My Book on the Future of Work is now Available for Your Enjoyment

The Future of Work in the Inclusive World Economy is posted to my website.  Click this link to view and print the book in PDF format: https://iweworkfutures.org/book-download/.

The timing for posting my book is not bad.  Gallup just published a major study of the slowdown in economic growth in the U.S., “U.S. Economy: No Recovery”,  and Robert J. Gordon’s book, The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War, has been getting lots of attention.  Yet, Donald Trump is vowing to buck the U.S. economic growth slowdown and a lot of economists will try to help him do it.  Elsewhere in the world, new leaders are making the same promises.  We have not had such a real world battle of economic policy ideas in a very long time.

A Return to Full Employment With Mixed Signals: This Time is Different for the World of Employment

SOURCE ITEMS

Chart-Employed Full Time Trend

St. Louis Federal Reserve, Accessed December 13, 2015.

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The Netherlands seems to be undergoing a sort of industrial revolution in reverse, with jobs moving from factories to homes. The Dutch labor market has the highest concentration of part-time and freelance workers in Europe, with nearly 50% of all Dutch workers, and 62% of young workers, engaged in part-time employment – a luxury afforded to them by the country’s relatively high hourly wages.

Sami Mahroum and Elif Bascavusoglu-Moreau, Is Jobless Growth Inevitable? Project Syndicate, March 25, 2015. Accessed December 13, 2015.

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Inequality, exclusion, and duality became more marked in countries where skills were poorly distributed and many services approximated the textbook “ideal” of spot markets. The United States, where many workers are forced to hold multiple jobs in order to make an adequate living, remains the canonical example of this model.

Dani Rodrik, The Evolution of Work, Project Syndicate, December 9, 2015. Accessed December 13, 2015.

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Forced labor permeates supply chains that stretch across the globe, from remote farms in Africa and the seas off Southeast Asia to supermarkets in America and Europe. Almost 21 million people are enslaved for profit worldwide, the UN says, providing $150 billion in illicit revenue every year.

Erik Larson, These Lawyers Want Slave Labor Warnings on Your Cat Food, Bloomberg, December 10, 2015. Accessed December 13, 2015.

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Over all, the Labor Department data painted a picture of an economy that is growing steadily and creating jobs at a healthy pace, even as wage gains remain subdued and many Americans are still stuck on the sidelines of the recovery.

Nelson D. Schwartz, Robust Jobs Report All but Guarantees Fed Will Raise Rates, New York Times, December 4, 2015. Accessed December 13, 2015.

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In reality, the 35-hour workweek has become mostly symbolic, because a multitude of loopholes allow companies to work around the law. French employees work an average of 40.5 hours a week — more than the 40-hour average in the European Union — and have high productivity.

Liz Alderman, Smart Car Standoff Pits Social Progress Against Global Competition, New York Times, December 12, 2015. Accessed December 13, 2015.

COMMENTS

A question emerged after 2008 that unsettled the field of economics and is still unanswered: is this time different? Was the financial crisis of 2008 an economic crisis of a unique kind in the history of capitalism; or was it just a very severe version of a routine kind of economic crisis?

This phrase gained currency from the publication of the book, This Time is Different: Eight Centuries of Financial Folly, by Carmen Reinhart Kenneth Rogoff.[1] They argue that the financial crisis of 2008 is not different. But others disagree.

In a 2012 article, Lawrence King et al make the argument that this time is different because it is the result of a level of financial liberalization and a degree of free market economics that did not exist before the 1970s.[2]

A few of our world’s best and brightest economists expressed their uncertainty and sense that this time is different in this way:

“As a world economic crisis developed in 2008 and lasted longer than most economists predicted, it became increasingly clear that beliefs about macroeconomics and macroeconomic policy needed to be thoroughly examined. … we knew that we had entered a brave new world…”[3]

Different Seems More Likely Than the Same

After 2008 optimism about a return to robust economic growth has been the rule. But actual economic growth has not rewarded that optimism. A few economists have been trying to explain this poor record.

