It's now official - The Global Jobs Crisis is real

By Neil Patrick

When I set up this blog, I was convinced that the subtitle – Global Jobs Crisis was appropriate and justified.

But many of my friends online and offline commented that they thought I was being rather apocalyptic. Even sensationalist. After all it does rather fit with the sort of conspiracy theory stuff which abounds in the online media world.

But I stuck with it nonetheless. Not because I wanted to be alarmist or a doom-monger. On the contrary. I wanted to raise awareness of the problem and try to find solutions that would work for people at a personal level.

It was simply the most appropriate tagline I could come up with which described the unfolding situation as I saw it. And with every week that passes I see more evidence that it remains the right subtitle.

So today I was interested to see that two years after I started this blog, none other than the World Bank has issued a report which describes the global jobs crisis in forensic detail.

I’d forgive anyone for not noticing it. It went more or less unremarked upon by the mainstream media. It’s titled in typical government speak and somewhat benignly: “G20 labour markets: outlook, key challenges and policy responses”.

The World Bank, Washington
By Shiny Things [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)] via Wikimedia

Behind the dull bureaucratic title is the starkest confirmation I've yet seen which describes in depressing detail, the true nature of the problem.

The world is facing a global jobs crisis that is killing the chances of reigniting economic growth. Worse there is no magic bullet to solve the problem.

The Study was released at a Group of 20 (G-20) Labor and Employment Ministerial Meeting in Australia in September 2014. The Bank says an extra 600 million jobs need to be created worldwide by 2030 just to cope with the expanding population.

"There's little doubt there is a global jobs crisis," says the World Bank's senior director for jobs, Nigel Twose.

"As this report makes clear, there is a shortage of jobs — and quality jobs.

"And equally disturbingly, we're also seeing wage and income inequality widening within many G-20 countries, although progress has been made in a few emerging economies, like Brazil and South Africa."

He said that overall emerging market economies had done better than advanced G-20 countries in job creation, driven primarily by countries such as China and Brazil, but the outlook was bleak.

"Current projections are dim. Challenging times loom large," said Twose.

Who says something really matters

Local mainstream media is so heavily influenced by national government spin that we cannot take anything that is said at face value. And I do my best to expose the most blatant deceptions about jobs and employment news that I come across.

Which is why this report has to be taken seriously. The World Bank isn’t beyond the influence of key stakeholders with their own agendas. Many have argued that the World Bank which has had an American as its President ever since its creation in 1946, promotes a US based world view.

And I have concerns that the World Bank still clings to a largely discredited view on monetary systems.

But critically, the World Bank isn’t controlled by politicians. And that’s the most important thing in my view. No-one at the World Bank is trying to win votes from citizens. They gain no benefit by telling people that things are better than they really are.


100 million unemployed

The report, compiled with the OECD and International Labor Organization, said more than 100 million people were unemployed in G-20 economies and 447 million were considered "working poor," living on less than US$2 a day.

It said despite a modest economic recovery in 2013-14, global growth was expected to remain below trend with downside risks in the foreseeable future, while weak labor markets were constraining consumption and investment.

The persistent slow growth will continue to dampen employment prospects, it said, and warned that real wages had stagnated across many advanced G-20 nations and even fallen in some.

"There is no magic bullet to solve this jobs crisis, in emerging markets or advanced economies," said Twose.

"We do know we need to create an extra 600 million jobs worldwide by the year 2030 just to cope with the expanding population.

"That requires not just the leadership of ministries of labor but their active collaboration with all other ministries — a whole of government approach cutting across different ministries, and of course the direct and sustained involvement of the private sector."

The Group of 20 leaders have called for each member country to develop growth strategies and employment action plans. They emphasized the need for coordinated and integrated public policies, along with resilient social protection systems, sustainable public finance and well-regulated financial systems.

"Coordinated policies in these areas are seen as the foundation for sustainable, job-creating economic growth," says the report.

So there we have it. The responsibility for solving the problem has been passed to national governments. And they are urged to adopt a cross-departmental approach to solving the problem.

Given the nature of governmental silos and the painfully slow way in which government policies are formulated and implemented, I’m not holding my breath for any big breakthroughs anytime soon.

And sadly the subtitle of this blog seems to be one thing which isn’t about to become redundant for a long while yet.

Why the US Middle Class is in danger of extinction

By Neil Patrick

Current news reports claim the US job market is slowly improving. Is this a return to better days? Sadly no. It’s a transformation for sure, but not back to anything like we all knew 10 years or so ago.

Make no mistake about it, America's middle-class jobs have been destroyed in the wake of the 2007-8 financial collapse. The growth in new jobs reported gleefully by the government have been almost entirely low-wage jobs. And there is little reason to believe this situation can be quickly or easily reversed.

What has caused this? In the next few posts, I want to look at the factors that are behind this tragic state of affairs, dig into what’s happening and what we can do about it.

