Why you are unemployed

By Neil Patrick

This morning, I have been catching up with Stefan Molyneux. In case you don’t know him, he is the host of Freedomain Radio, which is billed as ‘the most popular philosophy show in the world’.

Here is part 2 of his series of broadcasts, entitled, ‘Why you are unemployed’.

If you are unemployed, you may not care very much why, just what you can do to change it. So, if this is how you feel, I’ll save you wasting your time and suggest you don’t watch the film below (or even bother to read the rest of this post). There are no solutions or tips here about how you can change your situation. I've posted plenty of more practical advice about this elsewhere on this blog.

But if you want to get some thought provoking ideas about why jobs are getting scarcer and why the US is struggling to create well paid jobs, there are answers, or at the very least hypotheses to be found here.

And these are not the usual suspects like greed and corruption. Or QE and state subsidies of banks. Or even the damaging effects of low cost overseas labor. Stefan makes the point and it’s persuasive I think, that greed and corruption have always been part of human behaviour and they are no more prevalent today than they were in previous generations when professional working people in the US could expect a much better standard of living. It seems fair to assume that something else is at work today.

Stefan Molyneux
 Credit: Frank Licorice

I certainly agree with him that the idea that we live in freedom is a complete myth. If we were truly free, would we be sent to jail if we didn't pay our taxes? If we were free, would we be forced to adhere to the endless rules that our governments impose upon every aspect of the lives of honest hard working people?

Stefan has been described as an anarcho-capitalist philosopher. This means that he supports the free market as the best way of efficiently (and fairly) distributing wealth throughout society. The anarcho bit relates to his beliefs that state interventions in people’s live should be minimized and that the roots of all our problems today lie in over-extended state power and its endless appetite to extract wealth from citizens in the form of taxation and control. He sees this as a vicious circle that has got completely out of hand. He believes that our governments in the US and the west in general have become defacto fascist empires. And like all empires, they exert control and protect their power through the exertion of violence. Not necessarily bloody violence within their borders, but repression nevertheless in the form of taxes, coercion and the threat of imprisonment.

So watching this won’t help you get a job. It might though give you some new ideas about WHY you can’t get one and help you appreciate why it really isn't your fault.

Stefan claims that philosophers are not interested in supporting any political position. That they are only interested in finding the truth. I’ll let you decide for yourself whether or not you think THIS is the truth.

Why Pay Is Too Damn Low

By JAMES SUROWIECKI 

A few weeks ago, Washington, D.C., passed a living-wage bill designed to make Walmart pay its workers a minimum of $12.50 an hour. Then President Obama called on Congress to raise the federal minimum wage (which is currently $7.25 an hour). McDonald’s was widely derided for releasing a budget to help its employees plan financially, since that only underscored how brutally hard it is to live on a McDonald’s wage.

And last week fast-food workers across the country staged walkouts, calling for an increase in their pay to fifteen dollars an hour. Low-wage earners have long been the hardest workers to organize and the easiest to ignore. Now they’re front-page news.

The workers’ grievances are simple: low wages, few (if any) benefits, and little full-time work. In inflation-adjusted terms, the minimum wage, though higher than it was a decade ago, is still well below its 1968 peak (when it was worth about $10.70 an hour in today’s dollars), and it’s still poverty-level pay. To make matters worse, most fast-food and retail work is part time, and the weak job market has eroded what little bargaining power low-wage workers had: their earnings actually fell between 2009 and last year, according to the National Employment Law Project.

Still, the reason this has become a big political issue is not that the jobs have changed; it’s that the people doing the jobs have. Historically, low-wage work tended to be done either by the young or by women looking for part-time jobs to supplement family income. As the historian Bethany Moreton has shown, Walmart in its early days sought explicitly to hire underemployed married women. Fast-food workforces, meanwhile, were dominated by teen-agers.

Now, though, plenty of family breadwinners are stuck in these jobs. That’s because, over the past three decades, the U.S. economy has done a poor job of creating good middle-class jobs; five of the six fastest-growing job categories today pay less than the median wage. That’s why, as a recent study by the economists John Schmitt and Janelle Jones has shown, low-wage workers are older and better educated than ever.

More important, more of them are relying on their paychecks not for pin money or to pay for Friday-night dates but, rather, to support families. Forty years ago, there was no expectation that fast-food or discount-retail jobs would provide a living wage, because these were not jobs that, in the main, adult heads of household did. Today, low-wage workers provide forty-six per cent of their family’s income. It is that change which is driving the demand for higher pay.

The situation is the result of a tectonic shift in the American economy. In 1960, the country’s biggest employer, General Motors, was also its most profitable company and one of its best-paying. It had high profit margins and real pricing power, even as it was paying its workers union wages. And it was not alone: firms like Ford, Standard Oil, and Bethlehem Steel employed huge numbers of well-paid workers while earning big profits. Today, the country’s biggest employers are retailers and fast-food chains, almost all of which have built their businesses on low pay - they’ve striven to keep wages down and unions out - and low prices.

This complicates things, in part because of the nature of these businesses. They make plenty of money, but most have slim profit margins: Walmart and Target earn between three and four cents on the dollar; a typical McDonald’s franchise restaurant earns around six cents on the dollar before taxes, according to an analysis from Janney Capital Markets. In fact, the combined profits of all the major retailers, restaurant chains, and supermarkets in the Fortune 500 are smaller than the profits of Apple alone.

Yet Apple employs just seventy-six thousand people, while the retailers, supermarkets, and restaurant chains employ 5.6 million. The grim truth of those numbers is that low wages are a big part of why these companies are able to stay profitable while offering low prices.

Congress is currently considering a bill increasing the minimum wage to $10.10 over the next three years. That’s an increase that the companies can easily tolerate, and it would make a significant difference in the lives of low-wage workers. But that’s still a long way from turning these jobs into the kind of employment that can support a middle-class family. If you want to accomplish that, you have to change the entire way these companies do business. Above all, you have to get consumers to accept significantly higher, and steadily rising, prices. After decades in which we’ve grown used to cheap stuff, that won’t be easy.

Realistically, then, a higher minimum wage can be only part of the solution. We also need to expand the earned-income tax credit, and strengthen the social-insurance system, including child care and health care (the advent of Obamacare will help in this regard).

Fast-food jobs in Germany and the Netherlands aren’t much better-paid than in the U.S., but a stronger safety net makes workers much better off. We also need many more of the “middle-class jobs” we’re always hearing about. A recent McKinsey report suggested that the government should invest almost a trillion dollars over the next five years in repairing and upgrading the national infrastructure, which seems like a good place to start.


And we really need the economy as a whole to grow faster, because that would both increase the supply of good jobs and improve the bargaining power of low-wage workers. As Jared Bernstein, an economist at the Center for Budget and Policy Priorities, told me, “The best friend that low-wage workers have is a strong economy and a tight job market.” It isn’t enough to make bad jobs better. We need to create better jobs.

This post originally appeared here:

http://www.newyorker.com/talk/financial/2013/08/12/130812ta_talk_surowiecki