Every passing month it's the same story - the unemployment rate goes down, yet there are not nearly enough jobs for people entering the workforce. How is this possible? And this has been the story month in and month out for literally years!
The way we compute the unemployment rate, we only count people "actively looking for work," whatever that means. A large part of the American workforce is simply invisible - people on disability, people in part-time or contract work, students, prisoners, retirees, and 'discouraged' workers. These are part of what has been termed 'the vanishing workforce.' And as we said earlier, an increasing number of people who are technically "employed" require government largesse thanks to their meager paychecks to get by.
The vanishing trend is more than a decade old, but it accelerated during the Great Recession. Throughout 2012, economists held out hope that it had stopped. But then came Friday’s jobs report, and hopes were dashed.Vanishing workforce weighs on growth (Washington Post) and see this.
The Labor Department reported that the U.S. labor force — everyone who has a job or is looking for one — shrank by 500,000 people in March. That brought the civilian labor force participation rate to 63.3 percent in March, its lowest level since May 1979. And it left the workforce several million members smaller than the Congressional Budget Office estimates that it should be, given the nation’s demographics.
Perplexingly, the driving force behind the decline does not appear to be baby boomers beginning to retire, an event economists have long predicted would shrink the size of the workforce. It’s people in the prime of their working years, ages 25 to 54, who began tumbling out of the job market in the early 2000s and have continued to disappear during the recovery.
That’s obviously bad for those people, who aren’t earning money in any way that would legally require them to pay taxes. It’s also bad for the economy for a simple reason: The fewer workers, the less growth produced.
AOL recently did a computation and came up with a real unemployment rate of 11.9 percent. That's more than 1 in 10 people not working. This is most likely conservative, as it does not include people living in their parent's basement or with relatives and spouses, people in the revolving-door justice system, people working in the "underground" economy, or people currently in school training for jobs that don't exist, to name a few. Unemployment for those under 25 remains higher than 1 in 5.
Commentators pointed out the increasing absurdity of an official unemployment rate that drops any time the employment situation worsens. The EPI’s Heidi Shierholz noted that, if the actual labor force is compared to the Congressional Budget Office’s estimate of the “potential labor force,” there are 4 million people “missing” because they believe no jobs are available.Mounting Unemployment in America, Hundreds of Thousands Drop out of the Workforce (GlobalResearch)
“If those workers were in the labor force looking for work, the unemployment rate would be 9.8 percent instead of 7.6 percent,” she concluded. “Currently, the unemployment rate is hugely underestimating the amount of labor market slack.”
So rather than blow our stack at the amount of people at public assistance, can we not celebrate that we are rich and productive enough society to support such a large number of people not working? And even with so many people out of the workforce, the lights are still on, the shelves are still full of food, goods are still plentiful and cheap, emergencies are tended to, the streets are fairly safe in most places (indeed, the crime rate is historically low) etc. I don't mean to make light of some of the things that are falling apart or the genuine hardships people are facing right now. But with so many people out of work, it is not Armageddon. Can't we really say that their work was not needed in the first place in a society as productive as ours? And why are we so distressed about that to the point where we are "inventing" busywork just to give people something to do? We have spend decades if not centuries trying to become more efficient and productive, and yet we become distressed at the inevitable results! Isn't that ass-backwards?
Now I realize that this is a very different way of looking at things than the way we are conditioned to. We are conditioned to see the non-working as lazy, and work as redemptive, even though so much work today is counterproductive and degrading. This is a product of our Calvinist heritage. But since these people have lost their jobs and society is continuing on as before, can their jobs be said to have been essential in the first place? And since they are having such fierce difficulty finding another, can we not say that they do not really need to work? After all, if there were massive unfulfilled needs in society, they would have no difficulty finding work would they? We don’t need to create jobs. If those jobs were truly important, they would have been created anyway. As this post notes, we create jobs not to fulfill some sort of urgent need, but just to give people an activity to do that allows them to earn the tokens they need to survive, and little else. Often these jobs are miserable and socially destructive. And many are being automated away.
