By David Grace: (DavidGraceAuthor.com)
“What will you do when you grow up?” is an almost irrelevant question for a material percentage of today’s American middle-class, middle-school students.
Many Middle-Class Children Should Expect To Be Poorer Than Their Parents
If you grew up in the 50s your parents believed that you were going to have a better life than they did, and they were generally right.
Today, a material percentage of the children of middle-class parents should expect to be poorer than their fathers.
Fundamental Economic & Technological Changes Kill Social & Political Systems
A species finds a niche and flourishes until the environment changes, and then it either adapts or dies.
Societies are the same.
Fundamental changes in a social/cultural/technological environment force fundamental changes in societal and governmental structures.
Ideas that were once considered foundational principles of how society worked, change or die in response to striking new economic and social conditions.
Feudalism worked for centuries until the plague greatly reduced the number of serfs, the population of cities materially increased, and wealth was created more from commerce than from land. Then feudalism died.
Death Of Monarchies
The rise of industrialism and the middle class spelled the death of monarchies as the principal system of government.
Agrarian Vs. Industrial Societies
The rural economy’s checks and balances of competition and choice in a local market with personally-known providers evaporated in the face of urban populations dependent on distant, large corporations.
The rise of and abuses of cartels instigated the late nineteenth and early twentieth centuries anti-trust laws, government regulatory agencies, child-labor laws, and health and safety rules.
The Big Change That’s Coming For Us
We are at the cusp of another major shift in the structure of our economy that will require a fundamental change in the principles governing how our society, economy and government operate.
Mid-Twentieth Century Job Principles
From at least the beginning of the industrial revolution to around the Great Depression Americans considered the following statements to be fundamentally true:
1) Every able-bodied person who was willing to work could find a job that would support him.
2) People who are unable to feed, clothe and house themselves are defective (alcoholics, morons, lazy, etc.) and therefore deserve their deprivations.
3) Hard work, good health and an average intelligence are all that are needed for an adult to earn a reasonably decent life.
During the Depression people grudgingly acknowledged that there were able-bodied people who wanted to work but who couldn’t find jobs and who therefore needed public assistance.
When the Depression ended the “lazy loser” label was again popularly applied to those on public assistance, and the idea that every able-bodied person who was willing to work could support himself was again commonly believed to be true.
It was assumed that there would always be jobs that would pay well enough for the worker to support himself and his family without government assistance.
We are now beginning an era where those ideas are no longer true.
The Accelerating Disappearance Of Unskilled Jobs
Increasing numbers of ordinary, average, high-school educated people are and will be unable to support themselves above the poverty line.
Entire low-to-medium-skill job categories are disappearing.
Retail stores of all types are struggling. You can’t substitute five hundred jobs at one Amazon fulfillment center for a thousand unskilled jobs at four hundred geographically scattered retail stores.
Low-level hotel jobs are under pressure from systems like Airbnb.
We are starting to see restaurants with no waiters, no cashiers and very few cooks.
We are within a decade of a time when there will be few to no taxi drivers, Uber drivers, truck drives or bus drivers.
Travel agents are essentially gone.
An industrialized pizza business called Zume is within a year of full production. Zume pizzas will be made, sauced, and topped entirely by machines. They will go into vehicles where they will be cooked en route and delivered directly to the customer’s home.
No doubt these vehicles will eventually be self-driving.
You’ll order your pizza on your phone and pay on your phone. It will be made, sauced, topped, baked and delivered without any people being involved at all.
Within ten to twenty years you’re going to see AI systems take over many if not most of the ordinary tasks now handled by lawyers.
IBM’s Watson is now composing original music designed to be “popular.”
The Tale Of Two Curves
The blue, normal curve on the left shows the number of workers at each low to high skill level.
Lots of people with moderate skills/talents/intelligence are in the center of the blue curve, relatively few people with either very low or very high levels of skills/talents/intelligence are at either end of the blue curve.
The red, normal curve reflects a future shift to an economy that requires more workers at higher skill levels and fewer workers at unskilled and low skill levels.
In the past it has always been assumed that the two curves, skills available and skills needed, would be one on top of the other.
