Is Paid Wage Labor Really Worth It?

Writing in his two-volume masterpiece, An Inquiry into the Nature and Causes of the Wealth Of Nations,  Adam Smith envisaged a market society of individual proprietors: butchers, bakers, printers etc. all of whom would be self-employed and not dependent on performing wage labor under a single employer.  Abraham Lincoln was no different, stating in an 1859 address before the Wisconsin State Agricultural Society:

"The prudent, penniless beginner in the world labors for wages awhile, saves a surplus with which to buy tools or land for himself, then labors on his own account another while and - at length- hires another beginner to help him".

In other words the beginning job taker may work under wage labor himself but ultimately becomes an employer of others.  Thus the takeaway that even well into the 19th century wage labor was seen as only a temporary step to individual entrepreneur.    Today, many who've lost their wage jobs are also attempting this route, but alas- because of the competition - too many are failing.  Most tragically, the yearly glut of degree-holding younger job seekers has pushed many into the unskilled labor force - including as Starbucks baristas and retail clerks.

A lot of other systemic factors contribute too, including lack of guaranteed health care for self-employed folks - so that they now have to gamble they won't fall ill or have a serious accident under Trump Care.  Then there is the scale of initial investment needed, often making it a huge risk even to operate a franchise.

As opposed to Lincoln's era then, establishing a small business today is simply too fraught with risk for too many Americans, who still rely on their employers for health insurance and long term income. And that's assuming they can even get the level of pay and benefits needed.  Too many Americans now, including amongst the Trumpies, are forced to patch together a precarious existence and income from freelance gigs, using Uber, 'TaskRabbit' etc.  Or being an adjunct prof - who has to ply his teaching trade at 5 or 6 different universities.

WSJ columnist William Galston in his May 8 piece ('An Econ Mystery: Why Did Wages Flatline"') makes an even more cogent case for avoiding wage labor, but alas, offers no solutions how to escape it. This is despite the fact, as he points out "the labor-force participation rate which nudged above 67 percent in the 1990s, stands at only 62.9 percent today".

So what's happened? Well, for one thing much less investment in paid work, human labor. As I noted already (April 14), automation is grabbing more and more jobs, citing the WaPo article (4/ 8) by Jeff Guo,  'Robots Take Production Up Another Notch'

"Industrial robots alone have eliminated up to 670,000 American jobs between 1990 and 2007, according to new research from MIT's Daron Acemoglu and Boston University's Pascual Restrepo."

But in addition there is the Neoliberal dynamic explained by William Wolman and Anne Colamosca in their 1997 work, 'The Judas Economy: The Triumph of Capital And The Betrayal of Work'.  The authors argue that the modern Neoliberal state has no interest in human labor, paying it properly, or re-investing. It is capital that takes precedence, hence business is only invested in its own aggrandizement and proliferation at the expense of citizens. A key indicator? The magnitude of investment by corporations in stock buybacks as opposed to labor investment.   Since 2009, U.S. firms - entrenched in their own myopic interests- boosted capital investment by only 43%, dividends by 67% and stock buybacks by a whopping 194%. This according to Jason Thomas of Carlyle Group. In addition, rather than investing in new plants for new jobs, businesses have squandered $2 trillion on mergers and acquisitions .

Galston in his WSJ piece is clear on the trends:

"Firms have gains they could share with workers, but they have chosen not to do so. Even in occupations where there companies complain of labor shortages, there is scant evidence they are responding by raising compensation."

So one arrives at the question of whether paid labor is even worth pursuing anymore, or - to use the refrain of James Livingston - a historian at Rutgers: "Fuck work!".  Livingston takes up this theme in his new book, 'No More Work: Why Full Employment Is A Bad Idea.'.  His arguments are corroborated and reinforced by a similar work by Elizabeth Anderson of the University of Michigan: 'Private Government: How Employers Rule Our Lives (And Why We Don't Talk About It).

I mean think about these titles before even considering the respective content (for which the general theme in each case is that corporations now rule our lives as opposed to the government).  Think this is preposterous? For most workers entering wage labor at a corporation it's no joke. They are warned by finance columnists (like Jill Schlesinger) that they had better take down any anti-capitalist or controversial blogs or posts on news forums before going to that interview. (Some of the material such as I've written on 'Brane Space' would prevent most from even getting in the door for that interview, because employers now Google you first).