Robert J. Gordon, professor of economics at Northwestern University, recently asserted that “It is time to raise basic questions about the process of economic growth, especially the assumption – nearly universal since Solow’s seminal contributions of the 1950s (Solow 1956) – that economic growth is a continuous process that will persist forever.” He went on to propose that U.S. economic growth may grind to a halt because the kinds of technological innovations that drove rapid U.S. economic growth are not on the horizon.[4]

Professor Gordon was speaking only about the U.S., but the logic would apply to all of the world’s affluent nations.  Moreover, the World Bank and other global institutions have repeatedly warned of below par levels of global economic growth, in some cases for years to come.

Weighing anecdotal evidence, some discernible trends, and expert opinion, it seems reasonable to conclude that this time is different for economic growth.

That means this time is almost certainly different for the world of employment.

A Different World of Employment

In mainstream theories of economic development, the future of work is directly tied to the future of economic growth. Economic growth is the engine that pushes us toward the ever expanding prosperity goals that make for widespread affluence: high profits, high wages, and full employment. When economic growth slows down something has to give in the world of employment.  We are trapped in a long period of slow economic growth, so the employment trends of the past cannot continue.

We can be fairly certain that workers in the U.S. and other affluent nations will not experience the kind of return to full employment with high wage conditions we have known in the past. In the context of global competition and slow economic growth,  the world’s economic and political leaders are pressing hard to cap and reduce wage bills at all levels of employment. We have entered into an era of global degradation of employment.

In affluent nations they  are forcing working people to choose between fewer jobs and fewer hours at higher compensation levels or more jobs and more hours with lower wages and less valuable benefits.  In the rest of the world, where such a choice has seldom existed in any meaningful sense,  global competition and slow economic growth mean an end to the dream of jobs that will deliver better lives.  Everywhere, employment rights and workplace protections are falling away.

What we don’t know quite yet is how the ongoing degradation of the world of employment will play out in national and global politics. At the moment it appears that the world’s political and economic leaders have chosen to promote a free-for-all battle struggle among working people by defining rights to crumbs from the capitalist table using the old reactionary lines of difference – race, ethnicity, gender, religion, and nation. And, at the moment, too many workers in affluent nations are falling into this trap, as shown by the rise of Trumpism in the U.S., the growth of reactionary movements across Europe, and the destruction of governing institutions that embody common interests, and the rise of militaristic movements intent on redrawing national boundaries.

Intentionally engendering antagonisms can’t solve the fundamental problems for global economic growth, so the right wing policies can have only one ultimate outcome – a global catastrophe in multiple forms. Hopefully, this  will become clear to the world’s working people well before such a catastrophe becomes unavoidable.

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[1] Carmen M. Reinhart and Kenneth Rogoff, This Time is Different: Eight Centuries of Financial Folly, Princeton University Press, 2009.

[2] Lawrence King, Michael Kitson, Sue Konzelmann and Frank Wilkinson Making the same mistake again—or is this time different? Cambridge Journal of Economics 2012, 36, 1–15 doi:10.1093/cje/ber045.

[3] From the Preface: Olivier J. Blanchard, David Romer, A. Michael Spence and Joseph E. Stiglitz, In the Wake of the Crisis: Leading Economists Reassess Economic Policy, MIT Press, 2012.

[4] Robert J. Gordon, Is US economic growth over? Faltering innovation confronts the six headwinds, VOX, September 11, 2012. http://www.voxeu.org/article/us-economic-growth-over.

Crisis and Recovery Work: the Future of Jobs in the World Economy

 

SOURCE ITEMS

Pipes carrying Flint River water are opened; the Detroit supply is shut off. The switch was made as a cost-saving measure for the struggling, black-majority city. Soon after, residents begin to complain about the water’s color, taste and odor, and report rashes and concerns about bacteria. … Flint urges residents to stop drinking water after government epidemiologists validate Dr. Hanna-Attisha’s finding of high lead levels. Mr. Snyder orders the distribution of filters, the testing of water in schools, and the expansion of water and blood testing.

Jeremy C.F. Lin, Jean Rutter and Haeyoun Park, Events That Led to Flint’s Water Crisis., New York Times, January 21, 2016. Accessed January 22, 2016.

