenda could be passed in a couple of weeks. No problem
What is amazing is how resistant economists of nearly every stripe are to accepting this scenario. There's an inexhaustible amount of optimism these chaps have about the capacity of people to "find more work to do".
I'm glad you've summed some of this up here. In 5 or 10 years, you'll be able to say you saw it happening and called it out. Unfortunately, I know that we are incapable as a society right now of making such a radical change. Read Eric Alterman's latest essay on the limitations of our political institutions. And we have an entire generation whose best and brightest were schooled in the religion of mainstream economics (including Obama), which as I pointed out, has by and large denied the possibility that Americans won't just invent some new technology, service or product that will automagically create jobs.
it is fascinating how everyone has and idea or suggestion and that there aren't people who are addressing the problem. No one is listening. We do not INTEND to solve any problems. We can't. Mankind has NEVER successfully plotted a course and achieved it. Capitalism and democracy are achieving their natural end. The ideas don't hold water. Mankind is evolving without overall intent. Nature is in control. The current financial situation is a great example. Everyone was aware of the problems of overconsumption but we didn't INTEND to fix them. Nature is finding balance, not us. You can't keep spending more than you make. You can't consume your way to happiness. Capitalism operates on the idea of tricking stupid people into buying things they don't need with money they don't have. That is what it does. That is what it intends to do. That is what it did. There aren't any bad guys. The rich do what capitalism tells them to do and the consumer does what capitalism tells them to do. We have chosen to be irrelevant. Evolution asks us to make selections. Nature chooses which ones it will keep. I'm thinking at this point it is going to pass on consumerism and the idea that a whole bunch of uninformed uneducated people getting together to make choices.
Posted by: Travis at August 1, 2010 7:38 AM
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