Middle Class[Income] Jobs ain't Coming Back?

[bUU]

What's you idea of where jobs come from?

I'm flattered that you think I have all the answers.

Is there a fixed pool of jobs that need to be managed and allocated?

There is a growing pool of workers that need to be effectively employed.

Adapt, innovate, or be crushed.

Be compassionate and be honorable in your actions in the public space, or have your conduct repudiated and opposed.

 

[HFWR]

Absolutely, but "efficiency" without new jobs to replace those lost to efficiency is the absolute worst situation: People who want good work but there isn't enough to be had. We can arrive at an imperfect solution, but that arrangement is simply too offensive to abide.

We sit down (figuratively) around a table, discuss it, and come to an agreement, respecting everyone's needs and not respecting anyone's childish insistence on getting their own way.

Well, I was being more philosophical than political, but societies have long had "charity", some private, some public. And it's likely not going away from the public realm at this point.

A thriving middle class is important for future corp profits, and the major growth in that market is offshore at present. There are plenty of theories about how to maintain a middle class in the USA; not convinced which will work, but a large swath of the country un- or underemployed doesn't seem like a good thing...

 

[martyp]

I just had a related thought about productivity and its impact: The goal of business cannot be to reduce the number of jobs in the economy - which, if taken alone, would be the impact of increasing productivity. So productivity increases must naturally be accompanied by new ways of making use of the labor that the productivity makes unnecessary (either new productive use or through increased leisure).

My j*b (for the last 12 yrs) was to automate the manual processes on a production line. Productivity, of course went way up. The number of employees for the organization as a whole stayed about the same or increased a little. The production line staff levels went down some but we increased staff in other areas of the process. We let go of the lower skilled workers and hired more highly educated workers. Our budgets stayed relatively flat for years but the productivity gains were "spent" on initiating new areas of research. We also stopped hiring people with no previous experience.

This seems to be the familiar story of both the last 30 yrs and the years since the 2008 downfall. Lower skilled workers take the brunt of the downsides of either technological advances or economic downturns.

 

[marko]

bUU writes: "The goal of business cannot be to reduce the number of jobs in the economy - which, if taken alone, would be the impact of increasing productivity'

The goal of business is to increase value for those who own the business (shareholders).

Fact is, most of us on this board have investments which make us shareholders.

Companies have the responsibility to increase the value of the money we've invested in them. Without the increased value of those investments most of us would have go to back to w*rk.

 

[Midpack]

Seems like a good place for a discussion of 'creative destruction.' An essential part of the American success story past, but maybe creative is lagging destruction more recently, and society can't adapt skills fast enough these days? Not an easy topic...

 

[ziggy29]

Seems like a good place for a discussion of 'creative destruction.' An essential part of the American success story past, but maybe creative is lagging destruction more recently, and society can't adapt skills fast enough these days? Not an easy topic...

Creative destruction is still in play -- but it doesn't work the way it used to for two main reasons:

1. It is occurring on the global economy, not a single nation's economy. So even if "obsolete" good jobs are replaced by theoretically "better" jobs elsewhere, they are still flowing to where labor costs are lowest. So it no longer helps a laid off worker in a dying industry in their home country the way it used to.

2. Many of the software and "information" jobs do not scale in terms of jobs to demand. If you triple the demand for a software product or an information service, you don't need 3x as many people to "build" them. In fact, you barely need more jobs at all as when demand was 1/3 as high. Contrast that to the "old" economy where usually, when demand tripled, you needed close to 3x as many people to build product to meet the demand. (And I haven't even touched on the growth of robots in manufacturing to further dampen the job growth with increased demand.)

 

[bUU]

bUU writes: "The goal of business cannot be to reduce the number of jobs in the economy - which, if taken alone, would be the impact of increasing productivity"

The goal of business is to increase value for those who own the business (shareholders).

No. That is the goal of A business; that must not be the goal of business.

Fact is, most of us on this board have investments which make us shareholders.

Most of us on this board also have children and/or nieces and nephews, cousins once removed, etc.

Companies have the responsibility to increase the value of the money we've invested in them.

And society has the responsibility to grace all its members with its benefits.

 

[ziggy29]

No. That is the goal of A business; that must not be the goal of business.

It is *the* goal of a publicly traded business, whose executives have a fiduciary duty to shareholders. If they can find a way to squeeze out a few more pennies in earnings by turning the screws on their workers and/or customers, they will generally do so. Even if they are posting record earnings, it is their job (and the expectation of shareholders) that they will look for ways to squeeze even more profit from the business.

A privately held company is under no such requirement. And if theirs is a business with a long-standing company culture of taking care of its people, they can leave some potential profit on the table to do so without fearing retribution from shareholders. Also, since these businesses are not under pressure to "hit their numbers" every quarter, they can make tactical business decisions for the long run, not just move a few shells around to hit the numbers *this* quarter.

