Labor day post 2013

Given the day, it seems appropriate to consider labor once again before we move on. So here I am laboring on a post about labor. Oh well.

This is probably the best place to start: 'The Great Shift': Americans Not Working (Dave Leonhardt, New York Times blog):

Yes, the unemployment rate has fallen. But almost the entire reason it has fallen is the drop in the number of people in the labor force — either working or actively looking. As Binyamin Appelbaum has noted, the share of adult Americans with jobs is essentially unchanged over the last three years.

In a brief new report from Express Employment Professionals, a staffing firm, the company’s chief executive, Bob Funk, refers to the problem as “the great shift.” This shift long predates the recent financial crisis, too. The labor force participation rate peaked more than a decade ago.

What's most fascinating however, is that there is evidence that we have passed "Peak Labor":

If the decline stemmed largely from an aging work force, it would be much less worrisome. But the initial wave of baby-boomer retirements plays only a small role in the drop; the labor force participation rate has fallen almost as sharply for people aged 25 to 54 as it has for the overall adult population.  

Which is essentially what I argued in this piece.

This post is fascinating. It actually documents where jobs are increasing, and where they are decreasing: Here's where middle-class jobs are vanishing the fastest (Brad Plumer, Washington Post). It documents what people already know: that higher wage jobs are disappearing and lower wage jobs with less value added are increasing.

We can see that all the "real" jobs that have historically buoyed an economy are in precipitous decline, especially manufacturing and construction, but also retail trade, wholesale trade, information (!) and utilities. These have historically been the jobs that make society function from day-to day, making things, trading things, transporting things, growing things, keeping the lights on, etc.

And what do we find instead? Well, as you should already know, health care and social assistance are WAY up. Also low-paid work such as accomodation and food services (hospitality), and educational servcies. And then we have our "bullshit jobs" - government (at the national level - state and local employment is down), professional and technical services, finance and insurance. Also, there's North Dakota's fracking boom as well under oil and gas extraction. I would imagine police and security personnel are way up was well.

The second chart even more highlights the move toward bullshit jobs.  See where the bars are the longest: under 'Food Preperation' and 'Personal Care (?)'. And on the other end under 'Management (?)', 'Business/Finance' and 'Health Care.' As David Graeber noted in his article, the lowest-paid jobs are the ones that are actually necessary, the highest-wage jobs are the managers, money-movers, office fauna  and professional lunch-eaters, along with a few actual technical folk such as engineers, doctors, nurses and computer programmers who are actually needed. So we can see how skewed our jobs discussion really is. But to economists and the mainstream media, "a job's a job," end of story.

Here's more proof of the rise of bullshit jobs:

The figures show that in the last 10 years, the number of "managers and senior officials" has grown by 18.7%, whilst total employment rose just 3.6%. Bosses now represent 16.1% of all jobs, compared to less than 13% when current records began in 2001.This trend doesn't seem to be slowing much: the number of bosses rose by 2.7% in the last 12 months, compared to a rise of 1.2% in overall employment.

Too many chiefs and not enough Indians? Here's a good chart showing how the nation has changed since 1940:

1940
23.4% Manufacturing
18.5% Agriculture
14.0% Retail Trade
8.9% Personal Services
7.4% Professional & Related Services

2010
23.2% Educational services, health care & social assistance
11.7% Retail Trade
10.6% Professional, scientific, management & administrative services, waste management services
10.4% Manufacturing
6.2% Construction

In a similar vein: Happy Labor Day in 8 charts (Washington Post) Takeaways: One in five workers describes themselves as 'actively disengaged' from their jobs (only 1 in 5?), 'professionals' are seeing their workweeks become ever longer while lower-income Americans aren't (this trend is obvious), the share of foreign-born Americans in the workforce is higher than in the general population (cheap labor!) and wages as a percent of the economy are at a post-war low, while corporate profits areat an all-time high.

