Something I don't think many conservatives think about: in the economic system we have there has to be at least a couple of percent of people wanting to work for which there are no jobs - if there weren't, the system wouldn't function efficiently or be sustainable. That is the case because of how labor supply and demand can effect inflation. If there is an oversupply of labor, then in general the capital managers/owners can lower wage costs (pay less for the same amount of work) or keep wages at least flat. But when there is more demand for workers than workers readily available to hire, then the capital managers/owners must increase wages to attract workers; because of that, when labor supply gets really tight, we get out of control wage inflation. That kind of inflation would inevitably wreak the economy so the Federal Reserve would step in and raise interest rates until economic activity slowed enough to reduce demand for labor.

What that means is that for our capitalist, free enterprise system to work the way it is intended there must be a couple of percent of people who want to work and are able to work for which there are no jobs. Unless a conservative is a social darwinist, and especially if they are a Christian, then I think they should acknowledge that there needs to be programs in place to assist those people who are willing to work but can't find work. Of course, that does not imply that we should just put anyone on the public dole that doesn't feel like working or if we overshoot by too much we would end up providing too much disincentive to work.

It's not an easy thing to assess just how much and what kinds of assistance should be provided so that it takes care of the people who want to work where it is built-in to the system that they won't be able to find work but the aid doesn't become a disincentive to work for those for whom jobs are available. The "just how and what kinds of assistance" debate is the debate we should be having. Instead too often what we get is oversimplified claims like: In the American capitalist system anybody who wants to work can find work. That is just not true, even when economic times are good.



Edited 2 time(s). Last edit at 08/14/2012 09:37AM by Ted King.

The definition of "full employment" has changed over time. In the '70s, "full employment" was thought to be 6% or so; the '90s and early '00s gave us 4.5% unemployment, and a result was an increase in real wages: the Fed usually intervenes at that point, since real wage growth is a major factor in inflation (although commodity inflation is usually the biggest component these days).

Marx referred to "the reserve army of the unemployed" as a feature of industrial capitalism, which is one reason you don't hear many employers complaining about high unemployment, except insofar as it limits their ability to find customers.

I think you're confusing unemployment with worker mobility. You assume a finite supply of labor versus a potentially infinite supply of labor. When in fact both are quite finite, but labor can move to where the jobs are, and/or gain training and experience to move.

One of the most severe impacts of the recession were caused by the inability of the workforce to move due to the housing crisis... people were unable to sell their homes and move, and so they were *stuck*.

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J Marston
The definition of "full employment" has changed over time. In the '70s, "full employment" was thought to be 6% or so; the '90s and early '00s gave us 4.5% unemployment, and a result was an increase in real wages: the Fed usually intervenes at that point, since real wage growth is a major factor in inflation (although commodity inflation is usually the biggest component these days).

Marx referred to "the reserve army of the unemployed" as a feature of industrial capitalism, which is one reason you don't hear many employers complaining about high unemployment, except insofar as it limits their ability to find customers.

Yes. I don't think enough economic conservatives are aware of this aspect of our economic system.

Edit: Oh, I meant to mention that I wasn't aware that Marx had made the observation - that was an interesting tidbit, thanks for sharing it. I haven't read much on Marx and what reading I did do was quite some time ago. There was validity to quite a few things Marx said.



Edited 1 time(s). Last edit at 08/14/2012 09:48AM by Ted King.

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cbelt3
I think you're confusing unemployment with worker mobility. You assume a finite supply of labor versus a potentially infinite supply of labor. When in fact both are quite finite, but labor can move to where the jobs are, and/or gain training and experience to move.

One of the most severe impacts of the recession were caused by the inability of the workforce to move due to the housing crisis... people were unable to sell their homes and move, and so they were *stuck*.