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Health care employment expanded by 475,000 in 2015, compared with a gain of 309,000 in 2014.Chart-Job Growth by Sector 2015

 

Source: Current Employment Statistics Highlights, December 2015, Bureau of Labor Statistics, January 8, 2016. Accessed January 22, 2016.

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Air, sea and land transport networks continue to expand in reach, speed of travel and volume of passengers and goods carried. Pathogens and their vectors can now move further, faster and in greater numbers than ever before. Three important consequences of global transport network expansion are infectious disease pandemics, vector invasion events and vector-borne pathogen importation.

Tatem, A.J., D.J. Rogers, and S.I. Hay. Global Transport Networks and Infectious Disease Spread. Advances in parasitology 62 (2006): 293–343. PMC. Web. 22 Jan. 2016.

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Thus, the net gain in jobs in New Jersey over the four year period would be 270,000 (281,000 construction-related jobs less 11,000 Travel and Tourism-related jobs). Of the 281,000 construction-related jobs, about 218,000 will be direct construction jobs. …

If all of this money is spent on reconstruction, the influx of new spending will generate $53.1 billion in new total output in those 13 counties and about 352,000 new jobs. About 299,000 jobs will be construction jobs.

Economic Impact of Hurricane Sandy, Economics and Statistics Administration, U.S. Department of Commerce, September 2013

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Future warming will bring a more volatile, dangerous world, even if the world manages to keep temperature rises within a 2C limit to which governments have committed, Fischer’s research found. On average, any given place on Earth will experience 60% more extreme rain events and 27 extremely hot days.

Karl Mathiesen, Extreme weather already on increase due to climate change, study finds, The Guardian, U.S. Edition, April 27, 2015.

COMMENTS

Safe water is one of those items of wealth that comes to us as both natural wealth and fabricated wealth. We sip water purified by nature from natural springs and we sip water purified by factories from our water taps.

The water crisis in Flint Michigan illustrates the extent to which we humans have damaged the natural production of many forms of wealth and been forced to replace natural wealth with fabricated wealth. Therein lies the story of job growth in the 21st century.

During the expansive years of capitalism (roughly the 16th century through the first half of the 20th century), we increasingly used fossil fuels to transform natural wealth into fabricated wealth. We had our eyes on the growing stock of fabricated wealth and failed to see the costs in natural wealth. Now we are beginning to see that there is no free lunch. The notion that humans figured out how to add to the total stock of wealth on the planet (the notion of creating fabricated wealth at no cost to natural wealth) has turned out to be an accounting sleight of hand.

We have never been able to increase net total wealth (natural wealth + fabricated wealth). By defining nations as economies, we externalized all costs to other nations and to nature and counted only what we wanted to: fabricated wealth. Our riches seemed to grow without end. Now we can no longer expand the stock of fabricated wealth fast enough to stay ahead of normal wear and tear and a rising tide of social, geopolitical, and ecological disasters.

The work we want to do is steadily being replaced by the work we must do. Steadily, our working hands and minds are being turned to the task of fixing damage inflicted on our fabricated wealth by domestic conflicts, wars, climate events, and just plain old wear and tear; and to the task of fixing the damages we have inflicted and continue to inflict on natural wealth.

The rate at which the world’s fabricated and natural wealth are being damaged is growing fast, so more and more our jobs will be in industries that repair our bodies (and replace body parts), that repair and replace our essential fabricated items of wealth (e.g., homes, tools, transportation equipment, educational facilities, health care technologies) and that repair the planetary systems we have damaged. The proportion of jobs that produce goods and services that can be counted as net new fabricated wealth will go down.

Into the 20th century, job growth was associated with expanding the production of net new fabricated wealth. That era is over. Job growth is now becoming associated with survival goals in place of greater affluence goals.

Sustainability and the Inevitable Return of Physical Activity and Physical Exertion to Jobs in the Affluent Regions of the World

SOURCE ITEMS

Professional, managerial, clerical, sales, and service workers (except private household service workers) grew from one-quarter to three-quarters of total employment between 1910 and 2000; laborers (except mine laborers), private household service workers, and farmers lost the most jobs over the period

Ian D. Wyatt and Daniel E. Hecker, Occupational changes during the 20th century, Monthly Labor Review, Bureau of Labor Statistics, March 2006. Accessed October 17, 2015.