On that theme: Sorry, It's Not A 'Law Of Capitalism' That You Pay Your Employees As Little As Possible (Henry Blodget, Business Insider)

These days, if you suggest that great companies should serve several constituencies (customers, employees, and shareholders) and that American companies should share more of their wealth with the people who generate it (employees), you get called a "socialist." You get called a "liberal." You get told that you "don't understand economics." You get accused of promoting "wealth confiscation." You get told that, in America, people get paid what they deserve to get paid: Anyone who wants more money should go out and "start their own company" or "demand a raise" or "get a better job."

In other words, you get told that anyone who suggests that great companies should share the value they create with all three constituencies instead of just lining the pockets of shareholders is an idiot. After all, these folks say, one law of capitalism is that employers pay their employees as little as possible. Employees are just "costs." You should try to minimize those "costs" whenever and wherever you can.

This view, unfortunately, is not just selfish and demeaning. It's also economically stupid. Those "costs" you are minimizing (employees) are also current and prospective customers for your company and other companies. And the less money they have, the fewer products and services they are going to buy. Obviously, the folks who own and run America's big corporations want to do as well as they can for themselves. But the key point is this: It is not a law that they pay their employees as little as possible.

It is a choice.

It is a choice made by senior managers and owners who want to keep the highest possible percentage of a company's wealth for themselves. It is, in other words, a selfish choice.

It is a choice that reveals that, regardless of what they say about how much they value their employees, regardless of what euphemism they use to describe their employees ("associate," "partner," "representative," "team-member"), they, in fact, don't give a damn about their employees.

In a similar vein: Recession Forever?: 10 Reasons American Workers Are Screwed (Alternet)

The reality is that we're hollowing out the middle class by wiping out well-paid jobs with benefits and replacing them with low-wage ones that often lack them. That's damaging not only to people who are living on smaller paychecks – or who are indeed unemployed – but also to the health and viability of the overall economy.

No matter what New York Times columnist Thomas Friedman and his followers say, we are not living in a "sharing economy". We are living in a zero-sum economy – in which a handful of investors and owners win at everyone else's expense.

But ultimately, it will catch up with investors, too. The US economy is engaged in a vicious cycle in which low-wage jobs and under-employment stimulate little demand, giving companies little reason to hire workers. Would-be workers then get discouraged and drop out of the workforce. They lack money to buy things, so consumer spending sags and companies don't hire or offer raises to workers they know they can keep. Repeat.

Here's another chart: The Fast Food Industry Is the Deadest of Dead Ends (Gawker). So much for working your way up the ladder, Horatio Alger-style:

And: True Stories From Wal-Mart Workers: “I Am Not a Slave” (Gawker)

And here's a particularly good article from The Guardian: How low can you get: the minimum wage scam:

You'd think the exceptionally low minimum-wage – $7.25 an hour – would be the shame of a country like the United States that prides itself on its economic leadership. Half of minimum-wage jobs are held by adults over 25 years old, and asking adults to live on $7.25, or $14,500 a year, doesn't leave them with enough to rent an apartment, commute to work, raise a child and participate in society in any meaningful way.

Many US states have higher minimum-wage requirements than the government, with Washington State leading the pack at $9.19 an hour. That's a start, but many large, international companies will only pay the minimum the federal government requires. As a result, the federal minimum wage keeps an entire class of people trapped in economic servitude, focusing their attention on survival rather than growth, barring their ability to save enough or pay for education that would allow them to rise to the middle class.

Low-wage workers can't even care for their own health without giving up some other necessity. According to the Center for Economic and Policy Research, it took a minimum-wage worker 130 hours to earn a year's worth of health benefits in 1979. That is only three-and-a-half weeks of full-time, minimum -age work. By 2011, the same health coverage cost 749 hours, or 19 weeks of full-time, minimum-wage work. Working nearly half the year to afford only healthcare, and nothing else, is a ridiculous demand to make of low-wage workers.

