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What? No Workers? Employers Can’t Hire? How Did That Happen?

I regularly read Barron’s magazine, despite its conservative editorial slant (eye roll), because of its in-depth reporting on markets and investing.

This week’s cover story asks where have all the workers gone. I’ll explain momentarily, but first a little background.

If you follow economic news, you probably know the drop in workforce participation is a big story. The last such big story occurred in the 1970s when women massively entered the workforce because families could no longer live on one paycheck. But the story now is that people are leaving the workforce in droves.

Contrary to popular belief, this isn’t due to baby boomers retiring. Participation rates are actually going up in the 65+ cohort, probably because fewer people can afford to retire. The big decline in participation is occurring in the prime working-age cohort of ages 25 – 54. At the same time, disability rolls have surged. In other words, millions of people in their prime working years have traded paychecks for disability checks, although that doesn’t fully explain the drop in workforce participation. There also are other factors in play.

Why are people ditching work for other means of support? A couple of reasons. One, lack of jobs. (If you can’t get a job, you need some other way to pay rent and buy food.) Two, working sucks. I mean REALLY sucks! If you’ve worked, you know what I mean and don’t need it explained. If you’re still in school, you’ll find out soon enough, after you graduate and look for a job.

Of course, I don’t have to tell you this. Unless you’re already on disability or retired, you know all too well that for years now bosses have demanded more work for less pay, even as profits soared. The recession let them get away with it for a while.

You probably know that Republicans and their business allies bitterly fight any increase in the federal minimum wage, stuck at $7.25 since 2009, and go ballistic when workers demand a $15 minimum wage as happened here in Seattle.

Apparently fewer people are willing to work for low wages now. Especially for the federal minimum, where it applies (because local authorities, invariably Republicans, refuse to override it with higher state or local minimums.) After all, why should people work for less than it costs them to work? With gas at $4, it can cost two hours’ of wages just to get to and from work, depending on where you live and the availability of public transit. (In rural areas, it can be a lot more.) Business owners understand the difficulty of operating at a loss in all other aspects of the business; so why do they have such a hard time accepting that workers can’t work at a loss?

Anyway, here’s Barron’s whiny complaint, which could readily be taken as speaking for practically every boss in America:

“The job market has made a comeback over the past year, but the American labor force hasn’t, and the prospects don’t look good. Work seems to be on the wane in the U.S., with worrisome consequences for growth.” (Quoted per fair use; you can read the entire article here: http://tinyurl.com/lbyn279)

Yeah, well, pay them and they’ll come, ya know? Would someone please tell these guys the Thirteenth Amendment has been in effect for some time now and people no longer have to work for free?

I have a question for the Barrons editor who wrote that article. It goes like this. Given that since 1970, all the benefit of economic growth has gone to the one percent, and workers got none of it, why should workers give a hoot about economic growth? Not shockingly, they don’t.

Older people remember when workers were fiercely loyal to their companies. Then a new generation of managers with no ethics took over the business world, and companies ceased being loyal to their workers and thought of them as just another “input” to be minimized or eliminated if possible. This change of management attitude toward workers made employers as popular as a general who asks his troops to make the ultimate sacrifice but shows his own heels to the battlefield. Even feudal kings couldn’t get away with such disloyalty to their subordinates; if they tried, their armies would melt away.

Well, America’s workforce is melting away. If employers don’t get a message from that, I guess our economy’s a goner. It was nice (at least for some) while it lasted.

Don’t leave yet, I’m not done by a long shot. I want to talk some more about Barrons magazine. If you bear with me, I’ll explain why.

Barrons isn’t a batshit-crazy conservative website pandering to ignorant tea partiers and coal rollers. It’s an influential magazine read by CEOs, top-level managers, and wealthy investors. It’s well written and articulate, and caters to an educated and influential group of decision makers. Nonetheless, it has a pronounced editorial slant, sometimes slightly bombastic, and reliably propagates the shibboleths of conservative economic orthodoxy and capitalist self-justification. Keep bearing with me, I promise I’ll explain why this matters to you.

This week’s cover story on workforce participation furnishes a typical example. Everyone in the media uses the same economic statistics, nearly all of which are sourced from government reports, and rarely if ever are questioned even if impeachable. (For example, some government economic statistics are guesswork based on surveys, not compilations of actual data.) What the media does is interpret that stuff, and you get different interpretations depending on the editorial prejudices of the specific media organizations.