So here is my modest proposal. Instead of all the rigmarole, waste, and moral recrimination under the current system, let's just give everyone out of work a stipend forever, as long as they want it. No more jumping through hoops, no more humiliation. Let's stop requiring anyone not in the workforce to wear hair shirts. We spend so much money trying to make sure no one is "cheating" the system, that it ends up costing us more money than it would otherwise. In fact, making sure people aren't "cheating" is itself a growing source of employment! (see the part of NPR story about the companies paid to get people on disability - aren't those jobs?)We force people to look for jobs even through we know for a fact that there are not enough jobs to go around for everyone. How insane is that?
In fact it is more environmentally friendly as well. These people are not engaged in mindless consumption. They receive money to pay for necessities-food and shelter, and they receive medical care (more than people with full-time jobs, even!), but they are not buying useless crud from China. And they are not burning fossil fuels commuting to a job that produces no productive value but just satisfies our need to make people work for pay. Because so much poverty is concentrated geographically, often poor people have to pay for a car to drive long distances to look for a job that they really do not want in the first place, often coming up with negative income. Is this a good idea with rising gas prices? Why not save that fuel for where it's really needed?
In fact, I believe this is a necessary bridge to a post-peak oil world, where economic activity is severely constrained and economies are shrinking. If there is truly important work to do, it will get done, regardless of whether we're giving people checks or not. And if it's true that at some distant point in the future more and physical and mental labor will be needed needed as the fossil fuels give out, then jobs will eventually become plentiful again and we can slowly wean people into the "world made by hand," instead of letting them starve in the interim.
I would also argue that if people are not forced into the "money" economy to get a paycheck, they can cultivate the non-market domestic local "household" economy that used to be a much greater share of economic activity. If people have a consistent income, they can do things like start organic farms and urban gardens (in fact, most small farmers I know earn less in income than disability pays). They can start small businesses at home that are not profitable at first, or craft, or knit, or preserve food, or do a whole host of economic activities that do not bring enough income to survive right now in the conventional economy that is dominated by big firms. They can also participate in the gift economy, time bank and barter. These things will also be more prevalent in a post-peak economy, so we should do what we can to help it along, and not force everyone into make-work "jobs" that are just going to go away.
The public sector does not need to produce a profit in order to survive. The United States government can never go bankrupt. Nor, despite protestations to the contrary, is it constrained by what it takes in via taxation. See Dmitry Orlov's work about the benefits of having a big, "inefficient" public sector in the wake of a collapse.
After all, what is the alternative, really? There is no economic rule that says a.) there will always be enough jobs for everyone, and that b) freed up labor will find another outlet. Most of these arguments are not based on reason, but on the argument of what has always happened before will necessarily happen again, a clear logical fallacy (if something happens x times, it will happen forever). There's the idea that "creative destruction" frees up labor for more productive uses. But what if we've run out of productive uses? What if there are no more productive uses, or even nonproductive or counterproductive ones? The private sector is under no obligation to hire anyone. Do we want to change that? The private sector hires people to fulfill it's needs. That's not a bad thing.
Make no mistake, you will pay for these people one way or another, You will pay for the security to keep your community safe. You will pay for the police to keep them in line. You will pay for the prisons to lock them up. You will pay for overcrowded hospitals because they can not get adequate care. Even a total sociopath will pay to bury the bodies of the dead. Seen from that view, food stamps are a bargain. By some estimates, 1 in 4 Americans is in engaged in some form of "guard labor" just to keep the rest of the population in line (hence all those ads for on-line 'criminal justice' degrees.)
Why will we pay $30,000 to lock people up in prison for committing a crime but not pay them $30,000 to not commit a crime in the first place? I, for one, would be happy to pay a portion of my income going towards a peaceful society where people are not begging on the streets, evicted from their homes, starving, sick, lack health care, and with less crime and without overflowing prisons (and which I could take advantage of if I needed it). If people did not have to turn to crime to survive, the people who ended up in prison really would be the dangerous ones who should be there. And why turn to crime if you have enough money to survive? What it really is, is a peace tax.
I like the comment someone left to this post:
Here in America, we have this ideological aversion to a "welfare state" that results in our having to declare someone permanently unable to work before we can give them the basic support necessary to keep them from rioting in the streets and maintain social order. It would be better for all of us if the government could give a lot of these people support without medicalizing it and permanently removing them from the workforce.