I believe there is no single cause or culprit. Instead it’s a complex cocktail of seven factors which have collided to create a perfect storm for skilled American workers. In brief these are:

• Record levels of government and personal debt 
• The rise of technology leading to ever falling marginal costs 
• Capital shifts away from labour and into non-human investments 
• The globalisation of businesses 
• Government fiscal policies 
• Demographics and education 
• Finite global resources 

But I am getting ahead. In this post, I am going to look at:

• The nature of the alleged jobs “recovery” 
• Why GDP growth isn’t making people better off
• The transference of government debt to households.

The substitution of high paid jobs by low paid jobs is beyond doubt

A recent presentation from the Federal Reserve Bank of San Francisco describes the jobs “recovery” in stark terms. The vast majority of job losses during the recession were in middle-income occupations, and they've largely been replaced by low-wage jobs since 2010:

Mid-wage occupations, made up a staggering 60% of the job losses during the recession. But mid-wage jobs have made up just 22% of the jobs gained during the recovery.

By contrast, low-wage occupations have totally dominated the recovery. They represent 58% of the job gains since 2010. "Many middle-class workers have lost their jobs and, if they have been able to secure new employment at all, find themselves earning far lower wages post-recession," the San Francisco Fed says.

Nearly 40% of the jobs gained since the recovery began - about 1.7 million - have come from three low-wage sectors: food services, retail, and employment services.

And four low-wage occupations are now the top four types of employment in the US: retail sales, cashiers, office clerks, and food preparation and servers:

The problem is compounded by the fact that industries which employ mid-wage earners, such as construction, manufacturing, insurance, real estate and IT, have either stagnated or grown too slowly to recover their pre-recession losses.

Worse again, budget cuts to federal and state government have eliminated a vast swathe of mid- and higher-wage jobs. And a separate chunk of middle-wage jobs including carpenters, plumbers, plasterers and electricians are still waiting for the U.S. housing market to recover.

The growth of wealth inequality is a problem for all, not just the poorest

This is creating a polarised workforce in the United States. Over the past decade, both high- and low-wage jobs have been growing. But jobs in the middle continue to shrink. Mid-wage jobs suffered a major drop after 2001, largely stagnated during the 2000s, and have now declined even further in the most recent downturn.

Economists have been debating the causes of this divergence. Harvard’s Lawrence Katz and Claudia Goldin, argue that new technologies and machines are now displacing mid-wage jobs.

I believe this is a correct analysis as I talked about here. But it’s not the full story. Some others, such as Larry Mishel of the Economic Policy Institute, point to political factors, from the decline of labor unions to trade liberalization to the dwindling minimum wage. This is a factor too, but again it’s only an ingredient in the mix, not the full disastrous recipe.

But neither of these arguments discuss the lead weight which is pulling the whole economy down. And that weight is government debt. That debt puts massive upward pressure on tax, demands endless quantitative easing (devaluation of the dollar to you and me) and limits government spending – the type of spending which would create more jobs in the public sector.

It seems logical to me that there’s no single simple explanation of what’s going on. It’s multi-factorial which makes it complex to understand and remedy both at a national and individual level.

But if the trend continues, it will amplify something which is already a big problem in the United Sates: income inequality. Not to mention the destruction of the hopes and aspirations of a huge swathe of American society. And needless to say, that’s a bad thing…

GDP growth and household incomes have become separated

For the first time in US history, economic growth is no longer driving income improvements at the household level.

Traditionally, improvements in GDP have directly resulted in increased income and prosperity for citizens. In the US, this link has broken. US median household income is now at a lower level than it was in 1999. In fact even though US GDP has been on the rise since 2009, household income has been falling since 2008:

Here we see the evidence of how as technology continues to increase productivity and reduce marginal costs, so we have GDP growth but no wealth creation except for those who are in the boardrooms and/or major equity owners.

To look at it in its simplest terms, businesses can create higher returns with less human labour inputs than ever before. The first industrial revolution substituted human muscle power with mechanical devices. The second industrial revolution transformed transport and communications. And the third industrial revolution is replacing human cognitive tasks with artificial intelligence.

So until recently, technological improvements have only really affected those who sold their manual capacity to earn a living. Today’s technology is reducing the workforce needed for tasks which required the application of professional and mental skills too. But there’s another problem; if we are selling our manual labour, we need to do nothing to create our commodity. Our bodies are there to be applied to work whenever we want. Little or no training is needed.

But jobs requiring the application of skill and knowledge are different. The acquisition of these skills can take years. Sometime decades. And if no-one wants them anymore, we have a stark choice – dump them and start again or try and compete for unskilled work.

So we have an American middle class with skills that fewer and fewer people want or need to pay for. The keys to the acquisition of wealth are no longer the sale of our labour and skill. They are the ownership of income generating assets. And thanks to booming stockmarkets, owning assets has made most of the wealthy even wealthier over the last few years.

This is the reality of the polarisation of America’s workforce. Greater wealth acquisition by those at the top, those who own assets, but falling income levels for everyone else… not just the poorest, but the vast majority of Americans.

Needless to say, this is also a bad thing…

The burden of government debt is being passed to households

Despite multiple deficit-reduction deals during the past three years, the US national debt is projected to swell to 100 percent of the economy by 2038, due primarily to the enormous cost of caring for an aging society.