Then there are the other warnings, i.e. to remove all "controversial" photos, images etc. from one's Facebook pages. Also, any comments, writings that might be construed as anti-free market, or espousing any kind of "aggressive" environmentalism, or activist protests including climate change tracts.

If one is "lucky' enough to then get hired by "Corporation One", the extensive contract terms in fine print (sometimes given by HR depts.) let you know you are under constant surveillance. That includes all your outgoing (and incoming ) emails read by the boss and oh yeah - your keystrokes recorded as well as time consume for any bathroom breaks. If you have to take a crap - as one boss once confided to a friend at a radiotherapy software company "Make sure you're wearing Depends if you have overtime..")

But it doesn't stop there. In today's proto-fascist corporate work environment where ten million bosses channel Donald Trump, they can dictate how underlings wear and style their hair, when they can eat, how often drug tests are imposed, and the right to rifle through belongings in your desk any time they want. These tyrants can also require their slaves.....errrr, workers, to complete - as endurance test for entry - lengthy questionnaires concerning off-hours alcohol consumption, exercise habits as well as childbearing intentions.  The real howler here? The number of conservatives and Right wingers who whine and moan about "government intrusion" in our lives but are quite okay with a hotshot corporate CEO doing it to them - daily.

So much for any "rights". Meanwhile, Americans are daily fed the codswallop that "work builds character", "work will give you meaning", "work will give you satisfaction"  and other hogwash. Surely, if any of those tropes was true it ought to be possible to work full time in the 'richest nation on Earth" and not have to apply for food stamps or Medicaid. But we all know that's not the case and it isn't because those affected are "lazy" or "lack, ambition". They have plenty of ambition, there just aren't the quality jobs available to provide ample support - including to afford decent housing.

For these reasons, Livingston - like me- believes the cockeyed aspiration to "full employment" is misplaced and in the wrong direction. With automation and shrinking available quality jobs - along with too many people chasing them, it makes more sense to implement a "universal basic income" (UBI) to correct the course.  A start in that direction meanwhile would be to lower the maximum number of hours that comprise a "full work week". The French have already done that, capping the work week at 35 hours.  

A recent WSJ editorial (May 8) didn't like that, carping:

"Successive French presidents have failed to undo the 1999 35-hour workweek law amid militant union protests"

But the French are correct, because on its face the 35-hour week (in the context of a still "full employment" era)  enables more workers to be hired. It also paves the way for further lowering of paid wage hours as automation and other (economic efficiency) forces exert their unstoppable attrition on wage labor.  The next step, at some point, is the implementation of UBI.  The trick is to get politicians and other academic elites to use their heads and get going sooner than later, when it may be too difficult. This is especially as global population continues growing to the point of tripling (by 2050) from what it was 50 years ago.

The two authors cited in this post - Livingston and Anderson - make clear that no one should bemoan the demise of paid wage labor. It has already stolen too much in the way of time from families and caregivers, even while we've ceded an unconscionable amount of our energy in making wage work the primary conduit for our liberty and morality. In the end, all we've done is sacrifice our time and humanity to an entrenched Corporatocracy and its overpaid CEO henchmen.  Insisting the companies can improve our "work-life balance" misses the point, according to the authors, and is too timid. The cold hard fact is that corporate employers hold the means to our well being and currently have the law on their side.

Livingston's recommendation is blunt:  Instead of idealizing work and making it the linchpin of our society he asks: "Why not just get rid of it?"

Something to ponder.

Devaluing Labor - Now As Never Before

A week ago, a talking head on CBS Nightly News observed - after extolling the spiking stock market - that the average American's wages have declined by a full 5.9 percent since 2000. When anchor Scott Pelley asked Ms. Schlesinger how the economy could fully recover if workers, people didn't have adequate income to purchase corporate goodies - she had no answer. (She also admitted that rather than create jobs the corporations were using money to buy back their own shares and enhance their profits by "automating" to increase share value.)

