The Jobs Economy versus The Post-Jobs (Jobless) Economy
Once upon a time, there was no such thing as “a job”. And maybe that will be the case in the future as well.
Humans have always had to work hard for a living. But our present economy – and indeed our society – that revolves around the concept of “jobs” is a relatively recent development. And our “jobs economy” may eventually become obsolete. If so, our leaders need to begin thinking about how a post-jobs (jobless) economy and society would work.
For some 2.5 million years humans existed in small groups of hunter-gatherers. It was only about ten thousand years ago, with the agricultural revolution, that humans began to cultivate plants and domesticate animals. This allowed humans to settle in more permanent villages and allowed small towns and cities to develop. Agriculture allowed for a population explosion and also allowed for a hierarchical society with a small pampered elite at the top (the original 1%!). The vast majority of people worked the land, tended animals, and continued to hunt and gather and did not have “jobs” as we use that term today.
The earliest paid “jobs”, were likely in ancient cities including Rome about two thousand years ago and mostly involved working long hours in return for compensation that included and/or purchased nothing more than a basic level of subsistence and survival. At that time and up until perhaps 300 years ago most humans continued to work the land and did not have paid jobs as such.
Today, the great majority of adults expect to have a paid job of some kind for most of their working age years.
Today’s concept of a job – and certainly of a good job – is to work perhaps 40 hours per week in return for compensation that provides much more than a basic subsistence. We expect a job to provide us with much more than the essential food, shelter and clothing. We expect a good job to allow the purchase of a home and a car. We are entitled to a minimum two weeks of vacation but expect more. With good jobs we expect health and retirement benefits. We expect to be able to afford a reasonable amount of entertainment and recreation and travel. We expect a good job to provide us with a reasonable amount of discretionary income. In short, we expect a good job to provide for what would be considered a middle class lifestyle.
Today’s concept of a job – and certainly a good job – is also that it is relatively permanent. A good job is one where (absent quite poor behavior or performance) the employment will most likely continue indefinitely until the employee decides to leave. And a good career is one where the employee is able move to a different employer from time to time to pursue better opportunities or in the event of job loss or a move to a different part of the country.
The precise point in history at which paid “jobs” became the center piece of the economy and the center piece of the lives of the great majority of working-age adults is debatable. But certainly this has been the case for at least the past 100 years. Within the last 50 years or so it became normal for both partners in a marriage to work at paid jobs outside the home.
And just how central is their “job” to the lives of most adults in western countries today? Well, it determines their living standard. It largely determines their very identity in society. It often determines their sense of self-worth and happiness. It fills about half of their waking hours. It partly determines their attractiveness to potential mates. In short their job is absolutely central to the lives of most working-age adults.
And the job (if applicable) held by their spouse (if applicable) is also absolutely central to the lives of most adults. And certainly the job(s) held by their parents is central to the lives that different children experience.
In our economy, the great majority of working-age adults strive to prepare for and obtain and hang onto a “good job” or a series of good jobs within a good career. It can be argued that nothing is more central to their lives.
Governments also rely on people having jobs. Income taxes collected on wages are the main source of government revenues. A population with low unemployment rates is also more likely to be a contented and peaceful population.
Businesses are also highly dependent on the existence of the jobs economy. Businesses require workers and they benefit from a stable workforce that is employed for an indefinite period.
The fact that the majority of working age adults have relatively permanent or replaceable jobs is also extremely central to the functioning of our credit economy. Credit (or debt) is very much the grease that allows the economy to go around and to grow. If jobs were not relatively permanent (or were not generally replaceable) it would not be possible to borrow money for a house with a repayment term of 25 years. Almost all personal lending is dependent on the borrower having a job to facilitate repayment of the loan. If most jobs were not expected to be relatively permanent, or at least replaceable, then lenders would not be anywhere near so willing to lend.
The fact that labour is organized into various specialized jobs in our economy vastly increases the total level of goods and services that are produced. Jobs are central to the production of food, clothing and shelter, and to the provision of healthcare, education and policing. If everyone stopped doing their jobs tomorrow we would immediately face shortages of all goods and services and would soon descend into anarchy.
Our jobs-centered economy produces a prodigious and growing amount of goods and services and real wealth each year. And it is their job that primarily determines the share of the economy’s output that each working adult can receive. A significant portion of the output of the economy is also distributed to the owners of productive land and capital through rent and corporate profits. And a very significant portion is redistributed by government to the elderly and the needy. But for the vast majority of working-age adults, their share of the output of the economy, and therefore their standard of living, is determined by the wages they earn from their job (and/or that of their spouse).
