Saturday, May 21, 2016

Where Have All The Workers Gone?

That's the question Kim Moody tries to answer in this wonderful article in Solidarity. Mr. Moody, an expert economist and unrepentant Marxist, manages to successfully combine those two contradictory traits.

An article of faith among Marxists is that workers are getting poorer. Mr. Moody is no exception, stating at the top of his piece,
In a sense, the current debate over just how much employment is or isn’t “precarious” misses the bigger change in U.S. working-class life over the past three decades or more: the decline in living standards experienced by the vast majority of this class. 
But the whole rest of the article contradicts that claim. It is simply not possible, on the facts that Mr. Moody presents, to conclude that workers are worse off and living standards have declined.

Let's consider some of Mr. Moody's arguments.

The rise of the gig economy is a myth.
A JP Morgan survey found when it looked at what it called “capital platforms” such as Etsy, Ebay, and Airbnb, versus “labor platforms” such as Uber and TaskRabbit, that it was the “capital platforms” that captured the lion’s share of the 1% of adults who used any income generating digital platform. By mid-2015, those who used “labor platforms” accounted for .04% of adults surveyed.”
Though the link he cites (here) indicates a continuing rapid growth in gig-economy jobs, they remain a small fraction of employment. Whatever the wrenching changes in the labor market, it can't be because of gigs.

The growth of the precariat is largely a myth.

Mr. Moody makes a convincing argument that the precariat has not grown much at all, concluding,
So while there might have been some net gain in total precarious jobs, it seems unlikely the overall proportion of precarious workers in the total workforce could have risen much since 2005 or 1995. Give or take a couple of percentage points, it is hard to avoid the conclusion that at least since the mid-1990s precarious work in the United States has not grown as much as many impressionistic accounts claim, and that the large majority of workers, about 85%, are still in “traditional” employment arrangements; though these like the precarious workers have seen their incomes and conditions change significantly for the worse.
So again, nonexistent percentage growth in precarious employment can't explain the perception that the labor market is far worse than it used to be.

Rather than hopping from job to job as one might expect, Mr. Moody shows that the length of tenure at a given job has not decreased. Indeed, workers spend longer times with employers today.
BLS figures covering wage and salary workers of all age groups and industries, using median years of job tenure, actually show an increase for all groups. For all those 16 and older the median years on the job at the time of the survey rose, with business cycle ups and downs, from 3.5 years in 1983 to 3.8 years in 1996 to 4.6 year in 2014.
But manufacturing employment has collapsed:
While manufacturing has been a declining source of employment for a long time, the dramatic loss of nearly five million manufacturing, production, and nonsupervisory jobs since 1980 calls for an explanation.
Manufacturing occupied about 19% of the labor force in 1980, down to only about 12% today.

He correctly dismisses foreign imports as the culprit, saying that only accounts for 20% of the total job loss. If imports were the problem then one would expect a commensurate decline in domestic manufacturing output. But no such decline is apparent--indeed, quite the contrary.
The problem with trade-based explanations is that manufacturing output hadn’t shown a decline, but had grown in real terms by 131% from 1982 to 2007 just before the Great Recession reduced output.
Let me say that again: The US lost five million manufacturing jobs, and yet output since 1982 increased by 131%. Accounting for population growth, the per capita growth in manufacturing output has effectively doubled.

So let's get this straight. The much touted gig economy is a non-event; the precarious workforce is constant at about 15%; non-precarious workers have more job security than they used to have; And...

...we have twice as much stuff as we used to have.

So please, Mr. Moody, tell us how it is we are all getting poorer. There is no way.

Mr. Moody, blissfully unaware of the contradiction in his article, characteristically resorts to data to make his case. He says
One measure of [the decline of living standards] is the fall in both hourly and weekly real wages which despite some ups and downs remain below their 1972 level. 
But now the data lead him astray. For as we have seen, it is simply impossible, given all the other data he's presented, to believe that living standards in these United States have gone down. Indeed, it boggles the mind that one would even think that--all those people buying new cars, flying around the world in airplanes, ordering more & more stuff from Amazon, eating ever fancier food from Trader Joe's or some ethnic eatery, and so on. There simply is no mass increase in poverty, even without taking into account that all the stuff we buy is of substantially higher quality than it was 30 years ago.

The solution to this conundrum is simple. Inflation has been systematically overstated for decades. Actual inflation must be significantly lower than the headline number produced by the government. It makes sense--inflation is intrinsically difficult to measure, but in an era of rapid technological change it becomes impossible. How much did a cell phone cost in 1982? Or an MRI scan? What did Google charge for using its search engine?

So Mr. Moody's estimate for "hourly and weekly real wages" is way short of the mark. Lower the inflation rate by 1 or 2% over many years, and far from declining living standards, workers have been getting richer like gangbusters. Which is obviously true.

Then comes the last bit of the paragraph quoted above:
So stagnant has been the income of the working class majority that 30% of the workforce now relies on public assistance to get by.
Leave aside that people on public assistance can buy more stuff than people used to be able to buy with the same amount of money, so things are not quite as bad as Mr. Moody will have you believe. But they're bad enough, and that brings us to the word that he never mentions: automation.

He talks around it a good deal.
...employment remained flat due primarily to the large productivity gains, averaging over 3% a year achieved by capital through the application of new technology and lean production methods often supplemented or even supplanted by biometric and electronic monitoring, measuring and enforcing of labor standardization and intensification. One measure of the intensification of labor over these years has been the decrease in break time from 13% of the work day in the 1980s to 8% in the 2000s for those in routine goods and service-producing jobs.
Incredibly, he significantly attributes a doubling in the amount of stuff we have to a 5% lengthening of the workday ("speedup" in The Militant's terminology). But the major reason for the increase in productivity is automation--robots are replacing human beings.

And that process is accelerating--driverless trucks are on the near horizon. 3.5 million people work in the transportation sector. It is easy to see how more than a million of them might be losing their jobs within a decade.

So the rise of people on the dole is not a symptom of greater poverty, but rather quite the opposite. There is increasingly not enough work to go around. Some estimate that in the next couple of decades only 50% of working-age people will have a job. The rest will be members of the new leisure class. Obviously that will mean some big changes in social welfare policies--many are suggesting that the government provide a Universal Basic Income to everybody.

But Mr. Moody doesn't see this. He looks at the picture below (copied from his article) and sees future union members. I look at it and see a future army of robots, with one or two human overseers.

There's much more to like about Mr. Moody's article. I love the way he describes recessions as "capital destruction." It's point on, and worth another post just in itself. But I'm already past my word count so you'll have to read it on your own. Here's the link again.

Further Reading:

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