On this Labor Day, 2014, it is well for us all to ponder then, irrespective of our place in the labor constellation - whether employed or not - how we came to the sorry pass of American Labor being so devalued. One only needs to do the most rudimentary research to ascertain how far we've fallen since 1973-74. By one measure, as reported by Barbara Ehrenreich ('This Land is THEIR Land', p. 23),  one of her most popular books:

"the share of pre-tax income going to the top 1 percent of American households has risen to 16 percent. At the same time, the share of income going to the bottom 80 percent has fallen by 7 percentage points."

But it's worse than that! Those top 1 percent of people and indeed the top 5 %, have made out like bandits since the Bush tax cuts were passed in 2001, then extended (with the help of Neoliberal democrats) in 2011. As a result, there has been an average transference of $7,000 every year from lower and middle income earners to the top. According to a New York Times piece cited by Ehrenreich: "It's as if every household in the bottom 80% is writing a check for $7,000 every year and sending it to the top 1 percent".

How the hell did things get this bad for middle and working class labor? How has it come to be that now there is such a massive retrenchment of high benefits - high value jobs, while low value service jobs become the norm? It has been a long time coming, but numerous processes were at work, a few of which I will enumerate below:

(1) Cutting employee benefits, i.e. health plans - even after employees have retired with them.

(2) Eliminating defined benefits plans, such as provided standard corporate pensions - in favor or defined contribution plans (such as 401ks) in which workers are in it for themselves to accumulate adequate savings for retirement.

(3) Cutting wages - either de facto, or through eliminating the unions which protected them (much exacerbated after Reagan ascended to power)

(4) Firing/downsizing workers just before their retirement dates, so the company is free not to have to pay retirement plan benefits, or provide stock options, as per contract clauses.

(5) Re-engineering the workplace to increase its automation factor in order to dump workers, so increase profit margins by not having to pay benefits, etc.

(6) Shipping as many jobs as possible overseas, to places like Bangalore or Beijing, with labor costs barely 20% of what they are in the U.S. and no benefits to factor in.

(7) Firing - downsizing workers after mergers dictated by Wall Street interests, in order to enhance a company' profits through higher Wall Street share prices.

(8) Identifying older (over 50) workers as 'surplus' so that they can be replaced with younger workers for whom half the wages (or less) can be paid, with fewer benefits. (A recent 5-4 Supreme Court ruling a few years ago exacerbated this by asserting anyone claiming "age discrimination" could not file a suit in standing if that was the only charge)

(9) Eliminating nearly all permanent jobs which carry health and pension benefits, in favor of using 'temping', 'outsourcing' or some other device not requiring benefits. On the academic (university) front, using 'adjunct' professors, hired on a per hour, per course basis, without benefits., and with no possibility of 'tenure'.

(10) Tying health insurance to employment, so that when let go or fired, workers are waylaid again by having to do without critical protection. Thereby driving them into bankruptcy and-or poverty if they should get seriously ill or seriously injured in an accident.

All of these together, in concert, have forced a massive marginalization of the workforce. It is so disagreeable and extensive that it evokes the powerful words of Charles Reich in his book, Opposing the System,p. 22:

"We have built a machine for dehumanization of such force and destructive power, thorough its accumulated assaults on human dignity, that we are creating kinds and degrees of damage to human beings beyond anything ever known, with totally unforeseeable consequences "

And indeed, when one observes workplace killings, especially in the wake of firings - one gets a glimpse into these consequences. Not to say the fired people were "entitled" to get off this way, but that the system of American work itself has so regressed them that they are no longer able to see clearly what their choices are, in situations of desperation.

And don't think for a moment the military is free from this. As I tracked one of the charities to which I consistently donate, I found their main beneficiaries were families on U.S. military bases. That charity was primarily responsible for trucking in loads of free food from pantries to the bases - making the spectacle of military poverty high profile (especially following 9/11 when all entering vehicles had to be stopped for searches outside bases).

As Ehrenreich also noted from her book (p. 61):

"Market forces ensure that a volunteer army will necessarily be an army of the poor. The trouble is that enlistment doesn't do a lot to brighten one's economic future".

She goes on to say that the average pay for frontline battle troops (at the time of writing, ca. 2008) was $17,000 a year- "which puts them at about the level of theater ushers and crossing guards". Even 2nd lieutenants only earn an average of $26,000 - "less than most pest control workers and shoe salesmen". Yes, they do get benefits, but these enable families to barely keep heads above water. Also, as Ehrenreich notes, many service men and women have had to use credit cards to purchase kevlar or other protective vests because the Army couldn't afford them.