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The amount of time that most of us spend sitting has increased substantially in recent decades, especially as computers and deskbound activities have come to dominate the workplace. According to one telling recent study, the average American sits for at least eight hours a day.

Gretchen Reynolds, The Marathon Runner as Couch Potato, New York Times, October 30, 2013. Accessed October 17, 2015.

COMMENTS

One of the well known trends in the evolution of jobs in the affluent parts of the world during the last few centuries has been a decrease in physical activity and physical exertion. Sedentary office jobs abound and many jobs in industries traditionally associated with hard physical work are not physically demanding (e.g., ditches and trenches are no longer dug by sweating men with shovels and wheelbarrows but by men sitting on padded seats, and sometimes in air conditioned cabs, operating earth moving machines).

This trend has been powered by the massive and still growing use of fossil fuels and small amounts of nuclear fuels to augment and displace the use of human caloric energy in the production and distribution of goods and services. Sustainable growth optimists believe this trend is sustainable, even as fossil fuels are phased out of the world economy. They believe humans can continue to increase energy use to spread affluent lifestyles (and less physically demanding work) to more and more of the world’s people as long as we abandon fossil fuels. However, this sustainability logic is flawed.

Sustainability optimists get their optimism about holding onto the affluent lifestyle by continuing to divide the earth into the human world economy and the rest of nature, as economists have traditionally done. This keeps open the option of attributing the most threatening environmental problems to the types of energy we use, not to the massive amount of energy we use. This option disappears when we see the human world economy and the rest of the earth as a single Inclusive World Economy. Not only can the types of energy humans use endanger our wellbeing, the amounts of energy, regardless of type, can also endanger us.

The Inclusive World Economy concept counts all the material items on earth and the totality of energy flows from stored solar energy sources (fossil fuels), from geothermal sources, from nuclear sources, from gravitational sources (ocean tides) and from current solar energy flows (wind, photovoltaic, flowing water) as a single system that produces and distributes a vast array of goods and services we humans use and consume. This is a sum total of wealth, a wealth constant, if you will.[1]

Humans can neither add to nor subtract from this totality; we can only speed up or slow down the rate at which the materials of the earth are processed from one form into another form (e.g., clay into pottery). We can change the transformation rate by mobilizing and demobilizing flows of energy (e.g., by using more or less fossil and nuclear fuels) and by diverting existing energy flows from natural processes to faster or slower paced human controlled processes.

In this Inclusive World Economy view, humans cannot solve environmental degradation problems by only changing our energy sources. The use of each energy source has its own inevitable, unintended, and destructive consequences, but so too does the volume of energy being used by humans. The wealth constant in the Inclusive World Economy requires that increasing the use of solar energy to fuel the human world will divert equivalent amounts of solar energy away from natural material transformation processes.  This must have unintended consequences, some of which will be detrimental to humans and other species of life.

Inevitably, covering vast expanses of desert with solar panels, populating thousands of square miles of farm land with wind turbines, and dotting miles of coastal waters with massive machinery to harness tidal energy will have multiple unintended consequences, not just the intended consequence of powering the human world. Those unintended consequences will propagate throughout the entire Inclusive World Economy, just as the unintended consequences of burning fossil fuels at a rapid pace have. The existential threat from fossil fuels may go away, but another form of existential threat will emerge to take its place.

A solar future is necessary and inevitable, but the Inclusive World Economy view precludes a solar future in which the caloric energy of billions of humans is not a very large part of the total amount of energy derived from solar sources to power the human world. Continuing to create jobs in which human energy plays less and less of a role in processes that transform materials from form to form will only continue to move us further into a world of existential threat and catastrophes. If we don’t stop ourselves, the rules of the universe that control the Inclusive World Economy will.

Some of the broader implications of this conclusion for the future of work are clear. Rebuilding the role of human energy in the production of goods and services will entail refitting our many workplaces with machines that are manually powered. For example, we will almost certainly decide to replace electric pencil sharpeners and staplers with manual types and stop using “always on” electrical equipment. But, such small changes will not go far enough.