It was assumed that as the “skills-needed” curve moved to the right that training and education would almost simultaneously also move the “skills-available” curve to the right to match it.
Inherent in this second assumption was a third one — that it would be both
(a) economically feasible and
(b) practically feasible
to train sufficient numbers of workers to fill the new higher skilled jobs.
I think both of those assumptions are probably false.
Why Training Isn’t The Answer
1) As the ratio of skilled jobs to all jobs increases the average per-worker training cost increases.
In just the twenty years from 1990 through 2010 the number of doctors per 1000 has gone up by 40%. On top of that, it costs more to train each doctor.
2) Every skilled job requires a particular mix of the right (a) intelligence; (b) talent; and (c) personality traits. Not just any person can be successfully trained to perform any job.
Many IQ 100 People Are Unqualified For The Newly-Created Skilled Jobs
Yes, society will create new jobs but they will almost all be highly skilled jobs.
A majority of what today are ordinary, 100 IQ, high-school graduates flat out won’t have the intellectual ability, the personality or the unique talents required to fill many of those new jobs.
No matter how much money you’re willing to spend on training there is no guarantee that there will be sufficient numbers of people with the right levels of intelligence, talent, personality traits and willingness to do a particular job to actually do that job.
You could spend a million dollars training me and I could never, ever be a dentist. I’d make a terrible carpenter. Auto mechanic? I don’t think so.
Continuous Re-training Is Not Realistic
Even worse, the job market will repeatedly morph as industries and technologies rapidly change. Take a programmer at Microsoft ten years ago and put him in suspended animation, then wake him up today. How marketable would his ten-year-old programming skills be today?
Are you going to retrain half the workforce every five years? Can you even do that, and if so, who’s going to pay for it?
The new normal is going to be that there will be very few private sector jobs for low-skill adult workers.
My guess is that ten to twenty years from now somewhere between fifteen and thirty percent of the adult population will not be able to find living-wage jobs that they are qualified to perform.
I can’t say how far the “skills needed” curve will shift to the right as of any particular point in time. The exact position at a specific year isn’t the point.
What we need to understand from the above graph is that:
A) There will be far fewer unskilled jobs than there will be unskilled workers, and
B) There may well be far more skilled jobs than there will be people capable of performing them well.
What Does This Mean?
We are going to have to transition away from an unskilled worker, private-industry, employment model.
Private industry is not going be able to provide anywhere remotely close to enough living-wage, unskilled or low-skilled jobs to employ all the people who will need them.
The big question is what we will transition to.
The Difference Between Jobs & Work
“Work” is the rendering of effort by a human being.
A “job” is the performance of work which an employer deems to be of equal or greater value than the wages being paid.
America has not run out of work. It will run out of living-wage jobs that the available labor pool will be able to perform.
Four Possible Responses To The Loss Of Unskilled Jobs
There are several ways that we could deal with this fundamental change in jobs and work.
Some are terrible and at least one is not that bad.
1) Enact massive government-sponsored training/re-training programs to try to match up the jobs that do exist with people looking for work.
This has disaster written all over it.
A) Most people are not qualified to perform most available jobs and trying to train them to perform jobs that they are unsuited for will be a financial disaster;
B) We’ve already seen that for-profit colleges are largely scams and disasters. They take in huge amounts of money and return relatively few people who can actually perform the available skilled jobs well.
C) You train John for X profession but he drops out halfway through. He then goes to school for Y profession but he flunks out. He then goes to school for Z profession, gets a job, but hates it and quits. Hundreds of thousands of dollars down the drain. Now multiply that by ten or fifteen million Johns. Not a practical plan.
D) The student loan debt today is One TRILLION Two-Hundred MILLION dollars. A general, government-financed training program for everyone could easily cost five to ten TRILLION dollars and end up with little to show for it.
2) The government will give everyone a guaranteed annual minimum income.
The government looks at your tax return, sees that you’ve earned X dollars then writes you a check for the difference between X dollars and some preset minimum level of Y dollars.
This has disaster written all over it.
A) If you establish a societal principal that everyone has a right to receive tax money for not working you’ve pretty much screwed your society.
