Friday, May 20, 2016

Ten Principles for What’s Still a Permanent Jobs Crisis

“For most of their lives, Americans have thought all good people could find work and support themselves.  That is gone forever, and no economic recovery will bring it back.”

In the five years since I put that on the back cover of Work’s New Age, we have had fine economic times.  We have added over 8 million net new jobs since 2013 alone, and the official unemployment rate is, at 5.0%, a hair above half of what it was when that book went to press.  The American Job Shortage Number (AJSN), showing latent demand for additional positions, has not improved as much, but is still down from 23.3 million in July 2009 to 17.3 million last month.  Over the past year wage increases have exceeded inflation, and the numbers of those officially jobless for 27 weeks or longer, and working part-time for economic reasons, are way down. 

Yet the jobs crisis is not over.  The events of the past seven years, if not the entire 43 since what I call the Winning by Default era ended, have broken the back of the idea that ordinary Americans can routinely get work at all, let alone support others or even themselves with it.  The labor force participation rate, the best indicator of how common it is for United States residents to be either working or officially unemployed, was last month at 62.8%, well below its 2008 Great Recession 65.8%-66.2% range.  Since that recession ended in 2009, a disproportionate number of new positions – sources disagree on just how many – have paid lower than most.  At one point, one-third of jobs added since then were with temporary help agencies, and, per a CNN article from last month, many growing the most in numbers, specifically food preparation and service workers, personal care aides, home health aides, retail salespeople, and restaurant cooks, have average annual pay under $22,500.  At the same time, more and more people have been putting pressure on governments to raise minimum wages, and early returns when they have succeeded, as I wrote a few weeks ago, have shown that such moves have, indeed, caused jobs to go away.  We also have now had almost seven years without a recession, which while hardly unprecedented is not representative. 

So, given that we are not out of the jobs-crisis woods, what principles can we use to deal with our work situation, both currently and in general?

First, the largest employment gap, emotionally as well as logistically, is between those with and without jobs. 

Second, as long as we have no guaranteed income, the worst legal thing a worker can experience is not to have employment at all.

Third, the high share of new jobs being low-paying means our employment statistics, including the AJSN, overstate our prosperity.

Fourth, however, there is a place for low-paying positions, as people’s wants and needs vary greatly, they are not always the only sustenance source for those working them, and even a job at the lowest $7.25 hourly minimum, if full-time and including some small perquisites such as free food, can support one person in the great bulk of our country.

Fifth, education has done almost all it can to facilitate people working good jobs, as the number of such positions is limited and decreasing, and it now serves mainly to affect who gets them.

Sixth, almost every alleged “skills gap” situation would go away if employers were willing to either train workers or to pay market wages for those with the capabilities they want.

Seventh, I see no hope for many more high-paying jobs that the market can’t support, as artificially creating them usually costs more than they are worth, so we all need to adjust to their shortage.

Eighth, large numbers of things we have now, such as a constantly increasing set of medical treatments, were unavailable or extremely expensive in decades past, and many more, such as almost all electronic devices from TVs to phones, are priced far lower in constant dollars than ever before, and these boons are not counted in any wealth or prosperity statistics.

Ninth, accordingly we need to redefine what it means to be affluent and financially successful.

Tenth, the middle class as we knew it may be disappearing, but as more resources become free or cheap it is being replaced by something with similar or even higher levels of comprehensive prosperity.  By 2050 there may be only a minute number of Americans with true lower-class status, a 1% or a bit more who have profited mostly through possibly unstoppable wealth concentration at the top, and a great mass of people who might be called “sustaining class,” “typical class,” or something more melodious.  They will not be virtually guaranteed full-size standalone houses or new cars every few years, as were middle-classers from the 1945 to 1973 Winning by Default years, but would be envied by them for having, for example, free long-distance telephone calls. 

More to follow on this last principle.  Stay tuned. 


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