I don't think I'm confusing the two. Of course, worker mobility is an important factor - there are a great many factors - that go into the whole employment picture, but it still boils down the overall supply and demand of labor. There are many individual, local and regional variations - labor may be tight in one place and not another and so people will tend to migrate around, but that isn't always feasible so you do end up with pockets of variation. But there still has to be net result of the labor market generally not being too tight or we end up with inflation.



Edited 1 time(s). Last edit at 08/14/2012 09:49AM by Ted King.

I thought that it was kind of a given that "full employment" meant an unemployment rate down around 3-4% and not 0%. I seem to remember being taught this in Social Studies class as a young girl.

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"Stop thinking about art works as objects, and start thinking about them as triggers for experiences." ~ Brian Eno

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$tevie
I thought that it was kind of a given that "full employment" meant an unemployment rate down around 3-4% and not 0%. I seem to remember being taught this in Social Studies class as a young girl.

I imagine a lot of people know that those percents are said to be "full employment", but I suspect a lot of them don't know why.

I should say more about cbelt's comment. It is true that people moving between jobs does account for some of the 3-4% unemployed at any given time, but if the net flow of people into and out of jobs isn't close to the same then either unemployment goes up or we get a tight labor market and inflation takes off.



Edited 2 time(s). Last edit at 08/14/2012 10:05AM by Ted King.

The thing that irks me is that conservatives seem to have begun pretending that unemployment and welfare are one single program. The implication that one can be on unemployment for the rest of one's days bugs the heck out of me because it is flat out not true. Also, most people don't find $450 a week to be an awesome amount of money to live on.

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"Stop thinking about art works as objects, and start thinking about them as triggers for experiences." ~ Brian Eno

I think most of those evil conservatives are quite aware that a low unemployment rate makes it quite difficult to take advantage of labor at slave wages.

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norwegian wood reality TV

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billb
I think most of those evil conservatives are quite aware that a low unemployment rate makes it quite difficult to take advantage of labor at slave wages.

That wasn't my point but the "evil" thing was a nice touch.

One important factor here that must be considered is the definition of 'inflation'. What you are actually discussing is wage inflation, as opposed to price inflation. For example, the price of gasoline has gone up, up, up. But roughnecks and refinery workers aren't earning more money.

Most inflationary periods saw a growth in both wages and prices. But we haven't seen that. We've seen growth in some costs (food, oil based fuels). But overall wages have not grown.. much. In our area they have grown, but our unemployment rate is hovering around 7%.

The other factor is of course quality of the workforce... in a previous discussion I explained the level of training and experience required in manufacturing versus the levels required 30+ years ago.

The true reality is that labor is no longer the definining limiting factor for the growth or collapse of much of the US economy. Without looking at any numbers, I would opine that the availability of capital is more relevant to the US economy than the availability of labor. Yes, in the early 1900's the byproduct of economy was sweat. Farming was manual labor intensive, so was factory work, etc. Now most of these classic large labor absorbers are heavily automated.

A field that would have taken twenty people a whole day to harvest in 1910 (With wagon drawn steam powered equipment) now takes two people about three hours. One to drive the combine, and one to drive the truck.

A punch press that, in 1920 required an operator to push a steel blank into the die, push the palm buttons, remove the finished part, stack it, and then move the stack to the assembly line... well, it now runs 'lights out' from a steel coil, stacks the finished parts on a stacker, and then uses automatic guided carts to move the part to where they are needed for the assembly robots.

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cbelt3
One important factor here that must be considered is the definition of 'inflation'. What you are actually discussing is wage inflation, as opposed to price inflation. For example, the price of gasoline has gone up, up, up. But roughnecks and refinery workers aren't earning more money.

Most inflationary periods saw a growth in both wages and prices. But we haven't seen that. We've seen growth in some costs (food, oil based fuels). But overall wages have not grown.. much. In our area they have grown, but our unemployment rate is hovering around 7%.

Yes, you can get price inflation without wage inflation - because of things like the demand for raw materials being greater than the supply (e.g., oil), but over the long haul in a tight labor market, wage inflation inevitably leads to price inflation because labor costs still make up a huge percent of business cost - especially for the growing service part of the economy.

