Friday, January 18, 2013

what the labor pool collapse means

businessinsider | “If today, the country had the same proportion of persons of working age employed as it did in 2000, the U.S. would have almost 14 million more people contributing to the economy. Even assuming that these additional workers would be 25% less productive on average than the existing labor force, U.S. gross domestic product would still be more than 5% higher ($800 billion, or about $2,600 more per person) than it actually is.”

Makes sense.

The larger question concerns how and why this happened. I have my own theories about this, but let’s first look at the evidence that Vedder himself comes up with to show that most of this can be explained by transfer programs like food stamps, disability insurance, student subsidies, and unemployment payments.

Let’s look at each.

Food stamps were a slightly goofy subsidy to the big agriculture lobby back in the 1960s, fobbed off on the public as somehow essential to ending hunger. Today, food is cheaper and more plentiful than ever, and American waistbands reveal this fact. People talk about the plight of the hungry, but it is mostly a myth. We are the most stuffed society in the history of the world.

Yet even now, 47.5 million people are receiving food stamps, with an average benefit of $125 per month. That’s 15% of the population. That’s some pretty serious grocery purchases there. Big Ag is very happy about this. Must be nice to a have a pool of guaranteed customers who live off others.
Vedder makes the point that a major reason people work is to eat. If the eating part is guaranteed, why bother working?

With disability benefits — the government program most famous for massive fraud and abuse — it’s the same story. Back in 1990, only 3 million people took checks. Today, that number is through the roof, so much that almost 8.6 million people get checks that provide the equivalent of a full-time income. And this has happened at a time when medical technology is better than ever at dealing with real disability.

Next comes the whole student racket. Back in 2000, not even 3.9 million young people received Pell Grant awards to go to college. Today, the number is approaching 10 million. Going to school is a great way to avoid having to work. Hey, but maybe all these desk sitters are absorbing fabulous information that they will soon spring on society in the form of dazzling innovations and productivity, and we will look back and say, wow, that was worth it after all.

OK, stop laughing.

Next comes unemployment. In the past, it was never possible to stay unemployed for a full year and still receive benefits. Now it is normal. Congress just keeps extending benefits, probably out of fear that if these people are pushed into the labor market, unemployment will go up and wages will fall and there will be a revolution. It’s literally the case that government is paying millions of people to shut up and stay at home.
What are we to make of Vedder’s picture of the workforce? One gains the image of many millions of people sitting at home drawing checks, pretending to be students, stuffing their faces with tax-funded potato chips, and otherwise just living it up. If that’s really true, that’s not really suffering, is it? The data reported above indicate no real disaster, except for those of us footing the bill.

I actually don’t think this is entirely the right way to look at it. The reality is that the labor market is broken today because it is not really a market in any normal sense. Many people are shut out due to more substantial problems. People are saddled with debt, terrified to lower their wage expectations, and completely shut out of a system that doesn’t seem to accommodate the old expectations.


John Kurman said...

There's only one problem with Mr. Tucker's vision of history. It's all horseshit. Throughout the 19th century, there wa a chronic shortage of jobs. Done so by business leaders to keep wages low. One has onyl to look at the unending series of Panics and depressions to realize that markets are neither rational or efficient. Mr. Tucker (and his fellow deranged libertarian primitives) lives in fantasy land, and probably needs a surgical 2x4 to the skull to jump him out of the that record scratch.

CNu said...

Does that same characterization "chronic shortage of jobs" still hold true if you factor in the confederate rural agrarian economy in which coercive appropriation of labor value kept wages non-existent?

umbrarchist said...

Talking about economics without talking about "ownership" of land makes no sense. If some people did not have to pay other people to live on the planet would JOBS be so necessary? So who "owns" the land and how did they get it?

The Economic Wargame is a continuation of the Military Wargame by other means.

CNu said...

lol, I thought we'd already established that basic understanding

John Kurman said...

For the (ah-ha-ha) non-slave labor segment in the South, yes. The aristos south of the Malaria Line really didn't want free-range specialized labor 'effing up their sweet deal. No, the records show the vast majority of immigrants preferentially hitting the NE coast ports, finding no jobs in that fish trap, and forced to go West to escape the exponentially increasing pop. (with gov't subsidized lifestyle to gently push them on their way), or struggle and die in Eastern seaboard slums on steadily decreasing wages.

CNu said...

How long a period of time did that eastern seabord slum darwinian threshing floor scenario play itself out over, or, does a good hustle never die, just multiply?

John Kurman said...

At least since the Panic of 1797.