The low minimum wage is also as costly for the government as it is cheap for companies. While McDonald's or other fast food companies save pennies and boost their profitability by paying a low wage, their workers cannot survive on that amount and often end up taking welfare benefits. In 2012, 4.3 million people received welfare benefits and 47 million received food stamps. The number of Americans getting food stamps – a national hunger crisis – has risen in tandem with the number of people unemployed or out of the workforce. 

 Of course the U.S. is providing economic leadership - in the race to the bottom.

We covered this before, but to reiterate, seventy percent of American workers hate their jobs, especially because of their bosses.

Unemployment is also exacerbated by the lack of people being able to retire, largely thanks to the 401K sham (fund your own retirement!):

 And see: The longer route: Letter carrier, 72, among growing number in U.S. working well past 65 (WaPo). This is also contributing to the jobs market becoming a game of musical chairs.

And here is some more thoughtful fare from Pieria: Underemployment as a challenge to orthodox economics:

The fact that many workers remain willing to work longer hours without the requirement for an increase in the hourly wage rate may be a reflection of workers wanting to show commitment to employers when times are hard. Workers face the stark choice of being compliant at work or losing their jobs. This fact creates a willingness to work longer hours but it is a willingness based on fear and insecurity.

The constraint on work hours raises important issues for economic theory in the sense that it implies that the labour market is not an idyll of free choice. Orthodox neoclassical economics assumes that workers "choose" the hours they desire based on their preferences. If workers want to work more they can do so. They will also be rewarded for the disutility of longer work hours with higher wages.

This fantasy world of free choice runs contrary to the reality of the labour market that exists in the UK and elsewhere. Workers are not “free to choose" the work they want but instead confront constraints both on their ability to secure paid work and when in work on their ability to work the hours they need and desire. Employers set work hours not workers and often employers will deny workers the work hours they need and desire. Workers can suffer not just involuntary unemployment but also involuntary underemployment.

Neoclassical economics fails to recognise and indeed denies the unequal bargaining power between capital and labour and its influence on labour market outcomes. Contrary to what neoclassical economics assumes, in the real world, workers are not able to realise their preferences at will; rather they face having to take jobs on a take-it-or-leave-it basis. In work, workers must settle for hours decided upon by employers. Employers will not accede to the demands of workers for longer work hours unless they stand to gain higher profits from doing so. They will also be liable to impose longer work hours against the will of workers if they find it profitable to do so. While some workers will be denied longer work hours, others will face being overworked.  

And The Disutility of Work:

The point I would make is that work means more to us than just the money it brings. Work can be a source of creative expression and a route to self-realisation. Even where work lacks creativity it can still bring the benefits of social interaction. The problem with seeing work as just a disutility is that it fails to capture the dual-sided nature of work in human life. It misses the worth of work both as a means to an end and an end in itself.

To be sure, work is often endured by workers but this does not reflect anything intrinsic to work as such, rather it reflects on the way that work is organised. To see work as just a disutility is to abstract from the influence of the structure and organisation of work on the way that work is experienced by workers. To see workers as incorrigible “shirkers”, likewise, misses the endogenous roots of work resistance. It also lets employers off the hook by blaming workers for low productivity.

There is a deeper issue here with regards to the conception of human nature. The portrayal of work as a disutility presents humans as consumers with no interest in work other than as a means to consumption. It misses the needs of humans as producers.

And last but not least: Labor Day Is a Scam To Keep You Poor and Miserable Forever (Gawker)

Very crafty U.S. holiday planners within the federal government were told by bankers and industrialists to find a way to get rid of this [May Day] phenomenon. They had watched with interest as the Catholic Church tried (and failed) to steal May Day from workers by renaming it Saint Joseph's Day—the mythological Joseph, the cuckold in the tale of Mary's supernatural pregnancy, was the patron saint of going along with the system even though you're utterly dead inside.