What kind of nation is this? One in which the labor pool has been nearly totally devalued and debased.

Probably no truer a statement ever appeared than barely 12 years ago, in an issue of Psychology Today no less (July/August 1998, p. 10. Includes graph):

"Starting in the mid-1970s, the nation's quality of life parted company with its wealth, and the gap between social health, and GDP is now bigger than it's ever been."

A graph of 'quality life indices' vs. GDP (ibid.) shows the measured divergence. It also suggests that we are a much sicker society than anyone imagined. The marginalization of the workforce, is surely one major barometer of that. The GINI coefficient, and research disclosing how it portends social and economic disintegration, is another. And bear in mind this awareness was at least ten years before the massive financial meltdown in 2008, which now has 16.7 million out of work and nearly 26 million under-employed. Meanwhile, corporate America continues to sit on a heap load of $867 billion in cash reserves rather than create jobs.

They won't add jobs until "demand rises"- which means consumers buying more. But consumers are keeping their wallets tightly zipped up because they're still de-leveraging out of debt which, as recently as 2007, saw them with an average of $1,400 of liabilities over assets.

Cynical aspects of even remotely trying to reach full employment in the U.S. are seldom mentioned. For example, that a deflationary impetus has been a prime influence in companies cutting back on work forces, because the employment cost is too prohibitive. (Or, using 're-engineering and re-tooling to replace workers with robots or self-service queues such as at many supermarkets now)

Also, the cost of keeping people employed is seldom mentioned. But, the Federal Reserve even has a statistic to keep track of it: "the Employment Cost Index." It is basically, a per capita index of how much cost is attached to keeping each unit of workers in jobs. This includes benefits, as well as wages and salaries, including overtime pay. The higher this index, the greater the number of employed people. The lower, the more unemployed. Market specialists and strategists do NOT want employment rates high because they inflate the Employment Cost Index, and also:

"Inflation fears are especially acute ..because unemployment is too low. When available workers become scarce, employers must often bid more for their services and then raise consumer prices to make up for higher costs." (The Baltimore Sun, p. 1E Jan. 27, 1997, 'Employment Cost Is a Hot Number').

To put this all in more blunt terms:

Economists and Wall Street investment firms have learned that for roughly every 1.3 million people out of work, inflation decreases by 1%. (And the Employment Cost Index, though not necessarily by the same amount).

They also know(as the Federal Reserve Corporation does) that low inflation increases stock prices - which makes more money available to business (though not to their employees, since profits are always invested in new capital - i.e. issuing more shares, rather than labor). The end result is that there is an enormous impetus to eliminate as many good jobs and workers as possible - to maximize a company's stock prices, and enhance capital.

In other words, capital is opted for over labor, and this was the topic of The Judas Economy: The Triumph of Capital and the Betrayal of Work, by William Wolman and Anne Colamosca.

The point is then, that labor is devalued precisely because we live in a "Judas Economy" where capital is revered over it. One of the most disgusting indices as the authors note, is that productivity in relation to GDP has increased more than 40% in the interval since 1973 even as wages-salaries have remained almost stagnant. Of course, one major reason is how "greater productivity" is attained. Often by firing a number of workers and ditching their benefits, and making the remaining force do their work plus that of the downsized ones. OR- tossing out 80% of a workforce and replacing them all with automation.

So much for labor and Labor Day!

Americans, the kings of Bullshit, do a good job of talking it up and pretending like the nation extolls its regular workers. In truth, it disrespects them and the sure sign is how the trade unions have been treated and dismissed since the Reagan era. I leave with Barb Ehrenreich's powerful words (pp. 6-7):

"How many 'wake up calls' do we need, people? How many broken levees, drowned cities, depleted food pantries, people dead for lack of ordinary health care? (Waters poisoned by blown deep water oil wells)......Why don't we dare say it? The looting of America has gone on too long, and the average American is too maxed out, overworked, and overspent to have anything left to take. We need a new deal, a new distribution of power and wealth, if we want to restore the beautiful idea that was America".

