Author: ken

What it Means to be Without Work

Common sense suggests that suicides will increase in times of economic hardship, like all other expressions of psychological distress.  So far, however, the evidence has been mixed.  But a new study: “found a clear correlation between suicide rates and the business cycle among young and middle-age adults.”

The reason the correlation was not found earlier seems to be that researchers were not focusing on those who work.  As The New York Times put it in its account:  the “correlation vanished when researchers looked only at children and the elderly.”  Looking at the workforce revealed a different picture.

I’m no expert on suicide, but as a psychoanalyst and therapist I know how important it is for people to experience their competence, to use their skills, to be active and feel effective.  Most of us get that from work, along with the sense of belonging.  But without a job, workers can have trouble sustaining their self-esteem.  Worse, they often feel the shame of being unable to support themselves or their families.

I wonder what past researchers were thinking?  To be sure, an economic recession has wide and varied effects.  Many families must forego things they have taken for granted, not just the luxuries they hope for.  Children have to do without new clothes.  The elderly may have to forego medical checkups or trips to visit their children.  It may even be embarrassing for the jobless to apply for unemployment compensation or food stamps.  But that is hardly enough to drive people to suicide.

As one of the authors of the new study put it: “Once people age out of the work force, there seems to be no relationship between the business cycle and their vulnerability.” (See, “Study Ties Suicide Rate in Work Force to Economy.”)  Having “aged out” of the workforce, they still have their pensions, their families and friends.  They may be poorer than they were, but they were able to manage a transition from a world they belonged to.  The jobless who are used to working, on the other hand, have to deal with the emotional shock of being rendered suddenly useless, irrelevant.

As a society we have gradually eliminated all the ways that people can gain value from life – except work.  A few still think about their relationship to God, some devote themselves to art, while others concentrate on sports.  But these alternative sources of meaning have slowly but surely given way to work.  That is how we gain our identities, establish our place in the world, and acquire value.

At yet we so often forget that.  As a society we don’t make it easy for people to find jobs, to get the right training, adjust to unemployment or even retire.  We place work at the center of our values, but too often we make it hard to find work and impossible to hold on to it.

And Other Ways to Save Money

Most businesses would rather fire employees than cut their pay, though cutting pay could mean that more people keep their jobs.  It doesn’t make sense, but it does seem to be how management thinks.

Ray Fisman recently reviewed the pros and cons in Slate and concluded:  “this aversion to pay cuts isn’t good for workers or the American economy more broadly. More people end up losing their jobs than if wages were more flexible, and there are serious long-term consequences for the workers who lose their monthly paychecks.”

The problem for management is that they believe pay cuts arouse resentment, and there is evidence to back them up. “In experiments where workers were randomly assigned to receive wage cuts, they retaliated by slacking off.”

If we look closer at the experiments, though, it’s not hard to understand why.  What to a researcher is “random,” to a subject of an experiment is “arbitrary.”  It will seem patently unfair for one group of workers to have their salaries cut when others, for no apparent reason, are spared.  And, then, employees who feel powerless in the face of the arbitrary acts of management will surely assert power in the only way left to them.  They will resist passively and work less.  (See, “Raises Don’t Make Employees Work Harder, But Pay Cuts Make Them Slack Off.”)

Similarly, if management doesn’t share in the pain, workers will feel exploited and abused.  A story in The New York Times brings that home.  Gannett, the American newspaper chain, announced a week-long furlough for employees, the third year in a row.  At the same time, the president announced that he and top management “each will be taking a reduction of salary that is equivalent to a week’s furlough.”

Sounds fair, but The Times went on to point out:  “last month [the chief executive] received a cash bonus of $1.75 million for 2010 and [the president and chief operating officer] received $1.25 million. For 2010, they were also awarded stock, options and deferred compensation that would bring their combined packages to $17.6 million if the company and its stock hits certain targets.”  (See. “At Gannett, Furloughs but Nice Paydays for Brass.”)

The employees, understandably, were incensed, especially when the bonuses were justified on the grounds of the executives’ alleged success in cutting costs.

Fisman in Slate spoke of the need for “creative solutions.”  But workers are not dumb, and they know the difference between “creative solutions” and ingenious deceptions.  Sharing the pain might work to reduce resentment if the pain were really shared.

Could it be that management’s aversion to pay cuts, then, stems from their fear that gestures designed to make it seem as if they were actually cutting their own incomes would only backfire, and then workers would really have reasons for resentment.  Maybe it is safer just to fire them.

Trying to Calm the Public

Why is it that the efforts to calm the public after Japan’s nuclear disaster didn’t work?  To be sure, we all tend to be mistrustful of government officials.  We know they are telling us what they want us to believe, not necessarily the truth.  But when they tell us they are “confident,” that actually makes it worse.

William Saleton, correspondent for Slate, called our attention to this again last week.  He noted that Gregory Jaczko, chairman of the U.S. Nuclear Regulatory Commission, and William Levis, an executive of the industry’s Nuclear Energy Institute, in their opening statements to a congressional committee investigating the safety of nuclear power plants in the U.S., “used variants of the words assure, ensure, and confident 21 times.”

He commented:  “I don’t want to hear the industry and its regulators talk this way after Fukushima. I don’t want to hear confidence and assurances. I want to hear humility and a ruthless re-examination of assumptions.”

He added:  “The Fukushima Daiichi nuclear plant was built and upgraded according to the worst-case assumptions of the industry and its regulators. Those assumptions have just been spectacularly falsified. Our job now is to figure out what they got wrong.”