For Washington, the answer was to simply have a different kind of May Day—one that was more about sitting in the yard getting drunk, instead of storming the Bastille or seizing the means of production. After U.S. marshals and soldiers slaughtered railroad workers during the 1894 Pullman Strike, the federal government quickly whipped up a national workers' holiday. This "Labor Day," the first Monday in September, was preferable to the May Day agitations that called for worldwide socialist revolutions.

The American authorities re-christened May Day as "Law and Order Day," a deft bit of word magic that knocked the life out of U.S. celebrations of May 1. The commemoration of the Haymarket Massacre itself, on May 4, is now a fake Disney holiday—May the Fourth Be With You celebrates the immense financial success of Star Wars products.

Labor Day worked all right during our brief mid-20th century era of a prosperous middle class and a less desperate working class and a fully marginalized poor with no access to Twitter. But as a salaried job went from the norm to a prize held by the fortunate, the hard-won eight-hour workday became something sadder and stranger.

One of every three workers is now part of the "contingent workforce"—the exact number is conveniently hidden, because "the Labor Department does not regularly collect data about this group." When the Bureau of Labor Statistics stopped counting this contingent workforce in 2005, it was already at 30 percent of all workers. They're temps, contract workers, seasonal workers, and warehouse labor filling boxes for Amazon. They're generally in service, retail, food production and dead-end office jobs: stocking shelves, killing meat animals in a factory, doing telemarketing or data entry, cleaning bathrooms, working security, etc. And they're often deliberately kept from working 40 hours a week, because only then would they be entitled to benefits and legal protections reluctantly granted to full-time employees.

The modern Labor Day is one of the major retail sales weekends, right up there with the ominous Black Friday of Walmart riots and the unsatisfied mobs haunting Day After Christmas sales. With 70 percent of retail workers kept as part-timers and low-end retail increasingly being a round-the-clock operation, Labor Day is likely to be just another day of labor for the nation's worst-paid not-quite-employees.

Retail, along with "customer service representatives" and "fast food preparation," is one of the top five "largest job growth" occupations, according to the Labor Department. But don't get used to such horrible jobs, because even these are going away. The burger-flipping robot and the self-service checkout computer are killing off the crappy jobs just as machines killed all the jobs in agriculture and manufacturing.

This is the worst part of Labor Day, for those who want to think about it: Nearly all remaining jobs will be eliminated, probably in your own lifetime! The American-led destruction of the labor movement has been remarkably successful, and three decades of aggressive anti-union propaganda has made the few remaining trade unions with their pensions and vacations seem decadent and greedy to people struggling with a shift at the Del Taco followed by a shift at the Walmart, leaving children and elderly parents with whatever member of the casual family is without paid work of any kind.

But don't feel smug if you've got a law degree or work for an accounting firm or manage some department selling whatzits. The management massacre of 2008 and 2009 was just a way to get rid of dead-weight white-collar workers. Those jobs will never return. Most everything that anyone does can be done better and more cheaply by computers, and the price of robots is dropping just as the price of mainframes plummeted 20 years ago with the introduction of cheap but powerful PCs.

The next mass movement, if it ever happens, will not be about increasingly scarce laborers, but about people in general. Nationalism, oxycontin, despair, television, alcohol and slob propaganda have all done a very good job of keeping the 80 percent of Americans who are "financially insecure" too worn down and miserable to realize they've got a common enemy. If they ever do figure this out, there will either be a long internal war—the "class war" that worries rich liberals and rich conservatives alike—or the Pentagon is just going to poison the whole country between Silicon Valley and Manhattan.

On that last point:

"Another way to look at the effect of mechanization is to look at how it affected the other living employees of farmers. The U.S. horse population peaked at 26.5 million in 1915. It declined rapidly after that, hitting a low of just over 3 million in 1960. While it is about 9 million now, that’s because of increased ownership as pets.

I’m not saying humans will be destroyed like horses, but it raises some questions about the ease of transition. 

Happy Labor Day, all!