Jobs and Power

18 Jul

When we were back in college, we were told that 5% unemployment was roughly the ideal rate for fully developed economy. (It was called the ‘non-accelerating inflation rate of unemployment,’ or rate of unemployment below which inflation would start rising. To our minds, it was something of a fudge term invented by mainstream economics to redefine full employment, but nevermind.) It so happens that before the crash of 2007-8, the United States was just below 5% unemployment. However, according to a post over at the Wall Street Journal’s Real Economics, if we set ourselves the low expectation-goal of returning to pre-crash unemployment, we would not reach that level until December 2024. That calculation is based on assuming that jobs and the labor force grow at the rate they have for the past six months. Those are, needless to say, dismal prospects.

Anemic job growth is bad news not just for the unemployed, but for the currently employed too. A large, and desperate, reserve army of labor weakens the bargaining power of existing workers, a point that another recent Real Economics post made clear. According to a survey of 600 employers, paid family leave is down from 33% in 2007 to 25% now: “Other casualties include assistance with adoption expenses, which tumbled to 8% from 20% in 2007; elder-care referral services, down to 9% from 22% in 2007; and mentoring programs, which fell to 17% from 26% in 2007.” The same goes for wages. In the US, families may be making more, but it is not because wages are higher, but because they are worker longer hours – “In 2009, for instance, the typical two-parent family worked 26 percent longer than the typical family in 1975.” This is a “jobless and wageless” recovery.

This news goes to the heart of a recent debate over the use of fiscal or monetary policy – ie jobs programs and payroll tax cuts or higher inflation targets. This debate began between Matthew Yglesias, who argued for higher inflation targets, and Corey Robin and Doug Henwood, who argued for jobs programs and against the effectiveness of monetary strategies. The debate soon ballooned outwards, getting picked up, at least thematically, by Paul Krugman and Brad Delong. Henwood’s ‘the limits of easy money‘ is the best (and seemingly final) summary and statement of the stakes of this debate, as is this post by Corey Robin (which also contains the links to the earlier posts, for those who want to follow all the ins and outs). There is an important point from this debate that bears directly on recent job market news regarding declining benefits and stagnant wages. One thing that both Henwood and Robin point out is that a jobs program isn’t just a good form of economic stimulus – especially when current monetary strategies haven’t done much – it is also a good way of increasing the economic power of those who don’t have much:

Henwood – “[a jobs program] would put a floor under employment, making workers more confident and less likely to do what the boss says, and less dependent on private employers for a paycheck. It would increase the power of labor relative to capital.”

Robin – “what a government jobs program would mean to us…greater chances of unionization; better options (often) for pay and benefits; greater options for exit from bad private-sector work and thus, in the long run, better options for voice and power at that work.”

A jobs program is no silver bullet, there are undoubtedly some downsides. But this point, especially in the current moment, is an important one to make. Different strategies for stimulating the economy are never just a matter of which technical fix is the most appropriate. They are also a matter of how power is distributed in the economy, and thus human freedom. There is often a tendency in public debates to argue over the ‘right’ answer, as if this can easily be determined independent of political questions about whose interests are served best, and how this shapes the lines of power in society. But, as we have tried to argue previously regarding financial regulation, expert knowledge and narrow policy concerns are not so easily extricated from questions of power and values. That is why unemployment is a problem for everyone, not just the unemployed – it’s not just a matter of people’s ability to survive, but to exercise power in and over their daily lives.

Of course, as we have stressed in previous posts, we can also see here some of the underlying political economy of certain economic proposals. Employers know quite well the dangers of a more assertive labor force. That is why a something like a jobs program would require more self-assertion amongst workers, and a greater willingness to make openly class based appeals by political leadership. Even more minimally, it would require political leaders  to be more willing to accept and make explicit that, in choosing between forms of stimulus and budget deals, some interests have to be sacrificed to others, no matter which policies they end up choosing. In the conservative, tax-cutting and benefits-slashing climate of the debt-talks, honesty on these issues is in even shorter supply than jobs.

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8 Responses to “Jobs and Power”

  1. Kareem R. July 18, 2011 at 12:47 pm #

    Very interesting post, there are parallels to the roll backs in employee benefits post 1929 crash. Sadly, jobs programs were not enough in the 1930s to give labor power; back then there was at least some fundamental belief in unions. I’m not sure there is enough interest in labor (even by labor) to spur the same kind of Flint GM strikes that would shift the power back towards employees.

  2. staplovich February 13, 2012 at 5:27 am #

    It’s worth pointing out that you could easily pursue higher inflation targets AND start a jobs program. Obviously, when it comes to Congressional politics, it might be hard to achieve both, but at least when it comes to the bully pulpit, both should be brought out to the public; both should be on the table. That’s probably been mentioned by one of the other writers you referenced–I didn’t check all the links. But I think it bears repeating.

    Your central point about unemployment sapping the labor movement is dead on. I think we need to get a lot more radical though, and put more effort into building truly democratic, worker-owned businesses. Anything short of that is simply transferring power from one group of elites to another. It’s true that serious gains can be made through such a strategy, but the ceiling’s pretty low. But the central drivers of exploitation and violence will slow down to a crawl if labor owns the capital itself.


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