It's no accident, IMO, that a steadily increasing percentage of the "best places to work" are coming from the ranks of privately held companies rather than those which are beholden to Wall Street.

 

[bUU]

Agreed: Being privately-held does allow a business to do a better job at contributing to society.

 

[Meadbh]

It's no accident, IMO, that a steadily increasing percentage of the "best places to work" are coming from the ranks of privately held companies rather than those which are beholden to Wall Street.

So very true. A private company which manages a property whose board I sit on has an outstanding benefits package for its employees. Not surprisingly, this company is high on the best employers list. I have not encountered benefits like this in the public sector either.

 

[imoldernu]

Re: middle income and jobs, two points:
First, productivity has grown so rapidly, that without the unequal distribution of wealth, the entire world would live in health, to an old age, and in comfortable lifestyles.
Second, that discussions of income and wealth in the US should be predicated on an understanding of income growth in our lifetime.

 

[marko]

So very true. A private company which manages a property whose board I sit on has an outstanding benefits package for its employees. Not surprisingly, this company is high on the best employers list. I have not encountered benefits like this int the public sector either.

I think government jobs do the best at providing outstanding benefits and high morale with low stress. Wish I had taken one 40 years ago when I had the chance!

I'd be RE'd with full pension for 20 years already and my leaving would've created a job for someone else!!

 

[samclem]

Second, that discussions of income and wealth in the US should be predicated on an understanding of income growth in our lifetime.

imoldernu,
I like the table, but the climbing annual incomes might represent no true "progress" if it is due only to dollars that buy less and less each year.

Happily, that's not the case. The chart below shows the real wage growth (spending power) for privately employed workers in the US. People who work are earning much more than they did a decade or two ago. The real wage growth of households has climbed at an even faster rate because women have entered the workforce at higher rates than in years past (due to many factors: desire to have careers, the availability of fantastic medical advances many credit with helping facilitate the move of women into the labor force, higher rates of single parenthood in some cases, etc)

 

[NotMyFault]

I can agree with the premise but question the becomes on of motivation and distribution. How do we keep the producers working if the fruits of their labor go to others. How much can we share the wealth before productivity drops? If everything is distributed evenly who gets picked to do the work?

NMF

 

[ziggy29]

The real wage growth of households has climbed at an even faster rate because women have entered the workforce at higher rates than in years past

Certainly true, though this doesn't come without its own potential causes for reduced overall quality of life. For one thing, on average the entry of women in the workforce and the rise of "two income households" didn't double real income or standard of living, despite working twice as many hours. If you looked at real *per hour* wages, you might see a bit of a different story, at least in part because the "supply" of labor expanded faster than the demand. And if you adjusted it again for being in a higher marginal tax bracket with the second income, it looks even worse. How much better off are you if, after taxes and extra expenses, you work twice as many hours but only have (say) 25-50% more real after-tax income?

And then there are the non-financial or tangentially financial considerations. When women feel financially *required* to work these days (not talking about women who would choose a career even if money were not a concern), that's much less household time to run errands, to be parents to their children or take an active role in their education, to have leisure time. It also might mean the husband does more household chores because his wife is working as much as he is and it's no longer fair that she does most or all of it.

And then there are financial costs of two-income households: day care, more frequent dining out (too tired/not enough time for meal planning and grocery shopping), more costly and less healthy "convenience" foods, that sort of thing.

So there may be more income and maybe even a *little* more disposable/discretionary income, but not nearly enough to justify double the hours worked outside the home, and quite possible with a net *negative* quality of life differential.

Again, I'm referring to women working for strictly financial reasons, not because they *want* to pursue a career. And I'm certainly not suggesting we were better off as a society before women had career options other than teacher, nurse or secretary. "Better off" and "more income" are not necessarily synonymous. "Better off" is also a state of mind, a quality of life issue, at least once you are above the income level required to sustain your family. To that end, we're back to the old "money versus time" tradeoff.

 

[youbet]

If everything is distributed evenly who gets picked to do the work?

We could use a system similar to the military draft.

People who chose to work would be analogous to people who want to be in the military and therefore enlist voluntarily. Those who chose not to work but rather to be the recipients of the "distributions" would be subject to being "drafted" into the work force where they would serve some period of time until they were discharged.

Our country has a long history of involuntary conscription and we could do it again.

 

[samclem]

So there may be more income and maybe even a *little* more disposable/discretionary income, but not nearly enough to justify double the hours worked outside the home, and quite possible with a net *negative* quality of life differential.

I agree with all of that. All the possible negative social factors, decreases in hourly wages due to a larger supply of workers, family stress, increases in costs due a second wage earner (male or female), as you said, for families where the second person feels forced to work. But:
1) Whatever you or I think, apparently a lot of people have weighed their own circumstances and made the decision it is worth it to work.
2) Just using the chart and looking at the averages: The average single-breadwinner house today would have a higher real income than the average single-breadwinner household we remember from our youth. True, due to hourly wage changes that single breadwinner might be working a few more hours. So, why the presure for the second worker? A desire for more consumption, I think.