If you tell people that they can get the same amount of money by not working as they can get from working then why should they work at all?
B) A system that collects taxes, runs the money through a massive bureaucracy, then spits a fraction of it out again as a “gift” is inherently inefficient and extremely wasteful.
C) In each election cycle politicians will compete to promise ever greater increases in the annual stipend level, eventually leading to financial ruin.
D) How do you time it? Annually, in one big chunk? So, the low-income recipient can spend a year’s worth of income in the space of a few weeks? Horrible idea.
Do you require paperwork to be filed every month so the government can write a new check every month? Huge bureaucratic costs.
What about the people who don’t or can’t handle the paperwork?
How to you monitor it for fraud?
What if the person earns a pile of money at the end of the year? How will the government get the amount back that it overpaid in the previous months?
These questions/problems go on and on and on.
E) Such a system will fuel a vast black-market economy. We already have people who get paid in cash or barter in order to avoid paying income taxes. Imagine how much a system of government payments based on your tax-reported income will inflame those black market practices.
A terrible, awful, horribly bad idea.
3) Set a private-sector, age-graduated, living-wage, minimum wage, i.e. $11/hour for those 18 and under; $13/hour for those between 19 and 23; $15/hour for those 24 and older. It would be automatically annually readjusted for inflation.
The public-sector minimum wage would be one dollar per hour less than the private-sector minimum wage because we will want to encourage people to exhaust their employment options in private industry before turning to the government.
The local levels of government will provide a guaranteed minimum wage job for anyone who can’t find one in the private sector but at a slightly lower per-hour rate.
Again, we need to separate the idea of jobs from the concept of work. Cities, counties and states have plenty of work.
There will always be a great need for work even when there are fewer economically profitable jobs.
It will be the obligation of the government to turn that work into jobs.
Plenty of working adults will need day care for their kids, but they won’t be able to privately pay for it.
Plenty of old and infirm people will need personalized care, but they won’t be able to privately pay for it.
Plenty of streets and other facilities will need to be watched and cleaned, but none of them will find funding from private industry.
People will always get money someplace. They will work for it or the government will give it to them or they will steal it.
From society’s point of view, of the three choices, work, welfare or theft, work is by far the best option.
A Change In How We View Jobs
We have to look at jobs not as a market-driven, lowest-possible-cost, business expense, but rather as a tax-funded alternative to welfare and crime.
The local levels of government will guarantee that everyone who shows up has a job. They may rake leaves, work at a day-care center, mop the floors in train stations, take care of elderly people, clean up graffiti, whatever.
They would be treated like any other employees. They would have to punch a time clock. They could be fired. If they were fired for cause then no governmental body would be required to rehire them for some period of up to six months depending on the reason they were fired.
We’d need to budget for this expense, but there would be savings from reductions in traditional welfare programs, law enforcement, prisons, and other government services that would materially defray the cost.
And, useful work would get done, instead of just paying people to do nothing.
4) Do nothing.
Lose the middle class.
Gain huge political instability.
See a massive increase in crime.
Create a permanent underclass consisting of an unemployed fifteen to thirty percent of the population.
End up with a society that will not be worth living in for a majority of its members.
End up with the social, political and criminal environment of a third-world, banana republic.
“There is nothing more dangerous than to build a society with a large segment of people . . . who feel that they have no stake in it; who feel that they have nothing to lose. People who have a stake in their society, protect that society, but when they don’t have it, they unconsciously want to destroy it.” — Martin Luther King Jr.
The fundamental technological change in the nature of and the required skill level of available jobs is killing and will kill our original agrarian-society beliefs about work, jobs, government, welfare, education and self-support as dead as the decline in the number of serfs and the rise of cities and commerce killed feudalism.
The unskilled job loss won’t go away. It won’t stop. Ignoring it will be as disastrous as a one-crop farmer ignoring an invasive species.
If we do nothing, American unskilled, high-school graduates who are able to earn a decent, middle-class income are going to fade away just as surely as Dutch elm disease wiped out the American elm.
Adapt or die.
By David Grace: (www.DavidGraceAuthor.com)