To increase the share of human energy in the total energy flow into human purposes enough to sustain the viability of the planet for human habitation, we will have to invent new ways for human energy to power the human world. In the past we have put small generators on bicycles to convert human energy into electricity to power the lights on the bicycle. To create the human energy centered workplace of the future, thousands of innovations and thousands of changes in human work activity will be required.

Restoring the role of human energy in the human world economy will also require a slowdown in the overall rate of material transformations involved in the production of goods and services for human use and consumption. To accomplish this, quantity of output will have to give way to quality of output so product life cycles become much longer. Again, accomplishing this will entail vast changes in workplace environments and workplace practices.

The role of human energy in the human world economy is already increasing, although this change is largely invisible. The world’s governments are only able to monitor a portion of the world’s workplaces. This is the formal part of the human world economy. The informal part of the human world economy has been growing in recent years as formal jobs have disappeared. Jobs in the informal sector are generally more physically demanding, so this shift can be interpreted as an increase in human energy inputs into the production and distribution of goods in the human world economy.

Even in this formal part, work is becoming more physically demanding. In the U.S., this shows up as less equipment per worker – reducing costs by increasing the number of shared printers means more workers have to get up and walk to the printer to retrieve a print job. This is certainly a minor increase in physical activity, but it suggests a trend that will develop as U.S. employers work to reduce energy use both to cut costs and to meet environmental regulations.

Most of the world’s peoples and their leaders have accepted that the world must transition to using less fossil fuel to using more solar energy. We just haven’t realized that in the not so distant future even those who are middle class will have to put more physical effort into their jobs because a very big part of the flow of solar energy that powers the sustainable human world world economy will have to be human energy.

Notes

[1] For additional reading on the argument for conceptualizing the human world economy and the non-human natural world as a single economic entity, see my article, Replacing the Concept of Externalities to Analyze Constraints on Global Economic Growth and Move Toward a New Economic Paradigm, Cadmus, October 19, 2014, and the work of Jason W. Moore and his colleagues at their website, World-Ecology Network).

Robotics, Artificial Intelligence (AI), and the New Era of Labor Exploitation and Coercion

SOURCE ITEMS

But salaries higher than those offered last year might not be part of the deal. … Gardner said about a third of employers surveyed plan to raise salaries this year, compared with 60 percent to 70 percent before the 2008 recession.

Curt Smith, Job market better for recent grads, MSU survey finds, Lansing State Journal, October 9, 2015. Accessed October 10, 2015.

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By one dismal measure, America is joining the likes of Third World countries. … The number of U.S. residents who are struggling to survive on just $2 a day has more than doubled since 1996, placing 1.5 million households and 3 million children in this desperate economic situation. That’s according to “$2.00 a Day: Living on Almost Nothing in America,” a book from publisher Houghton Mifflin Harcourt that will be released on Sept. 1.

Aimee Picchi, The surging ranks of America’s ultrapoor, CBS News, September 1, 2015. Accessed October 10, 2015.

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There could be between 10,000 and 13,000 victims of slavery in the UK, higher than previous figures, analysis for the Home Office suggests. … Modern slavery victims are said to include women forced into prostitution, “imprisoned” domestic staff and workers in fields, factories and fishing boats.

Slavery levels in UK ‘higher than thought’, BBC News, November 29, 2014. Accessed October 10, 2015.

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Erik Brynjolfsson has a dream of the future. Or perhaps more accurately, a nightmare. … A vision of a world where computers entrench the power of a wealthy elite and push the majority into poverty. … Brynjolfsson is an economist at the Massachusetts Institute of Technology (MIT) and co-author of The Second Machine Age, a book that asks what jobs will be left once software has perfected the art of driving cars, translating speech and other tasks once considered the domain of humans.

Nick Heath, Why AI could destroy more jobs than it creates, and how to save them, TechRepublic, No Date. Accessed October 10, 2015.

COMMENTS

In the distant past, when the worth of a human worker was primarily her/his calorie power (for moving, pushing, pulling, lifting, twisting, and turning materials and equipment used in the production and distribution of wealth), only a very few workers were engaged in highly skilled work and decision-making.   In most of the world of work, one worker could easily replace another (according to one story, a mule was more valuable to a mine owner than a man). Slavery was cost effective, immigrant and seasonal workers and starvation wages were the norm.

