Where Will the Good Jobs Come From?
by Mark Thoma
author for Economist’s View and Maximum Utility
Where Will the Good Jobs Come From?
I have emphasized short-run job creation quite a bit recently, and I have noted, implicitly at least, that we shouldn’t be too picky about the quality of the jobs that are created. Most jobs will do.
But in the long-run the quality of jobs matters a lot, and when the private sector finally begins reabsorbing the unemployed, the underemployed, and the discouraged, we want people to be able to find jobs with decent wages and benefits — jobs that are as good or better than the jobs they had before.
But where, exactly, will those jobs come from? I wish I had the answer.
Education is part of it, better education means better jobs on average, and it’s easy to imagine a substantial fraction of the population benefiting from an educational advantage. So I won’t back off prior calls to improve education at all levels.
But even if we substantially improve education, it won’t fully solve the problem. There will still be a need for quality jobs that are not all that dependent upon knowledge based skills. However, it’s harder to imagine an emerging set of industries that will provide the large number of quality jobs that we need to replace those lost from industries in decline.
If these jobs fail to be created in the next years and decades, the result will be an ever widening gap in the distribution of income with, as now, a group at the top doing relatively well, and everyone else treading water at best.
Is it overly pessimistic to worry that we may be headed in that direction?
(Reposted with author’s permission)
__________________________________
Rdan here…Martin Ford, who has guest posted here, made the front page today of Fortune (CNN money) online with this article.
It will be technology, energy production/generation, and food production. Yes, food production as worldwide demand goes through the roof in coming decades farming will not look so dull. There will be a lot of new tech associated with that farming too.
More importantly than the type of jobs is the timing – when. I think we are going to have a job market that stagnates for a few years.
We have a nice and growing food trade surplus with China, they need our food production.
http://1.bp.blogspot.com/_otfwl2zc6Qc/S_ASn0kTaXI/AAAAAAAANdE/bng-rlK3OdE/s1600/china.jpg
It appears two comments disappeared….odd. (coberly and ??)
I never stop being shocked at how the most obvious solution to the “good jobs” question eternally escapes our best and brightest economic brains. BIG HINT: such a question does not exist in Europe in the same desperate way it does here — in Europe where they work many fewer hours yet.
Anybody ever going to recognize what is America’s CORE economic problem: quite a bit more than anemic labor strength at the bargaining table. Opps; what bargaining table? That is the CORE problem; Americans — including apparently our best and brightest and most progressive (they think — but totally useless to working folks like myself!) — have no idea you are supposed have an actually working ability to withhold your labor from the production process until you get the right price.
Simple, no-sweat way of going about this used all over the much better compensated and insured OECD world (excepting labor squeezed Japan) — legally mandated by the labor majorities everywhere: sector-wide labor agreements.
My personal experience as a starved American worker — in particular as a Chicago cab driver — which used to be what Mark Thoma would have called a “good job”:
1) one 30 cent increase in the meter mileage rate between 1981 and 1997 (by which 16 year mark I was hacking in San Francisco);
2) at which 1990 point the city began building subways to both airports and making the number of limo licenses unlimited, taking away most profitable long rides (a bit of explanation here: as taxi drivers were paid less and less, the quality of drivers naturally enough got worse and worse, scaring everybody into limos);
3) at which 1990 point the city also began putting on 40% more taxis (now on the way to 50% — the city profits selling medallions to drivers willing to work for more than the steel mill in Pakistan paid).
This would never happen in labor market conscious (that doesn’t sound very Marxist) Europe. Maybe you can tell me how to get cab drivers paid again (in America that is) — and make that job a “good job” again, Mark and Rdan. Oh; I already explained the basic process for reinstituting American labor power in the comment above — used all over the better paid OECD world: sector-wide labor agreements.
The Crips and the Bloods could not whip an honest Ronald Mcdonald and would be the first to say so. Double the minimum wage and end all street gangs. Double the minimum wage and the price of a Big Mac goes up 1/3. Who buys Big Macs: people earning less than $15/hr — seems no problem for Ronald there. Nothing else goes up much at all.