Whilst WW2 exceeded the current peak of government debt, the end of WW2 and the global restructuring that arose from its ashes is a very different scenario to that we face today. Post 1945 saw the US emerge as the dominant global super power. It’s huge manufacturing capacity, abundant natural resources and global markets created the wealthiest society on the planet:

But post 1980 has seen the failure of that economic model as the production of cheaper goods of equivalent or even higher quality started to materialize in low wage economies.

Making matters worse, tax cuts for the vast majority of Americans were made permanent during last year's fiscal cliff showdown. If the tax cuts had been allowed to expire, projections showed the debt dropping to 52 percent of GDP during the next 25 years.

In effect, huge government debts are being allowed to accumulate unchecked. But sooner or later these debts will be passed to individual citizens rich and poor through the giant levers of fiscal policy.

And you guessed it; this is also a bad thing…

So these three points define the problem: 

• Millions of jobs for skilled workers in the middle income bracket have simply vanished. 
• Economic growth has become of value only to the asset owning classes. 
• Government debt will continue to be passed onto citizens. 

This isn’t a problem which can be solved by the traditional tools of government. If you want to place your faith there, that’s your prerogative and I hope you are right. My take is that we all need to come up with our own personal solution. It might just be the biggest test of our lives…

I’ll be back with more on this soon.

Nine toxic behaviours that we must all keep at bay

By Neil Patrick

Many self-help books and coaches talk about the dangers of toxic people. We should distance ourselves from them they say. Better still remove them from our lives. I'm not so sure about this.

Sometimes that’s easier said than done. Just how would you go about removing a person from your life I wonder? Like your boss, or a colleague or a family member? Short of committing illegal acts, it all seems a bit tricky to me.

There's a much more realistic alternative option I think. We all have some of these toxins within ourselves. And it’s a much more practical proposition to change ourselves than attempting to change or remove those around us.

So not only should we be alert to toxic character traits in others, we should also try to purify our own system.

I am not here to preach or claim I am above criticism. I can count at least two or three traces of these toxins within myself. I don’t quite need a Betty Ford Clinic-style detox I hope, but relentless alertness to them and removing them is a sure way to purify ourselves I think.

And just as toxins in others make them destructive and debilitating to be around, toxins within ourselves don’t just erode our own strengths, they drive a wedge between ourselves and those we want to have productive and happy relationships with.

Here're my top nine poisons and how to detox from them.

1. Control

Controlling people think they know everything and the best way to do anything. They’ll never give anyone else a chance to contradict them, express a conflicting idea or influence their opinions. Learn to value and listen to the opinions of others. Don’t try to find fault in their views, but seek to find ways to improve their ideas.

2. Arrogance

Confidence and arrogance are totally different things. Confidence inspires; arrogance intimidates. Arrogant people always think they know best and feel superior to others. Remember to celebrate and show more enthusiasm for the success of others than your own.

3. Victims

Negatively charged people see themselves as perpetual victims. Victims look at their own situations and mistakes and seek to find others to blame, from their boss to their staff or their customers. Take ownership of your own life and change to adapt to the world around you. Don’t expect the world to change to suit you.

4. Envy

Those infected with jealousy don’t feel pleasure when good things happen to you. They can't appreciate it when others achieve success or move forward; they feel that if anything good is going to happen, they deserve it more than you. The success of those around you should be just as important to you as it is to them. Help others succeed as a matter of course. Sure, not everyone will reciprocate, but which is better a whole heap of goodwill, or a whole heap of indifference?

5. Lies

Liars are impossible to rely on. You can never know what to believe. You can't trust their promises or their statements. They will lie to you about others, and they will lie to others about you. Likewise we should tell the truth, always. Even if it’s bad news, sharing it now, is better than hoping it will disappear and be forgotten. It won’t.

6. Negativity

Some people are always suspicious of everything and everybody. Negativity destroys relationships, and spending time with negative people makes you feel the world is a much worse place than it actually is. My mantra is this: trust everyone and disappointment is a risk. Trust no-one and disappointment is guaranteed.

7. Possessiveness

Consumer culture relentlessly nags us to want more, achieve more and possess more. Sure, desire and ambition can be good things. But it turns toxic when people want everything for themselves and when possession, rather than doing or being, becomes the focus of their life. Aspire to success not as a way to have more for yourself, but as a way to be able to give more back to others.

8. Judgmentalism

Making a judgment and being judgmental are not the same thing at all. Judgments are objective and based on discernment, while being judgmental is just about criticism. Judgmental people are poor listeners and communicators and always too quick to jump to conclusions. Seek to understand before you seek to judge. Then consider how something can be made better.

9. Gossip

Gossips see themselves as being interesting because they share fascinating information about other people. And the more sensational this is the better. They do it because they secretly believe that their own lives are less interesting or deserve more privacy than those of others. They make little distinction between speculation and fact. We all talk about others – that’s natural. But if we bad-mouth someone, we can fully expect that those who hear this criticism will suspect that we will do the same to them.

So personally, I’m not about to remove anyone from my life. I’d much rather try and make others’ lives better by forever striving to become a better person myself. It'll keep me out of jail at least.

Any thoughts on what I should add to round this up to make a top 10?