Shouldn't High Unemployment = Less Work to Do?

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 U.S. 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 U.S. 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, U.S. 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 the TVs 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:

  • Today when they replace a worker with a machine, the few at the top get another chunk of income, the worker gets nothing. But suppose a worker got to keep some of the economic benefit from getting laid off! Suppose that if your company replaces you with with a machine you get, say, 15% of the cost-savings as ongoing income. Heck, getting laid off would be a good thing, like winning a prize. After you get laid off a few times you only have to work part time. Get laid off enough times, you can retire.
  • Suppose we just shorten the workweek? What if we change from a 40-hour workweek to a 30-hour workweek? Economist Dean Baker has been offering ideas for workweek reductions for some time:
  • 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.

  • Suppose the corporations and wealthy were taxed at the rate they were taxed before all the deficits and income inequality started, and the government just sent everyone a check, which served as a base income? Then everyone's wages would be higher because desperate people wouldn't be fighting over the few jobs. So then the better those at the top do, the better all of us do.
  • 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?

    This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.