A start can be made by increasing all Social Security benefits ASAP - so people can reap back in social insurance benefits what they failed to get in fair wages. Yes, the increase in benefits needs to be across the board and at least 6 %. Cuts that are guaranteed to only cause the gulf between capital and labor to grow even more. Instead of keeping those, cuts - take $2.2 trillion out of it to rebuild our decaying and crumbling infrastructure while also putting tens of thousands of people back to work....with full benefits!

American Moving Inertia: A Reason for Persistent Unemployment?

Leaving out stupid or ignorant "reasons" for persistent unemployment (e.g. "the unemployed refuse to take jobs they think are beneath them") offered by knuckle-draggers, the question does emerge of what's behind the stats. Most recently, the BLS delivered an unemployment rate a few ticks lower than last month but the labor participation rate was also lower, at 62.4 percent. Also, the number of jobs created -at 74,000 - was significantly below the 200,000 needed to feel the unemployment situation is improved.

Economists are therefore looking now from a different angle: mobility. As they often state in research, Americans' geographic mobility is tied to economic mobility. If you can't move to where the jobs actually are, then logically you won't find the jobs, including the ones best suited to your skill set.  In this sense, the Census stats show the lowest proportion of Americans (since post WWII)  moving in the last few years.

According to Census Bureau data from 2013, about 4.8 million Americans moved across state lines in the previous year. This is down from 5.7 million in 2006 and 7.5 million in 1999. Taken collectively, the percentage of Americans moving across state lines has dropped by half since the 1990s.  The stats also show that even immigrants who arrive on our shores are more likely to stay put than they were 30 years ago. All of this has an impact not only on finding jobs, but creating them.

Having said that, no one who is rational or sane can deny that the 2008 financial meltdown, credit crisis and stock crash - leading to a prolonged recession - also has impacted Americans' ability to move.  This is not advanced calculus or rocket science: You can't move for a job if no job exists, and you can't buy a new house if no one gives you a mortgage .....or you are unable to sell your existing home to be able to make a move.  In other words, this 'trifecta' of risk made it many times more difficult to move since the recession, than in times past Given also the recession was of the "balance sheet" form, it spawned an endemic or system inertia that in many cases remains even today. In many places, for example, people are still "under water" - meaning they owe more in their mortgage than the home is worth. How can they move? They can't! How can they move to get a job? They can't!

Another factor contributing to the lower moving rates must be the age of the population. It is axiomatic that older people tend to move much less than younger folks. This also isn't rocket science or advanced calc: it's damned hard to pack up all your stuff and move across country - as wifey and I learned when we left Maryland for Colorado in 2000. Needless to say, it's a move we'd likely not make again unless really extreme circumstances arose, say like fracking wells being set up next door and the fumes, polluted water driving us out.

Rising costs of living can also dent the yen to move, even among the young. A case in point is the San Francisco area where the home prices are now so sky high teachers are having to move many miles away to lower cost communities. This means teachers have less time to spend with the students, tutoring or in after school activities, because of the long commute.

Those who've just graduated from college are also finding the jobs hard to come by. They may have taken out loans in excess of $30,000 to pay for their college education, and can only obtain jobs - say at Mickey D's or Starbucks - that pay barely $8 to 9.50 an hour. This won't pay for a car loan, far less a home - so they have to live with mom and pop. 

This means that the military , with all other avenues of job opportunity closed, becomes the default employer. No surprise then that all too many young people hike to the nearest Army station to enlist and commence a military career, with the hope of having most of their college paid for later. Of course, the recruiters never tell these kids they may get wounded by IEDs or brain-damaged in some new fangled "war" (occupation) first, say in Iran, Syria or wherever the military industrial complex sees fit to next meddle.

Barbara  Ehrenreich notes ('This Land is THEIR Land', p. 61):

"Market forces ensure that a volunteer army will necessarily be an army of the poor. The trouble is that enlistment doesn't do a lot to brighten one's economic future".