Double the minimum wage and overall prices may jump 5% — haven’t worked it out lately. [See an earlier computation here:http://ontodayspagelinks.blogspot.com/2008/08/3-cost-of-gdp-output-and-inflation.html ] Double the minimum wage and end crime and the worst poverty for a bit of inflation (what the economy needs right now?). DOUBLE THE MINIMUM WAGE AND MAKE EVEN FAST FOOD JOBS BECOME “GOOD JOBS” AGAIN — FOR THOSE THAT NEED IT MOST.
Anyone ever expect Obama to ever so much as inform American labor that his minimum wage is now 75 cents below Eisenhower’s minimum wage — 250% the average income later?
Whoa (re: my “good jobs” post above)! $15/hr, double today’s federal minimum wage, is today’s median wage. Double the minimum wage and half of America will be restored to some sort of “good job” — if today’s median wage job is considered some sort of “good job.”
Why not double it — 40 years after LBJ’s minimum wage was $10/hr (adjusted) and 200% the average income increase later? If LBJ’s minimum wage had kept up with average income increase, then, today’s MINIMUM wage would be $5/hr more than Obama’s MEDIAN wage.
Wake up America. Good jobs are just a matter of getting paid fairly for your present jobs. “Wage Up America” might be the right good slogan.
I’ll repeat my offer (on Thoma’s blog) to explain the missing five million (conservative estimate) jobs. That’d be ten or twenty million using less conservative but still justifiable assumptions. Reducing the hours of work in response to technological change is not a “choice” — it is a necessity. In fact, part of the productivity gain from tech change is a direct result of the increase in leisure. If you forego the leisure, you lose out on much of the benefit of tech change. Instead, you convert some of the potential benefits into liabilities. This is not rocket science — it’s straight-forward neoclassical economic theory sans the ideological blinders.
“…Double the minimum wage…”
When I was in college the nominal minimum wage was around $2/hr (http://www.infoplease.com/ipa/A0774473.html) — I was making $2.35 in one of my first jobs.
If that had kept pace with inflation then that $2 job would now be paying $9.35. http://www.dollartimes.com/calculators/inflation.htm
What’s a good job? Most Americans want to own lots of stuff, automobiles,boats,motorcycles, house,eat out,travel just to name a few and if they can then it seems or economy is considered OK and providing the basic’s for modern life. While Sandwichman offers up a way to divide the current job market what happens as technology continues to eliminate more and more JOBS.
America has been sold as the land of economic opportunity which is reflected in our legal immigration policy and taught in the school system public and private as a basic tenet of American life. Technology or the better mousetrap isn’t labor intensive and its direction tends to focus on consumer apps rather then radical new industries that will employ millions for example Twitter employs a whopping 200 people not sure if they are even good jobs!
Maybe the question should really be what’s a good life? Sandwichman ideas point in that direction and that needs more attention which begins to pinch on the whole American Dream ideology that the political/financial/media elites have been selling so its going to be a very long struggle maybe several generations to embrace any new economic doctrines.
The answer then is to return to a more labor intensive economy one that is shaped less by technology and financial innovation and supports a general lower standard of living in terms material goodies but offers greater social cohesion.
The Amish offer a good example not that we need to return to 160 acres and a mule but the ideas of social connection and responsibility are critical in generating economic well being. We have the ability to remake America from its current over reliance on oil/gas to creating new cities based on living standards that promote energy efficiency. Remake our electrical transmission grid and radically expand nuclear,wind and solar energy sources which will create many new industries and jobs. We have many great challenges ahead but if our concern is with creating more luxury consumer spending,big houses,entertainment and sport spectaculars and protecting the banking sector then boom and bust will be the future.
Send it to me and I may post it.
The federal minimum wage was raised to $2/hr ($8.91 adjusted*) in 1974. Average income has increased 60% since (not a lot for 36 years — slow productivity growth era) — but 60% is still 60%.
