Regarding job creation, the United States economy is the king. During the last few decades, it has overwhelmed our Western European competitors in sheer numbers. But it has not done as well in terms of job quality. A much higher percentage of new (and old) jobs pay less and provide fewer benefits and little security. The US is also losing many of the jobs that combined modest skills and good pay in manufacturing.
Counting jobs is the first step that most policymakers, journalists, academics and activists take in ascertaining how well an economy is performing.
As important as these numbers are, this is too simple of an assessment. The reality is that not all jobs are created equal, and not all employment is equally available. There are big variations in the job generation prowess of cities and states across the United States.
Yet, the opportunity to be employed is certainly the "numero uno" benchmark of an economy and it is the means by which individuals and families try to attain the conditions of a "better life." That said, some additional key questions that should be asked are as follows:
- How many are employed?
- How many are jobless?
- Are the number of jobs increasing or declining?
- Do they pay enough for people to secure the basic necessities and save some for the future?
- Do all Americans have a fair opportunity to land a job, especially the better ones?
- How would you define the quality of a job? And what are the trends in their availability?
Let’s drill deeper in answering the last question.
WHAT’S A GOOD JOB?
According to the late economist David Gordon, a "good job" could be defined, ideally, as "employment which provides adequate pay and fringe benefits, job security and stability, decent working conditions, opportunities for advancement, and control (e.g., some "say" in the pace of work, its conditions, flexibility, design, etc.)."
This, I think, seems reasonable in terms of an ultimate goal. However, this is a big objective, especially given that 22.7 percent of North Carolina jobs do not pay enough to keep a four member family above the poverty line. Further, national estimates from past studies typically found that about one-third of jobs did not pass Gordon’s test.
WHY DO WE HAVE SO MANY BAD JOBS?
The simplest answer to this question is that there are two ways to make a profit: focus mainly on cost minimization or focus mainly on revenue maximization. Or, to over simplify a bit: The Wal-Mart or Costco models.
"Bad" practices are often inevitable for small firms with low margins. However, large firms employ them because they’re profitable, they can get away with them, and it would take some effort and a very big change in business strategy to switch. Big corporations are also finding that they can shrink the size of their "core" workers who are treated well and intimidate the workforce as a whole by out-sourcing, off-shoring and relocating.
Why does it continue? Inertia and sticking with what you know. Short-term profit goals. Weak unions. Lax regulation. The growth in the power of American business, which has the veto on investment: "You do X, and we’re relocating."
HITTING THE LIMITS
In a market economy, there are limits on the redistributive and regulatory powers of government. Economist Kenneth Boulding writes:
"There is some level of reward below which the owner of a factor of production will not feel it worth while to put his property to productive use. This level is usually called the ‘supply price’ of the services in question. Thus, there is some wage below which a man will not work at a particular occupation; there is some rate of profit below which a capitalist would rather not hold his property in the form of productive goods, but would prefer to hold it idle in the form of money. This level of remuneration, however, is usually less than the income which the owner actually remains. Most men would be willing to continue at their present job even at a smaller wage and most capitalists would be willing to hold goods at a lower rate of profit than they are now receiving." 2
So, egalitarians can go too far in their reform efforts and harm production.
Boulding says "the difference between the level of income—which is barely sufficient to induce the owner of property, whether his own capital or some transferable capital, to use that property productively—and the level of income actually received, may be called the ‘economic surplus’ of the property in question." 3
The implication again is obvious: only so much income is available for redistribution before the production of income and wealth is undermined—"only the economic surplus is available for distribution."4 Conservatives and liberals are in constant arguments about where that line is and which specific policy options generate the best benefits over costs and the best combination of equity and growth.
Returning to the topic of "good jobs," policymakers have a variety of tools that they can use to shape market institutions, forces and outcomes, including job quality—expenditures, taxation, procurement, and regulation. The conditions for "good jobs" are just one example.
"Part 2" will more directly deal with what we can we do.
1 Joel Rogers says it this way: “adding the value, reducing waste and capturing the benefits of both in smart democratic places.” He has also coined the slogan – “Close the Low Road and Pave the High Road.”
2 Boulding, Kenneth. The Economics of Peace. New York, NY: Prentice Hall, Inc, 1945, p. 108.
3 Ibid, p. 108-109.
4 Ibid, p. 110.