Where Have All The “Good Jobs” Gone?

Yesterday, May 1st, was International Worker’s Day or May Day, which is “a celebration of labourers and the working classes that is promoted by the international labour movement“. As there are every year, there were various protests, marches, rallies etc across the country and the world. International Workers Day, has become a general “protest all bad things” day for the American left, and in fact, has its roots in Communism, a political philosophy I hold in the utmost contempt. I will, however, spare you from the most predictable of conservative hot takes, “Communism is bad and May Day is a communist holiday“, and instead turn my gaze elsewhere.

Mayday is about Labor, the working man, the proletariat to use Marx’s own words, and it’s inescapable that in the past half century “work” has undergone a titanic shift. Every modern politician- from Trump, to Sanders, to Clinton- By “good jobs” they seem to mean the high-paying low-skilled manufacturing jobs which existed in this country from 1950-1980. Coal jobs in West Virgina, steel jobs in Pennsylvania, auto manufacturing in Detriot. Politicians, of every political stripe, promise year after year that these jobs are coming back- but none of them seem to have any concrete ideas on how to actually do that.

Democrats generally want to continue and expand wealth transfers from the wealthy to the poor (taxes and social programs) and from future generations to the current generation (long-term government debt). Republicans want to roll back regulations and taxes, spurring the economy, so that a “rising tide will lift all ships” and the market will just sort everything out.

Both of these policy dispositions fail to address, or even recognize the existence of, the apparent structural problem of the modern economy. There is very little demand in the economy for low-skilled labor- and mass high-paying, stable, employment for low-skilled laborers simply doesn’t exist anymore, and isn’t coming back. From a supply and demand perspective- there is far more supply of low-skilled labor than demand for it. Growth in the labor market is increasingly geared towards hyper-specialized & hyper-educated labor. Wealth transfers and social programs will not, and cannot, fix this structural problem- only mask them.

Similarly, spurring the economy won’t help those on the bottom because they’re not really participating in the economy. 46% of the country does not participate in the stock market in any way, and 38% doesn’t own property. It doesn’t matter how well the economy is doing, these people will not benefit from it at all unless they’re directly employed at a “good job” as a result of a bull market. Even then, if employed at a “good job” the lack of property holding or investing puts their long-term financial health in serious jeopardy. The way the economy is trending, economic booms no longer link directly to mass employment.

Author Charles Hugh-Smith believes that part of the problem is an economic mismatch- between work that is “useful” and work that is “profitable”. Work that is profitable is becoming increasingly rare and specialized with the massive leaps forward in the IT resources and automation (say hello to McDonald’s ordering Kiosks and package sorting robots, and goodbye to another set of low-skilled jobs). However, there is work that is “useful but not profitable” to be done everywhere- especially in inner cities and poor rural communities.

What’s abundant is unprofitable work, commoditized goods and services, and conventional labor and capital (which is why wages are declining and yields on capital are near-zero).

What’s scarce is profitable work, highly profitable niches that are immune to commoditization/ automation, and meaningful work.

Everyone wants an abundance of “good paying” jobs, but employers can only afford to pay employees if the work being done is profitable. Paying people to do unprofitable work is a one-way street to bankruptcy.

Those who want the government to fund “good paying” jobs forget that government tax revenues depend on profitable enterprises and the private-sector wages they pay….

Impoverished areas are impoverished because there are few highly profitable scarcities to fill and few people with the surplus income to pay for profitable services. Taking money from one community to fund make-work jobs in another community (the essence of government redistribution schemes) deprives one community of income while providing a temporary injection of income in the other community–income that is controlled by a government that is itself controlled by lobbyists and privileged elites.

Redistribution schemes act as bread and circuses to suppress social disorder, but they don’t address local scarcities in a sustainable way or foster the expansion of long-term solutions to a lack of work.

Read the full article- and see Smith’s proposed solutions over at ZeroHedge.

1 Comment

  1. Well written article, but it would have been worthy to mention “Thomas Friedmans world is flat concept” as well as the fact that American workers were only filling a void in labor supply after the world wars as the main reason why the well paying jobs are not coming back to America.

    Like

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