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cbelt3
The other factor is of course quality of the workforce... in a previous discussion I explained the level of training and experience required in manufacturing versus the levels required 30+ years ago.

The true reality is that labor is no longer the definining limiting factor for the growth or collapse of much of the US economy. Without looking at any numbers, I would opine that the availability of capital is more relevant to the US economy than the availability of labor. Yes, in the early 1900's the byproduct of economy was sweat. Farming was manual labor intensive, so was factory work, etc. Now most of these classic large labor absorbers are heavily automated.

A field that would have taken twenty people a whole day to harvest in 1910 (With wagon drawn steam powered equipment) now takes two people about three hours. One to drive the combine, and one to drive the truck.

A punch press that, in 1920 required an operator to push a steel blank into the die, push the palm buttons, remove the finished part, stack it, and then move the stack to the assembly line... well, it now runs 'lights out' from a steel coil, stacks the finished parts on a stacker, and then uses automatic guided carts to move the part to where they are needed for the assembly robots.

I won't quibble with most of this, but I'm not sure of it's relevance to the point I'm making. It does seem to me that there is a growing structural problem with maintaining employment levels because of the productivity increases due to technology, but I don't see that that diminishes the point I was making in the OP.

Wel, I don' t think that the paltry aid is a distraction to becoming employed. At least not for anyone I know.

>>The true reality is that labor is no longer the definining limiting factor for the growth or collapse of much of the US economy.

One could argue that highly skilled labor is indeed the limiting factor.

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cbelt - you may have an interesting perspective on this - do you see a lack of highly skilled jobs in your industry? i certainly don't in mine (tech)

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Edited 1 time(s). Last edit at 08/14/2012 12:59PM by mattkime.

Is cbelt3 arguing above (in the section on workforce mobility) that our economy has had sufficient jobs on offer to keep the unemployment rate low, but in areas other than where people were 'stuck?' Because i'll refer you to the DoL on that one. There are far more unemployed Americans than there are open, unfilled positions. A variation of this ruse is used when it's claimed that there are 'plenty of good jobs, but no qualified applicants' - most often in reference to high-skill tech positions. If every vacant high-skill tech job in America were filled today, the unemployment rate would drop less than half of one percent. The industry simply isn't big enough to fill the gap.

As Marx noted, modern industrial capitalist economies depend on a surplus of labor. The neo-liberal term used to describe this is the 'flexible workforce' - generally, low- to medium-skilled workers who are available to work at minimum or near-minimum wages when industry needs their productive capacity, but able to be easily laid off when demand wanes. Who takes care of these folks when they're not needed? Well, neo-liberals would prefer that private charities and generous relatives handle that, because when government does so, it inevitably wants to tax companies to pay for it. That's a drag on profit, because companies are charged a premium for flexibility, which they feel should be the 'natural state' of a free market. Capitalism, you will note, never accommodates the needs of the worker for the worker's sake. It is solely concerned with growth, productivity, and profit. Workers are responsible for their own welfare (hence the development of unions, the significance of solidarity, etc.).

What happens when labor fails and corporations thrive? Unemployment rises, the lumpen proletariat become even more marginalized and forgotten, and government is left in the middle - beholden to those in power (capital), yet accountable to/responsible for those with increasingly less (labor). Democracy strains under these conditions, and movements emerge to reclaim, reform, or revolutionize systems of power (e.g., Tea Party, Occupy movement, Birthers, Anarchists). Often charismatic leaders emerge, usually social and political violence increase, and not infrequently large-scale conflict (war, revolution, etc.) results.

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rj
AKA
Vreemac, Moth of the Future

>>If every vacant high-skill tech job in America were filled today, the unemployment rate would drop less than half of one percent. The industry simply isn't big enough to fill the gap.

one half of one percent. lets see...is unemployment at 8%? I'll pretend that it is. That would be a 6% decrease in the unemployed. and they'd have more money to spend, etc.

i think thats fairly significant.

