Summary: Today we have a graphic that tells us much about both the recovery and the trends shaping the New America — growth in food stamps vs. jobs. What forces drive these contrasting trends, and how will they help reshape America?
Below we see the US recovery in one graphic, from the February 4 issue of Bloomberg Briefs. It shows the weakness of the recovery, but has another and deeper lesson for us. The pressure of the Great Recession on business accelerated existing political and economic trends. As a result the New America has an increasing fraction of jobs that are some combination of minimum-wage, temporary, part-time, and with no benefits (Wal-Mart and Amazon have perfected these tactics; see the links below).
Free competition, open borders to immigration, and the destruction of private sector unions all contributed to this situation. Despite what we’re told, this was not inevitable or immutable by public policy. The nations of Northern Europe have shown this by the successful protection of their middle classes.
Foreshadowing the next wave of automation
This structural change in the bargaining power of management and labor puts us in a weak position to cope with the robot revolution, the next wave automation (see posts below for descriptions and analysis). Employers have learned to structure their workforce to minimize wages — and prevent unionization (including defanging the New Deal’s labor protection laws and agencies). The next wave of automation will further erode away both jobs and skill premiums, pushing more people into the ranks of the marginal workers.
Of course, these tactics do not work as well with creative jobs. For them employers have developed another set of tactics: make your workers entrepreneurs (ie, self-employed independent contractors). This has long been used when hiring actors, models, musicians, and artists. The result: a few rich superstars, a small number of upper-income stars — and a mass of people barely getting by.
Delivery of services via the Internet makes this even easier, as described in “As Music Streaming Grows, Royalties Slow to a Trickle“, New York Times, 28 January 2013. It’s a model that will work for a wide range of skilled people, as we’ll see during the next decade.
Government aid to the working poor allows the development of a subsistence labor force, in which taxes provide indirect subsidies to corporations. This is the exact opposite of what we’ll probably need to maintain a middle class during the robot revolution — some form of government action to force wider distribution of the profits from automation (ie, the fruits of increased productivity).
The next few decades will be interesting. Will we allow these trends to help the 1% reshape America, or will we follow the Founders’ example and take command of events — and make our own destiny?
Articles about working at Amazon
- “Inside Amazon’s Warehouse“, The Daily Caller (the Lehigh Valley newspaper), 18 September 2011 — “Lehigh Valley workers tell of brutal heat, dizzying pace at online retailer”
- “In the Wake of Protest: One Woman’s Attempt to Unionize Amazon“, The Atlantic, 12 December 2011
- “I Was a Warehouse Wage Slave“, Mac McClelland, Mother Jones, March/April 2012 — “My brief, backbreaking, rage-inducing, low-paying, dildo-packing time inside the online-shipping machine.”
- “Amazon warehouse jobs push workers to physical limit“, Seattle Times, 3 April 2012
Some recent articles about the robot revolution
- “Raging (Again) Against the Robots“, New York Times, 2 February 2013 — “The robots are coming! Word is they want your job, your life and probably your little dog, too.”
- “Obama must face the rise of the robots“, Edward Luce, Financial Times, 3 February 2013 — “Technology will leave a large chunk of the US labour force in the lurch”
- “How to Freak Out Responsibly About the Rise of the Robots“, Derek Thompson, The Atlantic, 5 February 2013 — “It’s fun to imagine an economy where machines are smarter than humans. But we don’t need an artificial crisis over artificial intelligence.”
For More Information About the Robot Revolution
- The coming big increase in structural unemployment,
7 August 2010
- The coming Robotic Nation, 28 August 2010
- The coming of the robots, reshaping our society in ways difficult to foresee, 22 September 2010
- Economists grapple with the first stage of the robot revolution, 23 September 2012
- The Robot Revolution arrives & the world changes, 20 Apr ’12
- The coming big inequality. Was Marx just early?, 27 November 2012
- In Friday’s job report you’ll see early signs of the robot revolution!, 5 December 2012
- Krugman discovers the Robot Revolution!, 9 December 2012
- How do we respond to the Robot Revolution?, 11 December 2012
- 2012: the year people began to realize the robots are coming, 3 January 2013
This piece is cross-posted from Fabius Maximus with permission.