Yes, they do get benefits, but these enable families to barely keep heads above water. Also, as Ehrenreich notes, many service men and women have had to use credit cards in years past to purchase kevlar or other protective vests because the Army couldn't afford them.
The dynamic then generates an enormous military jobs program while the domestic (private) jobs program is left to suck salt. This military jobs program is also not cheap. It is passing incredible that too many Rightist  knuckle draggers don't see the irony of carping against an infrastructure maintenance program (which is REALLY needed, to repair the crumbling water mains, sewer lines and bridges) but express no money worries by funding a monstrous military jobs program. Especially given the latter will always be used to invoke ever more interventions. ("After all, if yuh got the Army why let it go to waste?" )

Anyway, back to other ironies pertaining to job mobility. Jed Kolko, chief economist at Trulia (real estate website) did an analysis and found on indexing the 100 largest metro areas by affordability - San Fran and New York City were at the bottom, while 'hollowed out' less affluent communities wee at the top. The problem? Many fewer jobs were available in the latter, than the former. However, when Americans did move to these municipal  'backwaters' they justified their decision by noting the cheaper living costs outweighed less economic-job opportunity. In other words, it was a trade off. In hardly any cases, except for graduated 1-percenter  scions hailing from top private universities, was the situation 'win-win'.

Another explanation to account for the job mobility inertia comes from Greg Kaplan or Princeton University and Samuel Schulhofer- Wohl of the Minneapolis Federal Reserve Bank. They theorize that there is no longer any upside to moving because labor market have become more homogeneous. Because earnings have been leveled across the country, there's a lot less incentive to move from one location to another, say in search of a raise. In addition, the spread of fast food franchises and the service industry are ubiquitous across the country. Moving to any location to find such a job is essentially pointless, especially if one can't count on the property taxes remaining lower. The solution could only be to raise the minimum wage, say to at least $15 an hour. But the knuckle draggers will never let this happen.

The effect is that  economic inequality grows, partly as a result of too low taxes (especially on the 'upper crust') and partly on account of the best jobs shipped overseas (with the concomitant decline of domestic manufacturing) along with the growth of the low wage service industry. It is no wonder then that the middle class is being slowly eviscerated, while the upper 1 % have more money than they know what to do with, although they can opt for weekends in St. Kitts to get rose wine wraps, e.g.

By one measure, as reported by Barbara Ehrenreich ('This Land is THEIR Land', p. 23): "the share of pre-tax income going to the top 1 percent of American households has risen to 16 percent. At the same time, the share of income going to the bottom 80 percent has fallen by 7 percentage points."

But it's worse than that! Those top 1 percent of people and indeed the top 5 %, have made out like bandits since the Bush tax cuts were passed in 2001. As a result, there has been an average transference of $7,000 every year from lower and middle income earners to the top.

According to a New York Times piece cited by Ehrenreich: "It's as if every household in the bottom 80% is writing a check for $7,000 every year and sending it to the top 1 percent".


Left unsaid in all this, is how capital has come to dominate over labor in this country. The dirty little secret, seldom broadcast by the MSM,  is that low inflation (such as Bernanke has incited with his $4 trillion cheap money infusion program) increases stock prices - which makes more money available to business (though not to their employees, since profits are always invested in new capital - i.e. issuing more shares, rather than labor). The end result is that there is an enormous impetus to eliminate as many good jobs and workers as possible - to maximize a company's stock prices, and enhance capital.

In other words, capital is opted for over labor, and this was the topic of The Judas Economy: The Triumph of Capital and the Betrayal of Work, by William Wolman and Anne Colamosca.


The point is then, that labor is devalued precisely because we live in a "Judas Economy" where capital is revered over it. One of the most disgusting indices as the authors note, is that productivity in relation to GDP has increased more than 40% in the interval since 1973 even as wages-salaries have remained almost stagnant. Of course, one major reason is how "greater productivity" is attained. Often by firing a number of workers and ditching their benefits, and making the remaining force do their work plus that of the downsized ones. OR- tossing out 80% of a workforce and replacing them all with automation.

These observations suggest Americans haven't stopped moving because of housing prices, or cost of living or other financial concerns but because they simply don't see the need to. Since the entire country is royally fucked in terms of metastasizing inequality and lack of  job opportunity - it doesn't matter which part of the 'ship' you high tail it to if the whole ship is sinking.  Uneducated or semi-educated troglodytes can sit in their own little comfy dens - high on their own gov't benefits - and bemoan the "laziness" or "selfishness" of the long term unemployed, but they have no room to talk. The fact remains our long term unemployment problem is systemic and structural and no amount of 'moving chairs on the Titanic' will change that. Until economic inequality is addressed. This can only be done by raising taxes which will increase genuine productivity as well as job creation, as the authors of The Indebted Society have shown.