[* http://www.minneapolisfed.org/ ]
dan,
it wasn’t me, and then it was. try again.
we fool ourselves with “education for good jobs.” i have worked in colleges and i have worked on farms. farmers are smarter than professors. no doubt some college education is worth while, but a lot of it is a fraud.
an educated idiot is still an idiot. but take a kid who really wants to learn how to make steel and give him a job in a steel mill with a decent personel policy and in ten years he’ll run the place, and in thirty the owners won’t know how to do without him.
ah, but we are running out of steel mills. there’s your “good jobs” problem. maybe we can go back to hand made chairs. buy one for a lifetime. instead of ten cheap, ugly, uncomfortable ones made in a factory by organ doners. educated organ doners.
ddrew
yes.
Sandwichman
are you saying that great lump of leisure at the end of life called retirement might be GOOD for the economy?
are you on some kind of terrorist watch list?
Sandwichman:
Drop in Participation Rate (that rate of the Civilian Non Institutional Population) that is the Civilian Labor Force is now in Not In Labor Force. We never recovered to the Participation Rate at the end of the 2001 Recession or 66.7%. Where did these jobs go? Gobalization and automation “probably.”
Sandwichman, I agree with you on the weekly hours. The producivity after 40 hours diminishes. It makes sense to reduce hours to maintain the sanity of Labor and inturn hire more Labor. Instead we beat the drum faster to move of the pace of the rowers in the trireme . . . ramming speed.
I would luv to have you post on Angry Bear about Labor.
coberly:
He didn’t say such. He did say OT was not as productive as what it is made out to be and a 40 hour week may not be needed.
Ronald:
So you like the Homestead Act? I believe if you begin to skew the prodcutivity gains back to Labor instead of it present direction – Capital; much, could be solved.
ddrew2u: “Simple, no-sweat way of going about this used all over the much better compensated and insured OECD world (excepting labor squeezed Japan) — legally mandated by the labor majorities everywhere: sector-wide labor agreements.”
I think that a very large part of our problem is the diminished power of unions. However, I a skeptical of sector-wide labor agreements. Just as big corporations can be exploitative, so can big unions. in competitive situations in general, the few are more powerful than the many. (So the many should form coalitions.) One corporation, one union makes sense to me in that regard. Then the corporation and the union have an incentive to work together to compete with other corporation/union pairs. This competition benefits the public in general. Also, if the corporation is multi-national, then the union is as well, compensating labor for its lack of ability to cross borders.
Umm, if you’re going to talk about labour hours then you’ll really have to make sure that you talk about all labour hours. Not just market labour hours.
You need to add in hours of unpaid household production: that’s what allows us to calculate the residual, leisure.
And unpaid hours of household production are much lower in the US than they are in Europe. To the point where leisure hours are much more equal than most people seem to think. Indeed, at least some studies point out that total labour hours for women (Germany as one example from a paper I remember) are higher in europe than they are in the US.
Only looking at the market working hours is only looking at half the picture.
Double the minimum wage and the landlords will take every last cent of it.
Housing costs are strangling us more than anything.
I pay $1750/mo for an apartment (that rented for $800/mo when it was built in 1989), gas only costs 1/10th that.
We need to reduce the forced expense of housing. The housing good takes a long time to be consumed yet we all pay thousands per year in housing costs more than the depreciation of the asset.
We either need to shift to a high-tax / high-service mixed economy like Norway or Finland’s, or shift more taxes on land value.
Either way we’ll find a higher standard of living and less of our earnings being skimmed by the rentiers in the system.
Of course a 40 hour week is not needed. Nor is retirement at 70.But if society allows captialists to suck up all producitivty yields then we have a problem.
Is it me or does nobody understand that higher wages end up mostly in higher rents and mortgage payments?
The wage/rent spiral in Silicon Valley 1996-2000 was an eye-opener, but low vacancies hid the rent inflation effect.
Gas could go to $10/gallon, mandatory health insurance contributions could double, income taxes themselves could double. Wages could be cut to halfway to China’s.
Theoretically, AFAICT, at the end of a very painful process of adjustment, we’d find our standard of living not affected in the slightest, we’d just be paying a lot less in rents and mortgages.
Theoretically.