In the nearer past, workers in affluent nations had gained substantial economic power as business owners increasingly needed human workers not only as a source of energy but also as a repository of learned production skills (e.g., skill at soldering a resister to a circuit board without leaving an electrical arc point), and as managers, problem solvers (the intelligence to figure out why the assembly line shut down or whether a particular article contained information relevant to a lawsuit) and planners. The nearer past was also a time when much of the world was still not incorporated into nation-states and markets, so capturing more and more of the world’s people as consumers required more and more production and distribution facilities and equipment, which required more and more highly skilled workers and managers.

All of that is going fast. Fossil fuels and solar power (in all its forms) replace human muscle power. Robotic skills replace human skills. AI software and massive computing power combine to make better, faster and more consistent (unbiased by considerations of kin, ethnicity, race, gender, looks, etc.) decisions than human decision-makers.

What is left to give the mere mortal economic importance? Not much.

AI and robotics, in conduction with fossil fuels and solar energy, have dramatically reduced and will continue to reduce the value of working people for the world’s business owners and managers. In the context of global competition, American and European workers are much too costly given the savings achievable through combining AI, robots, and low wage, unskilled workers in the world’s factories and offices. Even the most honorable of business owners and managers must succumb to the competitive pressures – shedding higher wage, skilled workers and escaping regulations and taxes now devoted to protecting employment rights. Wages, benefits, and employment protections must continue to fall in the wealthiest nations and the best of businesses.

Enslavement, indentured servitude, unpaid family labor, and self-exploitation are labor acquisition strategies as old as humanity and there is no reason to believe the less honorable among the world’s owners and managers will not directly and indirectly take advantage of these strategies. Studies are already finding that these things are on the rise. There is no reason to believe the business owners and managers who are fair to their own workers will stop closing their eyes to the exploitation and coercion of working people practiced by the other owners and managers with whom they do business. Relying on the cheapest sources of components and raw materials must be part of the competitive strategy of every business owner and manager, including the most honorable.

The Slow-Growth World Economy and the Degradation of Formal Wage Employment

SOURCE ITEMS

“We think of the ‘new neutral’ as a natural evolution from the ‘new normal’,” Executive Vice President Richard Clarida said in a telephone interview, likening the firm’s new outlook to a car stuck in neutral gear. “The ‘new neutral’ looking forward is a story about a global economy that isn’t recovering, it’s a global economy that’s converging to trend rates of growth that will be sluggish.”

Mary Childs, Pimco’s ‘New Normal’ Thesis Morphs Into ‘New Neutral’, Bloomberg, May 13, 2014.

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What is new – and distressing – is that developing economies’ low-productivity segments are not shrinking; on the contrary, in many cases, they are expanding.

Dani Rodrik, The Growing Divide Within Developing Economies, Project Syndicate, APR 11, 2014.

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Formal employment creation in Colombia is taxed with social security contributions and payroll taxes that equal roughly 60% of the base salary for each worker.

Domingo Cavallo and Rodrigo Botero, Proposal – Incentives to Formal Employment: A Proposal for Colombia, Global Economic Symposium 2014.

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But if you’re not self-motivated, this world will be a challenge because the walls, ceilings and floors that protected people are also disappearing.

Thomas Friedman, It’s a 401(k) World, New York Times, April 30, 2013.

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America’s shadow economy includes activities that are actually illicit — prostitution and drug dealing — and more benign jobs like working construction for a day for cash, or even the $2 a kid that Kalmes gets for walking neighborhood children to the bus. Added together, economists estimate $2 trillion could be involved.

Joshua Zumbrun, Shadow Economy Shows Joblessness Less Than Meets U.S. Eye, Bloomberg, March 20, 2013.

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A study for the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee.

Over-regulated America, The Economist, Feb 18th 2012.

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Informal employment in Californian construction has increased by 400 percent since 1972. The ranks of the informal swell with each economic recession, but most recently a larger share of workers have stayed in the informal sector because formal sector jobs have not been recovered. Four years after the end of the Great Recession, the industry has recovered only 66 percent of the jobs lost in the formal sector. –

Yvonne Yen Liu, Daniel Flaming, Patrick Burns, Sinking Underground: The Growing Informal Economy in California Construction, Economic Roundtable, September 2014.

