Why No Jobs?

The Economy Rebounds But Jobs Don’t

Profits are up, sales are stronger, stock prices are rising, and even the pace of construction is picking up – but why not jobs?  As The New York Times put it: “For corporate America, the Great Recession is over. For the American work force, it’s not.”

The Times went on to comment:  “Economists are now engaged in a spirited debate . . . about the causes of the American jobs slump. Lawrence Katz, a Harvard labor economist, calls the full picture ‘genuinely puzzling.’”  (See, “In Wreckage of Lost Jobs, Lost Power.”)

Perhaps I’m not puzzled because I’m not an economist.  The answer to me seems obvious, the clues everywhere.  Employers don’t want to hire workers.  They are “jobs averse.”  They think full time employees are too expensive, too difficult to manage, too hard to get rid of in a downturn – and they have been thinking this way for sometime.

Just the week before, The Times carried a story about the dramatic rise in the hiring of temporary workers. Last November, “they accounted for 80 percent of the 50,000 jobs added by private sector employers.”  All the advantages are for the company, The Times pointed out, as the workers themselves “generally receive fewer benefits or none at all, and have virtually no job security. It is harder for them to save. And it is much more difficult for them to develop a career arc while hopping from boss to boss.” (See, “Weighing Costs, Companies Favor Temporary Help.”)

For years, businesses have been “downsizing” or as they came to prefer to call it “rightsizing.”  They know the “benefits” of outsourcing jobs oversees where labor is far cheaper and easier to control.  Moreover, they have come to prefer automatic systems, robots and computer programs.  Labor just costs too much, and “human resources” are just too erratic and costly.

The trend has been documented for years, but by sociologists, political scientists, historians, and liberal economists outside the mainstream.  Fifteen years ago, the Harvard sociologist William Julius Wilson published When Work Disappears, focused on the new urban poor.  That was followed by Jeremy Rifkin’s The End of Work, documenting how machines were relentlesly replacing workers.  Two years later, James K, Galbraith published Created Unequal: The Crisis in American Pay. Then there are more personal and popular works such as Barbara Ehrenreich’s Nickle and Dimed.  And that’s just the tip of the iceberg.

Mainstream economists must be looking in the wrong place for explanations they never find.  I can’t help but think their blindness is motivated.  No doubt it would be politically awkward to offer the obvious and real explanation for the job crisis.