Answering this question is an interesting academic exercise and in truth there are a myriad of ways we can find to utilize the resources we have and employ people in jobs they both want to do and can do. All it takes is creativity which I see as almost endless.
What I can say with certainty is that good jobs will NEVER come from the austerity packages being foisted on populations around the world. Ones income will never go up when spending is going down. If there was ever an example of unenlightened thinking its the gut response to “cut” everything when things get bad. Until we decide we can spend again there will be no good jobs.
Troy: “We need to reduce the forced expense of housing.”
Haven’t you heard? We have a housing glut now. Why, it’s so bad that we may have to bulldoze a lot of it.
Greg: “What I can say with certainty is that good jobs will NEVER come from the austerity packages being foisted on populations around the world.”
Isn’t that the point? (Good help is so hard to find these days.)
Troy
It’s not just you. But I think there may be a class divide. People with big money buy big houses, but that makes them feel rich. Then prices, rents, and taxes go up even for the people who don’t have big money.
This is not quite what you are saying, which is also true, but it’s another aspect of it.
hey run
i knew that. just extending the argument a bit. hoping to enlighten minds.
Tim
that’s because german women keep their houses cleaner.
the commenters are right about overtime. but any job with “overtime” is already not a “good job.”
to some extent “leisure” means getting away from a soul killing job. people who do creative work can’t find enough time in a day to do what they love.
Min
i wish that was funny.
purple,
we have a problem.
i ran into this today: “Apparently, these are the “good-old days” our nation’s fiscal hawks relish. The Peterson Foundation’s David Walker co-hosted CNBC’s Squawk Box this morning (personally, we yearn for the good-old days when so-called “news” shows were hosted by journalists—not partisan advocates—but that’s another debate).
The discussion followed the classic Peterson Foundation talking points—government bad, business good—but ultimately led to a nostalgic reminiscence for the good old days when Americans faced debtors prisons and had no sense of “entitlement” (presumably to the Social Security and Medicare benefits workers have funded for their entire working lives):
“The fact of the matter is we have to change how we do things. We are on an imprudent and unsustainable path in a number of ways. You talk about debtors prisons, we used to have debtors prisons, now bankruptcy is no taint. Bankruptcy is an exit strategy. Our society and our culture have changed. We need to get back to opportunity and move away from entitlement. We need to be able to provide reasonable risk but hold people accountable when they do imprudent things…it’s pretty fundamental.”…David Walker, Peterson Foundation, CNBC Jun 10, 2010 “
The economy is about to be in the hands of people who are terribly concerned about the virtue of poor people.
“…now bankruptcy is no taint. Bankruptcy is an exit strategy…”
He’s talking about corporations, right?
Right?
Tim,
Parkinson’s Law? 🙂 Expenses rise to meet income; work expands to fill the time available.
If Germans receive more compensation per hour in the labor market — and therefore receive the same total market compensation Americans receive but for fewer hours — then, the added benefit from more homework hours added to equally matched (total) market compensation means more overall pay for the same hours for Germans. (Teamster’s Union version of life anyway.)
well, maybe i lost the thread of this argument.
so germans have more “leisure” which they spend working around the house, therefore they do nothave more leisure.
what the hell?
are they supposed to just sit in front of the TV like good Americans?
or is the point of working fewer hours making money exactly to have more time to “work” on the things that matter to you (and not to your boss)?
Min,
Sector-wide is the only way I know of to halt the race to the bottom. Supermarket workers all over this country have been forced into two-tier contracts, paying new employees less, permanently removing one more “good job” from the labor market (giving in only after a long, painful strike in California) because minimal paying Wal-Mart decided to get into the reatail food business.
Alternately, Wal-Mart, last year, closed 88 big boxes in Germany (don’t worry; they still have 3000+ here) because they could not compete paying the same as the competition.
Guess what? Employers actually like one giant thing about sector-wide: they know their competition will have to pay whatever the increase in pay is (average income doubles over 40 years due to increased productivity — in a word maturing technologies: xerox machine, internet — but not pay, not in the US that is) so they can relax about labor cost anyway.