Note: we should probably be using "mean" figures instead of "average" but I found these first and they matched Imoldernu's chart.

 

[ziggy29]

2) Just using the chart and looking at the averages: The average single-breadwinner house today would have a higher real income than the average single-breadwinner household we remember from our youth. True, due to hourly wage changes that single breadwinner might be working a few more hours. So, why the presure for the second worker? A desire for more consumption, I think.

These days, IMO, it's as likely to be as "insurance" against a job loss as anything. At least you have some income still coming in, and possibly access to health insurance as well -- things not available to single-income households. Then again, 40-50 years ago mass layoffs and requiring years to find another decent job were far from the minds of most people.

 

[imoldernu]

imoldernu,
I like the table, but the climbing annual incomes might represent no true "progress" if it is due only to dollars that buy less and less each year.

Happily, that's not the case. The chart below shows the real wage growth (spending power) for privately employed workers in the US. People who work are earning much more than they did a decade or two ago. The real wage growth of households has climbed at an even faster rate because women have entered the workforce at higher rates than in years past (due to many factors: desire to have careers, the availability of fantastic medical advances many credit with helping facilitate the move of women into the labor force, higher rates of single parenthood in some cases, etc)

Agreed... Being two or three decades older than most members, I only posted the table to show some equivalency to what is considered a "middle" salary today, and what showed on the paycheck 25 years ago... ie. $43K in 2011 and $17K in 1987, when we were putting money away for retirement.
With a "normal" job in those days, the idea of amassing a million dollars for retirement would have been a flight of fancy.

 

[photoguy]

Happily, that's not the case. The chart below shows the real wage growth (spending power) for privately employed workers in the US. People who work are earning much more than they did a decade or two ago.

The figure that you cite looks like it's the average hourly wage from the BLS (roughly 30-40% growth from 1970-200X). This includes all workers including CEOs and the 1%. If you look at the median, the hourly wage growth is basically flat:

The wedges between productivity and median compensation growth | Economic Policy Institute

 

[brewer12345]

Certainly true, though this doesn't come without its own potential causes for reduced overall quality of life. For one thing, on average the entry of women in the workforce and the rise of "two income households" didn't double real income or standard of living, despite working twice as many hours. If you looked at real *per hour* wages, you might see a bit of a different story, at least in part because the "supply" of labor expanded faster than the demand. And if you adjusted it again for being in a higher marginal tax bracket with the second income, it looks even worse. How much better off are you if, after taxes and extra expenses, you work twice as many hours but only have (say) 25-50% more real after-tax income?

And then there are the non-financial or tangentially financial considerations. When women feel financially *required* to work these days (not talking about women who would choose a career even if money were not a concern), that's much less household time to run errands, to be parents to their children or take an active role in their education, to have leisure time. It also might mean the husband does more household chores because his wife is working as much as he is and it's no longer fair that she does most or all of it.

And then there are financial costs of two-income households: day care, more frequent dining out (too tired/not enough time for meal planning and grocery shopping), more costly and less healthy "convenience" foods, that sort of thing.

So there may be more income and maybe even a *little* more disposable/discretionary income, but not nearly enough to justify double the hours worked outside the home, and quite possible with a net *negative* quality of life differential.

Again, I'm referring to women working for strictly financial reasons, not because they *want* to pursue a career. And I'm certainly not suggesting we were better off as a society before women had career options other than teacher, nurse or secretary. "Better off" and "more income" are not necessarily synonymous. "Better off" is also a state of mind, a quality of life issue, at least once you are above the income level required to sustain your family. To that end, we're back to the old "money versus time" tradeoff.

Amen.

I don't know why more people don't take a jaundiced view of the dual worker household, particluarly with kids in the mix. GW and I took a long, hard look at what our lives would be like with both of us working and wanted no part of it. So DW set up a small business out of the house to keep her skills fresh and generate a bit of income and we opted out.

 

[bUU]

There's no real need to worry about who should and shouldn't work: Everyone who can, should. If society incurs lower productivity from that, so be it. There are no dividends to society from increased productivity at the expense of utilization. Productivity must be able to stand on its own, to be worthy, not steal from full employment.

 

[NotMyFault]

There's no real need to worry about who should and shouldn't work: Everyone who can, should. If society incurs lower productivity from that, so be it. There are no dividends to society from increased productivity at the expense of utilization. Productivity must be able to stand on its own, to be worthy, not steal from full employment.

So are you advocating the elimination of the concept of retirement? So we eliminate stay at home moms?

NMF

 

[NotMyFault]

Just read my post and no I don't want to wipe out all the stay at home moms.

NMF

 

[REWahoo]

There's no real need to worry about who should and shouldn't work: Everyone who can, should. If society incurs lower productivity from that, so be it. There are no dividends to society from increased productivity at the expense of utilization. Productivity must be able to stand on its own, to be worthy, not steal from full employment.

Horsepuckey.