Saleton concluded:  “the key to nuclear safety isn’t confidence. It’s doubt.”  But his point is not just about nuclear safety.  It’s about all attempts to measure and deal with risk.  (See, “Shaken to the Core.”)

There must me a kind of conventional wisdom among spokespersons and public relations experts about how to handle disasters, a misbegotten script they tend to follow.  I can see the point of being calm and reassuring when there is a tendency for the public to panic and act inappropriately.  If a movie theatre is on fire, the audience needs to move quickly and efficiently to the exits, without pushing or shoving.  But in the face of danger, we are right to be aroused, worried and questioning.  We need facts and plans and actions.  Clichés won’t work, especially when they are repeatedly contradicted by events.

That goes for risk in general.  In hindsight, the empty statements of regulators and government officials that the economy was immune to a financial meltdown seem ludicrous.  They did not question their assumptions.  They believed what they all wanted to believe.  They did not worry enough – or, as Saleton put it, they did not exercise enough doubt.

When it comes to risk, only the ideas that have survived the test of systematic doubt are worth believing.

 

 

 

 

Working Without Hope of Economic Stability

The media have been celebrating the good news about unemployment.  The rate has gone down to 8.8%.  But the news obscures the fact that having a job does not provide security for many people.  It doesn’t even make it possible to make ends meet.

A new report that measures economic security notes: “many of the jobs being added in retail, hospitality and home health care, to name a few categories, are unlikely to pay enough for workers to cover the cost of fundamentals like housing, utilities, food, health care, transportation and, in the case of working parents, child care.”  (See, “Many Low-Wage Jobs Seen as Failing to Meet Basic Needs.”)

The official statistics actually function as a kind of camouflage, allowing us to believe that the plight of workers is improving, while the gap between the rich and poor continues to grow.

Others are also working to give us a more real account of our fiscal situation.  Robert Frank, an economics professor at Cornell University, has been developing what he calls a “toil index” that “measures the number of hours that median earners must toil each month to be able to rent a house in a school district of at least average quality.”  This gives us a better way to gauge how middle class families are really doing.

In The New York Times, this week, Johnson notes that, like everyone else, “government officials want to look good. That often leads them to enact policies that promote favorable movements in the indexes by which they are judged.”  He adds that, by far the most common and “visible official summary measure of individual economic well-being is per capita gross domestic product — the annual market value of a country’s final goods and services divided by its population.”  The GDP not only lumps the rich and poor together, it completely overlooks such issues as the quality of life required to survive.  (See, “Gauging the Pain of the Middle Class.”)

Measures like the “toil index” and the report on economic security give us a more focused look at our economic well being – but they fail to compete with the official figures and the judgment of most economists.

Our conscious minds are captured by such official “facts.”  They are presented definitively as “jobless rates,” impartial statistics generated by the U.S. Department of Labor.  And they are proclaimed by the media as “news,” real events that have actually happened.  One does not have to be an expert to realize that these are not “facts” at all, but numbers that have been selected and compiled.  Or one has to be exceptionally mindful of how easily the mind is seduced into such beliefs.

This is not a conspiracy.  But it is a sign of how many of us routinely believe what we want to believe – or what others want to believe themselves.  The media just reports the “news.”  Even when they report on such new ideas as the “toil index,” that’s “news” too.  Unless it’s “Opinion.”

 

 

 

 

 

 

And Who is Really Wealthy?

A recent survey by Fidelity Investments showed: “Some 42 percent of more than 1,000 millionaires . . . said they did not feel wealthy. Respondents had at least $1 million in investable assets,” and that did not include real estate or retirement accounts.  In other words, they each had a million dollars that were liquid and available.  They were not exactly poor.

To be sure, such feelings are highly subjective.  Moreover, a million dollars is hardly what it used to be.  But, still, the results of the survey call for some explanation.

Michael Durbin, president of Fidelity Institutional Wealth Services offered two: “They compare themselves to their peer group … and they are also thinking about the long period they will have in retirement.” (See, “What It Takes to Feel Wealthy.”)  I find the first explanation more compelling.  The perspective of retirement makes us all feel insecure, especially after the gyrations of stock markets in the last three years.  It is easy to feel you need a lot more than you actually have to make sure you have enough.

Such judgments depend on context.  A five year old child can feel “big” after a growth spurt, but what will those extra inches feel like ten years later?  I feel “strong” for an old guy, but compared to my trainer I’m a weakling.  “Wealthy” compared with what?

The relevant context here is the growing gap between the rich and the poor.  That makes the poor feel poorer, but it also makes the rich at the bottom end of the spectrum feel poor as well.  According to Forbes, last year there were 1210 billionaires in the world, with total assets of $4.5 trillion.  Compared with so many billions, a million looks puny.

And the standards keep going up. If you want a decent apartment in Manhattan, you have to spend several million.  Even a time-share at a luxury resort can be pricey.  You don’t need your own plane to be wealthy, but more and more of the rich have gotten used to “flying private.”  Goods and services for the wealthy keep pace with their ability to pay.

Almost as an after-thought, the Reuters report on the survey commented:  “Fidelity noted the wealthiest 5 percent of Americans hold more than 55 percent of the nation’s wealth.”  That’s the point.  Those with just a few million may well be right to think that if you want to find those who really deserve the term these days, you have to look much higher up the ladder of success.