I was in Teamsters local 804 in the late ’60s. Recent read they raised their defined retirement benefit from $3300 a year to $3600 a monty. They are just high school graduates driving trucks and working in warehouses but they have retained the power to bargain on an equal power basis. Have to have eqaul power with business — called checks and balanced in politics — or inequity always follows (from unions too if they have the chance — “fallen” human nature). Only sector-wide contracts provide equal balance around the OECD world (in some second and third world economies too).
Troy,
The Lord made the earth and He’s not making any more. As long as a huge pack of money (15% of US income — did not happen in Europe) switches from the bottom 90% of earners to the tippy-tippy top (top 3% — but largely to the top 1/10th of 1%) all the housing construction is going to go where the money is. No new housing gets built for the majority of Americans — which majority grows 50% in numbers every 40 years while the earth does not grow at all — and the rest of us pay more and more for the stagnant housing stock till we are literally threatened with homelessness (or doubling up the double ups).
The Bronx apartment in the then very middle class neighborhood I left 30 years ago cost only $400/mo in today’s dollars. In the now poorer neighborhood it would go about $800/mo.
Like writing for Angry Bear??
Dan
no. i do this for my soul. after i finish my coffee i have to go build a fence. for which the only person who pays is me.
“are you saying…”
Coberly
Not what I’m saying at all. But since you raised the issue, I’ll bite. I think retirement overdoes the leisure = not working myth. Working keeps people socially active and involved. All work and no play makes Jack a dull boy. The opposite is also true.
Tim,
Umm, if you’re going to talk incessently about the Time Use Surveys and use arbitrary aggregations of their results as master factoids, you should at least address the detailed methodoligal issues I’ve raised with you at least twice. In a nutshell, aggregating the time use results is an exersize in adding apples, oranges, grapes, walnuts, tomatoes and Hershey Bars to get totals that are then called “fruit”. It is simply not credible to me that driving to a McDonald’s for a happy meal because you are too tired to cook is “Leisure” while cooking a gourmet meal for friends is “Work”. If you, Tim, want to define your activities in such a bizarre fashion, that’s o.k. with me. Just don’t generalize and say that because Americans are watching TV while Germans are gardening, the Germans are working more than the Americans. That is nonsense.
Rdan,
I’ll do that later today. Thanks.
run,
I’ll be sending my “five million jobs” sketch to Rdan.
sammichman
retirement is not sitting in front of the tv. it’s living the life you never had time for making money for your boss.
if you can’t figure out how to live without “working” you have a serious problem.
sammich
yes. exactly what i was trying to say to you.
ronald
i don’t think we need to abandon technology. labor intensive is no fun if it’s “work.” what we could do is let the machines do most of the work, then take the time off. what we end up doing is competing with the machines and working sixty hour weeks so the boss knows we are sincere.
the plastic toys just aren’t worth it.
Sure, you need to adjust the GDP figures (well,. no, because they only measure market output, but the standard of living figures perhaps) to reflect greater home production.
But that isn’t what we were talking about. We were talking about hours worked. And when we do so we must include household production as well as market production so that we can calculate that residual, leisure.
You’d better go and take it up with those two Nobel Laureates, Amartya Sen and Joe Stiglitz then. They make this point very clearly in the report they did for Sarkozy.
It is the residual of leisure which is important: not the division between household and market working hours.
“It is simply not credible to me that driving to a McDonald’s for a happy meal because you are too tired to cook is “Leisure” while cooking a gourmet meal for friends is “Work”.”
Fine: now try two other cases.
1) The gardening is growing vegetables on an allotment (quite a common thing in England). This helps feed the household. Or more market hours of work are done and the cash earned used to pay for vegetables at the supermarket.
These are both work, no?
2) I’ve just had a house restored. There were two ways to do this. I could do a lot of the work myself. Badly and slowly, this is true, as I’m not very “handy”. Or I can do what I am good at (relatively to my handywork that is, not by any absolute standard), write perhaps, do a little light metal trading, and take the cash earned from that market work and employ craftsmen who actually know what they’re doing to rebuild the house for me.