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The result has been a downsizing of expectations. By almost two to one — 64 percent to 33 percent — Americans say the U.S. no longer offers everyone an equal chance to get ahead, according to the latest Bloomberg National Poll. The lack of faith is especially pronounced among those making less than $50,000 a year, with close to three-quarters in the Dec. 6-9 survey saying the economy is unfair.

Rich Miller and Michelle Jamrisko, Americans on Wrong Side of Pay Gap Run Out of Means to Cope, Bloomberg.com, By December 30, 2013.

COMMENTS

The legitimacy of a formal wage employment system for working people comes from an implicit guarantee that workers get a fair share of national income. This guarantee is necessarily implicit because to make it explicit would require imposing substantial constraints and costs on the owners and managers of business enterprises. Public policy would have to define the primary and overriding obligation of the private sector to be providing employment or income to all working people in place of the existing mandate to provide maximum income to investors.

In most of the world’s low wealth political jurisdictions, opposition to creating and strengthening formal wage employment systems is generally very strong, especially among the rich and powerful of those jurisdictions.   Both the rich and a majority of workers in those jurisdictions understand that their profits and jobs can be quickly eliminated in a world economy in which businesses and workers in other jurisdictions will underbid them if given the opportunity.

In the post World War II decades, the rich and powerful in the world’s affluent nations were less often actively opposed to high cost formal wage employment systems, preferring the cost of accommodation to the cost of ruthless government suppression of conflict.

This accommodative stance has been disappearing as economic globalization has dramatically increased the competition for resources and markets faced by owners and investors in wealthier jurisdictions like the U.S. In recent decades, the accommodative stances common to business communities across the affluent nations of the world have been replaced with aggressive political campaigns to substantially reduce the high costs of the formal wage employment systems. Working people in the world’s affluent nations have lost benefits, suffered wage reductions, lost union organization protections, lost funding for government agencies charged with monitoring workplace conditions and labor market practices, and become more exposed to exploitative and unsafe working conditions.

Working people have been nudged into and forced into less desirable forms of employment (including informal sector employment, family employment, self-employment in petty trades, coerced employment, and employment in illegal activities). In a reversal of trends a few decades ago, formal wage employment now accounts for a declining share of total employment.

This trend is likely to continue because global ecological and institutional conditions impose a structural ceiling on the global rate of growth. As a result, global competition will intensify and national economic policy efforts to restore high rates of economic growth will fail much more often than they succeed. Adopting accommodative relationships with working people will not reemerge as an option for even the most successful of the world’s businesses.

Formal wage employment standards will continue to deteriorate because the world’s business owners and investors will put more pressure on governments to cut tax revenues and weaken labor market and workplace regulations as they fight for global market shares. Working people in various places will attempt to resist but will mostly lose these battles because they are, at heart, global political battles in which owners and investors have a massive advantage.

At the moment, the world’s working people are fragmented and disorganized, both across and within nations. Despite global business competition, the world’s owners and investors are much better organized into a global political force. They fund large transnational organizations to develop and pursue shared goals (e.g., more trade, easier money, lower costs) to a far greater extent than do the world’s working communities.

In the long run, this could change, but not unless the world’s working people find ways to politically checkmate the world’s owners and investors. That may or may not happen. What is certain is that the future of work is up for grabs.

(For a perspective on the slowdown in global economic growth see my article, Replacing the Concept of Externalities to Analyze Constraints on Global Economic Growth and Move Toward a New Economic Paradigm.)

The Sharing Economy: Mobilizing Underutilized Assets or Degradation of Quality of Life in Times of Job Scarcity and Income Stagnation?

SOURCE ITEMS

PAUL SOLMAN: A peak efficiency economy, that is, putting idle resources to work, like a car, or your own idle time. Cook a meal for strangers on Feastly or work a freelance gig in your downtime on oDesk or Elance.

