Jobs are scarce and workers are feeling the pinch all around. Republicans would have you believe the government is to blame, limiting growth through bureaucracy. Democrats would have you believe that companies are simply greedy. But is the income of American workers really limited by a lack of growth or the avarice of a privileged few?
The short answer is just a bit more complicated. The distribution of the income has changed substantially since postwar America changed sometime around 1968. It’s not a failure of government or even the greediness of corporations, but a change in the most important market there is – the market for the talent and hard work of ordinary Americans.
Big companies have been slow to hire, slow to increase hours
Every once in a while another article references a study by Carl Fry of Oxford University showing that 47% of all jobs we know today could be replaced by machines in the coming decade. Fry is careful to note that this trend is nothing new, dating back to the dawn of the Industrial Age over 200 years ago. But his concern is that the trend appears to be accelerating, and may in fact become what defines “work” in the coming decades more than anything else.
This fits with the Barataria observation that a developed society only has so much paid work to go around. When the share of the population working goes above 60%, income inequality starts to grow rapidly. It suggests that there is a fixed labor market, and more workers simply suppress wages by the market forces of supply and demand. Given that we have had more than 60% of the population working since 1968, the year our inequality started to grow, it makes sense.
Automation is the reason there is less paid work to go around. Yesterday’s productivity gains are today’s unemployment. So if the money isn’t going to workers, where is it going? Consider this chart of the net share of total income (essentially the same as GDP, by a different calculation) taken home by workers since 1968:
Note that there was a 50/50 split of income between workers and companies in the sometimes longed for period before the market pressure of Baby Boom workers started to erode it. That split has gone down fairly consistently to where it is today, about 42.4% to workers and the rest to companies. Companies are making more and keeping it, eventually seeing it wind up as a return to investors. Working people only get it when they have enough to invest.
That 7.6% difference is not small in our roughly $17 trillion economy. It amounts to over $1.3 trillion, or about $11,300 for each of the 115 million households in the US. That’s pay lost every year because the distribution of income in the US changed, not because of any lost overall growth.
While it may be obvious to you what you’d do with an extra 11 grand every year, let’s stay with the big picture. Here is the median household income in the US, adjusted for inflation, since 1985:
It grew slowly before falling back down after 2000. The additional money that would be made with a more traditional relationship between workers and companies would be enough to erase the erosion in household income that we have seen since the start of this Managed Depression in 2000-2001.
What does that have to do with robots? They are the reason that there is only so much work to go around. If this trend continues, we may find that we are in an economy where there is even less work to be done by an ever shrinking workforce. The retirement of the Baby Boom and the collapse of the Labor Force Participation rate below 60%, as it was in 1968, will help – but the trend may well continue.
At some point you have to ask, “Who are the robots really working for?”
We can reasonably expect continued automation to define the new economy that is developing to replace the one that failed in this depression. That means that we have to come up with a new arrangement for this thing called “work” if we are unhappy with growing inequality and poverty. There are many possible solutions – including a much higher minimum wage, a reduction of the defined work-week to 32 hours or less, and perhaps even a system of taxation and redistribution along a socialist model.
All of these changes are first a new social agreement even more than they are a matter of law or policy. But they are coming. There is only so much paid work to go around, and in the future there may even be less. That trend has defined the last 46 years and may only accelerate. What will we do about it?
Barataria - The work of Erik Hare 
Erik I like this article because it asks a question(s).that needs an answer. Just how do the 40% who are not working make it? If the 40% are retirees/disabled or kids or wives with husbands who make good money I get it. I could ask so many questions on this I would probably end up being incoherent. My workplace driving ($12/hr, few benefits) cannot find workers so many of us end up working 12 hour days (which suck). Most of us (20) are white men 55 and older who formerly had decent jobs (better pay and healthcare)..
Thanks. I guess my starting point is that we were a nation with 60% or less of the potential labor force working, and overall it was something like a Baroque Era of great wealth. For those who could participate in the standard arrangement happily the economic times were good. It wasn’t a flexible system at all, depending on large coherent family units that all got along and weren’t abusive, but it did work in a larger economic sense. The secret of that system was that it kept people out of work, meaning that those who worked could organize and demand higher wages.
So, assuming that only so many people can work, how do we equitably distribute the income? And, for that matter, how do we get people do do the work that isn’t usually paid – such as raising the kids, keeping the community operating, taking care of the sick or old, et cetera? Not only do I not know, I can’t answer that by myself – it has to come from some broader social agreement that everyone buys into.
What I can tell you is that the old agreement was based on a good day’s pay for a good day’s work. That’s clearly broken, and it’s broken in large part because there’s only so much paid work to go around. If we’re going to rebuild that, we have a lot to work out as a people.
Regarding the intriguing theological and literary discussion (Age of anxiety and the related links), we ought not to forget that the theology of Christ originated with Paul or St. Paul.
Of course the Reformation asserted that faith in Jesus Christ leads to salvation. This has to do with a spiritual interpretation of Jesus who reconciles people back to the heavenly Father. Paul makes this argument and he makes the argument because he says he had a vision from Jesus himself. This is the realm of faith.
I was perusing the Jesus Seminar websites and what I could surmise is that those scholars are theorizing at the synoptic gospels were written after Paul’s writings to balance things out, given that Paul did not know the human Jesus. So in Matthew, Mark and Luke we get Jesus’s teachings and actions.
I don’t think you can say that Western culture is at a dead end, unless you are specifically talking about the military. Philosophy took a different route somewhere between Descartes and Hegel. Science separated itself from philosophy. Human rights sort of comes out of the idea of natural law that comes from God
Also liberal theologians admit that Jesus being raised from the dead is not verifiable. Their interpretation is that some followers had an experience of the resurrected Jesus. So again this is in the realm of spirituality.
The early Church came up with their theories who Jesus is to have inspired people to spread the faith and accept the faith. Constantine helped too. The crumbling Roman empire mixed with Germanic and Celtic ideas.
The Norse mythology had Thor. Thor kicks ass.
We have Thorsday, Frigesday, and Saturnsday. So we didn’t completely go Christian.
Myth is just fiction, it is for entertainment. If want to apply it allegorically or metaphorically as a form of enlightenment to your life you can. Christ themes really don’t come up in the workplace per se. Instead we have things like cost accounting, management science, technical writing, marketing.;..
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I do not like this at all but you are making the point. There is always more work to do, maybe its just not at a wage that anyone would take to do it. People could always pick up litter but what would you want to be paid to do that? This might have do to with a mninimum wage law.
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If there isn’t enough work for everyone we do have a serious problem. Why not look at how much of our work has been set overseas for starters? Then we should look at crumbling infrastructure. We don’t even have to get into stay at home moms before we find a lot of jobs missing.
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