Whichever of the two I do I think we’d both agree that both are “work”? But only one counts as market work, the other is household production (and yes, ha ha, what a jolly little jape in that it is also production of a household).
Now, in trying to determine how much leisure I have, we do not want to distinguish between such household production and market production. What we do want to do is distinguish between working hours and leisure hours.
And we can even go further. Given the greater efficiency of market working hours (for the obvious reason of the division and specialisation of labour) to achieve some given standard of living I will likely have more leisure the more market working hours I do. Or, to say the same thing another way, by increasing market working hours while reducing household production hours (while holding total working hours constant) I will have a higher standard of living than by having more houshold production hours in my working mix.
And we can go even further than that: the tax wedge will influence my decision. The greater that wedge taken off my market production hours is the less the efficiency gain from substituting market hours for household hours. And so the less I’m likely to actually substitute.
Europe in general has a higher tax wedge than the US: europe in general has a lower level of market working hours and a higher level of household working hours than the US. And a lower standard of living. And, amazingly, in parts, less leisure time.
It does all hang together…..
“But where, exactly, will those jobs come from? I wish I had the answer.”
This, of course, is why we have a market economy rather than one planned by economics professors. Getting 150 million people to experiment with the possible uses of surplus labour leads to better outcomes than planners who admit to “I don’t know”.
What Stiglitz and Sen were concerned about is not counting the VALUE of the non-market work in the national income accounts. I have no objection to counting the value of non-market work, although the method for doing so remains unclear.
Leisure as such also contributes uncounted value to one’s standard of living. The implication of your bringing in Stiglitz and Sen is that if we count the value of leisure, then we should also be reckoning the time spent as “work”. You don’t seem to recognize that we’re in ambiguous territory here, where “quantification” loses its character of objectivity and simply becomes a subjective whatever.
The fact you don’t see home renos as a leisure passtime doesn’t affect the fact that for my friend Anthony, work on the cottage is his main hobby. Whether paid or unpaid, work can be enjoyable or merely extrinsically rewarding. Outside of market work, what counts as work and what counts as leisure is determined subjectively. That’s why it’s called “free time.” For a “free market” kind of guy, you seem awfully eager to have a bunch of eggheads from a government bureaucracy tell you what to think about what you do in your free time, Tim.
and one more thing with regard to Stiglitz and Sen… you take the old-style official statistics of the GDP to assert that Europe has a lower standard of living (that’s not counting the value of leisure and non-market work) but the Time Use Surveys and a muddled interpretation of Stiglitz and Sen to assert that they have “less leisure time”. This is called starting from your desired conclusion and cherry picking the “facts” that support your conclusion, even when those facts are mutually exclusive.
It only hangs together in your imagination…
So, we have a “market economy” rather than one planned by economics professors? Not counting wars, stimulus packages, central banks, tax expenditures, limited liability corporate personhood, patent protection, professional certification, cronyism, etc., etc., etc.
Dreamer.
“Whether paid or unpaid, work can be enjoyable or merely extrinsically rewarding. Outside of market work, what counts as work and what counts as leisure is determined subjectively.”
If this is true (and I’m inclined to think it is) then our barrier between market work and leisure doesn’t exist either. Sometimes I write for money. Sometimes I write for fun. Under current definitions some of that is “work” and some of that is leisure. Sometimes I would even write for free what people in fact pay me to write (more often than not actually). So the division between work and leisure is subjective, not just the division between market work and leisure.
However, we do actually need to have some form of counting non market work as work. If we try to say that only market work is indeed work then how do we account for the life of a subsistence farmer? Almost no work is market work….yet they labour from sunup to sundown. How can we deal with changes in domestic technology over time? The replacement of the washtub, the riverbank and the mangle with the combined washer dryer has certainly increased leisure time….but if leisure is only to be defined as non market hours then it hasn’t….which would be a ridiculous argument.
I don’t try to say that determinations of household production hours and leisure hours are perfect: but to try and insist that all non market hours are leisure is simply nonsense.
“you take the old-style official statistics of the GDP”
Look up a comment, I address that.