And speaking of idle, how about that empty space in your house? The app DogVacay lets you rent it out to bored canines. One of the most popular sharing economy platforms extends that idea to humans, Airbnb, now turning the hospitality industry on its head.

The new ‘sharing economy’ can enrich micro-entrepreneurs but at what cost? PBS NewsHour, October 10, 2014.

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Our indicators of leisure quality show that, despite increases in the quantity of leisure over this period (as reported by Aguiar and Hurst [2007 ] and others, and confirmed in Section 5 below), the quality of leisure has decreased for all groups.

Almudena Sevilla Sanz, José Ignacio Giménez, Nadal Jonathan Gershuny, Leisure Inequality in the US: 1965-2003, Sociology Working Papers, Department of Sociology, University of Oxford.

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But this is not by virtue of people wanting to work less — it’s by virtue of people being able to work less.

That’s an important distinction: being able to make a living and support your family by working 40 hours a week versus 80 hours a week.

Peter Diamandis, Evidence of Abundance #1: More Leisure, Less Work, Forbes, June, 27, 2014.

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Specifically, the allocation of time for less‐educated and highly educated adults started to diverge in 1985 (panel B of Table 6) and was dramatically different by 2003 (panel C of Table 6).
Taken together, the results of Table 6 and Figures 6a and 6b document an increase in the dispersion of leisure favoring less educated adults, particularly in the last 20 years. This corresponds to a period in which wages and consumption expenditures increased faster for highly educated adults.

Mark Aguiar and Erik Hurst, Measuring Trends in Leisure: The Allocation of Time over Five Decades, Working Papers, Federal Reserve Bank of Boston, January 2006.

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In economics, capital goods, real capital, or capital assets are already-produced durable goods or any non-financial asset that is used in production of goods or services. … Homes and personal autos are not usually defined as capital but as durable goods because they are not used in a production of saleable goods and services.

Capital (economics), Wikipedia, Accessed 10/11/2014.

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Around the world, working-age people with full-time jobs (and therefore weekends and distinct non-work time) are now a minority: According to a new survey of 136,000 people in 136 countries by Gallup, 26 per cent of working people “worked full-time for an employer in 2013.” In India, nearly three of four are informally employed, according to the national statistics agency, either doing day-by-day piecework or buying and selling things.

Doug Saunders, Work? Leisure? It’s all a blur these days, The Globe and Mail, Aug. 30 2014.

COMMENTS

The positive spin on the sharing economy is that people have unused assets they can turn into capital and income.  A spare room in the house or a car that is not always in use can be transformed into capital for a business. Non-work time can be turned into work time and thus into income.

But, what does it say about the quality of life when everything you own is seen as capital or potential capital and every waking hour is seen as potential work time? Only a generation ago, being middle class was understood to include owning things just for the pleasure of having and using them and to include having lots of time not a work to spend with family and friends enjoying our spacious homes, our comfortable cars, our hobbies, and our many wonderful toys.

The rise of the sharing economy must be put in the proper context: the globalization of competition for jobs and income, the technological destruction of higher end jobs, the permanent slow down in the growth of global wealth, and the steady increase in the world’s working age population. These forces brought the growth of middle class incomes in affluent countries to a halt over the last several decades, even while costs associated with middle class life continued to rise rapidly – costs for college, good health care, and higher end consumer goods.

The sharing economy seems new to many of us in affluent nations, but it has been a staple of human societies all along. It’s the technologies that Uber, Airbnb, and other sharing economy enterprises use that fool us into thinking the sharing economy is a modern or postmodern model of economic activity. For most of human history, people have engaged in peer to peer economic activities within the small populations their communication and transportation technologies could knit together.  For most of human history people have necessarily used every available asset. They have necessarily done work in the places where they live and seen their own time and the time of their children as potential income.  They have made almost no distinction between work and leisure.  Ironically, what we are now calling a different and promising future is in fact just a continuation of what has historically been typical.

In another form, the sharing economy could offer a promising future. In its present form, it is only another of the many ways in which the world’s middle income people adapt to their ongoing economic decline by undercutting each others’ wages.

The world’s peoples do have to adapt to emerging limits to the growth of affluence, but we should choose to implement new technologies in ways that create real forms of economic sharing not new forms of all against all competition.