People enjoy work. Even those who don’t enjoy what they do enjoy the feeling of agency and being able to provide for others. For a world to work where a universal basic income accounts for the bulk of the consumer spending for many people, something else needs to account for the social side of work. It is disappointing to think that we’d have to create make-work for people, but it may be the hard truth.
–Ryan Avent, September 6, 2016
Disappointing indeed, but the reality is rich countries have been dealing with this problem for decades. A staggering 96 per cent of America’s net job growth since 1990 has come from sectors known to have low productivity (construction, retail, bars, restaurants, and other low-paying services were responsible for 46 percentage points of total growth) and sectors where low productivity is merely suspected in the absence of competition and proper measurement techniques (healthcare, education, government, and finance explain the remaining 50 percentage points):
It’s tempting to conclude many of these additional workers are doing little to boost real living standards, and that their continued employment is effectively the product of subsidies extracted to provide make-work, rather than the result of competitive market conditions. We are even tempted to blame part of the slowdown in measured productivity to these shifts in the composition of the workforce. (Related.)
We’ll provide additional supporting evidence for these hypotheses in a subsequent post, but first let’s focus on the changes in employment since 2000. In the past sixteen years, 94 per cent of the net jobs created were in education, healthcare, social assistance, bars, restaurants, and retail, even though those sectors only employed 36 per cent of America’s workforce at the start of the millennium:
Average hourly pay in these sectors, weighted by their relative sizes, has consistently been about 30 per cent lower than in the rest of the economy:
And since typical jobs in bars, restaurants, and retail involve far fewer hours than normal, weekly pay packets for workers in these growing industries were more than 40 per cent lower than workers in the rest of the economy. Average weekly earnings are now 3 per cent lower than they would have been if the distribution of employment had stayed the same as in January, 2000:
This is basically the opposite of what you would expect if additional American workers have been needed to do things that can’t be done either by machines or, to a lesser extent, by far cheaper foreign labour. Yes, Americans have gotten older and fatter, which implies somewhat greater spending on healthcare and more employment in the sector. (The growth of eating and drinking outside the home probably hasn’t helped.) But compared to previous employment booms, which were caused by the rapid growth of the most-productive enterprises, the experience of the past quarter-century suggests the growth of make-work has been the main thing preventing mass joblessness.
Related links:
On the phenomenon of bullshit jobs — David Graeber
The evolving structure of the American economy and the employment challenge — Spence and Hlatshwayo
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