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In NE Ohio there is a lack of skilled machinists and highly trained factory technical workers in the heavy industrial trades. But.... most companies have 'expanded' their workforces by using temporary workers rather than hiring full time employees due to the uncertainty of what is to come.

Despite what many of you believe, many American companies do not LIKE to lay off workers. And some (mine included) have a policy against laying anyone off. Ever.

Which means that when growth is uncertain, we don't 'hire'... we 'borrow' from temp agencies. We may hire a few here and there (I believe we've hired past the 304 who took voluntary early retirement in 2009), but we try to be very careful.


Look, the meme of "Capitalists are Evil" and "Companies are Bad" is tiring as hell. Capitalism is the system which powers our nation's economy. Companies are a big part of that system. Deal with it, or move.

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Look, the meme of "Capitalists are Evil" and "Companies are Bad" is tiring as hell.

Then why do you insist on posting it every chance you get? Please point out all these people, other than you, who continually post your meme.

rjmacs - excellent post, well-written and informative.

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cbelt3
Look, the meme of "Capitalists are Evil" and "Companies are Bad" is tiring as hell. Capitalism is the system which powers our nation's economy. Companies are a big part of that system. Deal with it, or move.

I'd get tired to if I was constantly swatting at things that weren't there. Where did anyone say something in this thread that implied capitalists are evil or companies are bad?

Edit: Oops, August beat me to it.



Edited 1 time(s). Last edit at 08/14/2012 04:54PM by Ted King.

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cbelt3
Look, the meme of "Capitalists are Evil" and "Companies are Bad" is tiring as hell. Capitalism is the system which powers our nation's economy. Companies are a big part of that system. Deal with it, or move.

I don't want to rehash what August and Ted have already said, but the truth is, the strong middle class which exemplifies the broad distribution of prosperity in America was made possible through the development of organized labor, not despite it. Unions, which acted to stabilize an unstable system of unrestrained capitalism, are at the center of everything we now associate with modern standards of living, education, healthcare, and consumer protection. You can harp on the state of the contemporary labor movement, and gripe about unions standing in the way of progress, and accuse the enterprise of wholesale corruption; what you cannot do is deny history. Without a strong labor movement there would be no strong middle class; without principles derived from the labor movement and enacted into law (collective bargaining rights, workplace safety, communal funding of services like education and public works, etc.), we would live in a very different, and much less appealing, nation.

This is not the same as saying that "capitalists are evil" and "companies are bad." It IS a way of saying that a counterbalance to the unrestrained power of those who control capital has been at the center of America's progress over the last century and more. This counterbalance - organized labor - has been losing ground over recent decades, and we've seen concrete results. Education, opportunity, prosperity, and health have become ever more divergently accessible based on individual wealth, and wealth is more unevenly distributed now than at any time in more than a century. Are poor people today better off than poor people a hundred years ago? Absolutely! But this is only because they have been the beneficiaries of the counterbalancing effect of an effective organized labor force. Before we had unions, we had poor houses; charities that provided minimum food and housing for the destitute. Now we have food stamps and subsidized housing. Before we had unions, we had child labor and no protection for the safety of workers. Today we have publicly funded mandatory education and regulated, enforced workplace safety.

Let's not say that corporations or unions are evil or bad. Let's recognize that the success of the American enterprise has been thoroughly dependent on both of these groups working together - and separately - to move the country and its inhabitants FORWARD. Let's acknowledge that just as labor fails to appreciate the necessity of profit and efficiency at times, so do corporations sometimes fail to recognize that human values are not the same as market values. Instead of demonizing one another, why not celebrate that when working in tandem (albeit in tension), labor and management can accomplish brilliant things and better the nation and the world, cooperatively?

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rj
AKA
Vreemac, Moth of the Future