But the question arises: Does our jobs economy, along with the rents and profits to owners of land and businesses combined with income taxes that fund various government payments to individuals, distribute the output of the economy in a reasonably fair manner? Are the wages that various jobs pay inherently fair because they are (supposedly) set in an open competitive market?
Increasingly, those at the bottom and even those near the middle of the wage scale argue that the outputs of the economy are not distributed fairly.
Let’s examine some jobs and consider whether the wages seem to be set in an open competitive manner.
The government worker who is earning $50 to $75 per hour (or $70 to $100 with benefits, and, believe me, there are lots of these jobs on the sunshine lists) tends to believe this is fair compensation set in the open competitive market. But is that really how that government wage was set? Does that government worker get a pay cut when the economy is bad and there is an excess of qualified people around? Is that government worker ever required to sort of rebid for their job in an open competition? Is that wage supported partly because the next level of management wants to be paid even more than that? Is that high wage supported partly because it is not coming out of the pocket of those setting that wage?
Are government wages that make no adjustment for the difference in the cost of living between large cities and smaller towns really set in an open competitive manner?
The dentist who charges fees that amount to $500 or $1000 per hour might be convinced that this price has been set in the open competitive markets. But do people shop around for dental services especially when most patients are covered by benefit plans? Do dentists even post their prices? (In some or most provinces of Canada, dentists are actually prohibited from advertising their prices by their self-regulated professional associations!) Does the dentist profession limit the number of dentists entering dental schools and make it hard for foreign-trained dentists to come in? Does the dental profession discourage or even prohibit competition on price?
Are many wages higher than a competitive level due to union negotiations? Is that a bad thing?
Some employees find themselves subject to relatively brutal competition. Store clerks can’t demand $20 per hour when there are many qualified people willing to work for less. When such people clamor for a $15 per hour minimum wage they often face sanctimonious criticism from people making five times that level whose wages and jobs are not subject to open competition.
The wages of Chief Executive Officers of large companies are set by consultants – paid by the corporation. And are set by comparison to wages of other CEOs in a manner that results in a race to the top. Meanwhile workers on the shop floor are told of the need to compete with lower wage companies in what seems more like a race to the bottom.
Overall, I would conclude that there are many imperfections in the way our current jobs economy sets wages and therefore distributes the output of the economy. An increasingly large proportion of the population believes that the current jobs-based economy is treating them unfairly or excluding them altogether. They may be right.
Are actions warranted to address some of these imperfections? Should income tax rates be more progressive with even higher taxes on the highest incomes and perhaps income tax credits for the lowest wage earners?
And, is the jobs-based economy going to become obsolete in any case?
For hundreds of years, workers have feared that automation would eliminate jobs. But new jobs have appeared to take up the slack. Standards of living rose exponentially for several hundred years due to automation and the specialization of labour.
But now, figures show that on average real wages have not increased for perhaps 20 years or more. Those people with the highest wages have seen their standards of living continue to rise exponentially. Those in the middle and below perceive that their standards of living have stagnated.
For the middle class, good permanent jobs with health and retirement benefits and attractive wages are undeniably harder to find than in many of the decades of the 20th century.
Many highly educated young people find themselves in a “gig economy” in which temporary positions are common and organizations contract with independent workers for short-term engagements. These “gigs” lack the stability and benefits that a traditional “job” provides.
Experts, almost always safely ensconced in good jobs themselves, argue that education and training is the solution. But education and training levels and the years spent in school have continued to increase rapidly and yet a large proportion of young college graduates are unemployed or under-employed or temporarily employed. They even face the indignity and abuse of unpaid internships.
What if automation and technology is going to eventually reach the point where essentially all goods and services are produced without any requirement for human labour of either the physical or even the intellectual form? Is it possible that as we head towards such a point that well-paying jobs will become harder and harder to find and eventually become obsolete?
Such a jobless world will produce even more goods and services than today’s system. But how will the output be distributed? What kind of construct could or should replace their job as the thing which gives meaning, definition and stability to people’s lives?
It seems clear it will involve increased levels of government entitlements such as a basic income system paid without the need to work.
We may very well be headed towards this type of post-jobs jobless economy and society. In the western world, people, especially older people, have an ingrained level of contempt for such socialist notions. But technology and automation may be taking us there.
Our thought leaders might be well advised to turn their attention to how such a jobless economy and society would function.
End
Shawn Allen
InvestorsFriend Inc.
December 1, 2016 (with minor edits to September 27, 2017)