In Barrons’ case, its writers invariably rely on, and quote, conservative economists and think tanks. The Barrons cover story on workforce participation takes the usual conservative tack of blaming the economy’s ills on government programs and workers. If not enough people are showing up for work, it’s because overly generous safety net programs induce sloth. If more people are going on disability rolls, it’s not because employers’ relentless demands for production cause mental stress and physical injuries, but because out-of-control disability lawyers are bleeding taxpayers white. Although, more often than not, people are applying for disability benefits because they have a valid reason to do so. But it could take a long time for their application to be approved, as the journey to filing it can be difficult, so that’s why companies like Crest SSD are on hand to help you file a successful application for disability benefits because you have stress or a physical injury. On some occasions though, disability lawyers may not help the situation.

Moreover, the Barrons editor who wrote this article doesn’t hesitate to use hate language. Some samples:

“As American Enterprise Institute senior fellow Charles Murray has bluntly observed, there was a time when ‘healthy men in the prime of life who did not work were scorned as bums.'”

[Comment: Yeah, but that was when companies offered lifetime employment with decent pay and benefits to workers who were loyal to the company and worked hard.]

“Might the surge in prime-age males opting out [of working] reflect the fact that the wages offered were often lower than those in the high-paid union jobs of the 1960s and 1970s? Perhaps, but if that discouraged men from seeking work, it would be an indication of an eroded work ethic.”

[Comment: No, it’s an indication that low wages and no job security provides less incentive to work.]

“Some of these men may be … living off crime.”

[Comment: Nice. If people refuse to work at shitty jobs for shitty wages, call them criminals.]

“The SSDI program ‘creates a very strong incentive against meaningfully participating in the formal labor market,’ says MIT economics professor David Autor, author of the November 2011 study, ‘The Unsustainable Rise of the Disability Rolls in the United States.’ The reason is simple: If you take a job, you run the risk of being terminated from the program and losing the benefits. Not that those benefits are especially generous. But … [w]hen you bear in mind that … it’s possible to supplement it with under-the-table money, it might not be surprising that the number of recipients has soared.”

[Comment: Nice. Assume that millions of disability recipients are cheating the system by working under-the-table and not reporting income. By the way, for every dishonest SSDI beneficiary working under the table, there’s also a dishonest business owner employing him under the table.]

“‘There is a very powerful kind of for-profit advocacy component to getting people onto SSDI,’ says Autor. Law firms that represent claimants are given a percentage of the take, much like personal injury lawyers…. [T]he sums involved are large enough to create a special-interest group that has a stake in perpetuating the system. As Autor puts it, ‘The Social Security Administration each year pays more than $1 billion directly to attorneys that prevail against it on behalf of claimants.'”

[Comment: This statement contains so many falsehoods it’s hard to know where to begin. Let’s try. First, you can’t get SSDI unless you’re actually disabled under SSA’s stringent criteria, and disability claims have to be supported by medical evidence from a doctor. Although errors are possible, I think we can safely say that most people on SSDI are getting it because they’re eligible. Second, the SSDI program doesn’t exist because of greedy trial lawyers; Congress enacted it in the 1930s to satisfy an actual social need and alleviate real hardship. This program, by the way, directly benefits employers by shifting the costs of caring for disabled workers from businesses to the government; it represents government taking a major expense off employers’ backs. Third, the Social Security Administration doesn’t pay the $1 billion “directly to attorneys” except in the sense of where the check is sent; attorney fees come out of the applicant’s benefits award and therefore are paid by the applicant, not by SSA. Fourth, note the phrase “that prevail”; disability attorneys and their clients get nothing unless the clients are determined eligible for SSDI benefits because they are, in fact, disabled. Attorneys enter the picture because proving a claim, which involves gathering and presenting medical evidence, is too difficult for most people to handle themselves without professional help.]

“Simple math gives us some idea of the program’s effects on labor-force participation. As noted, 3.3% of prime-age men were in the program in 2013, up from 1.4% in 1970.”

[Comment: Wow! 3.3% of prime-age men are on disability! That’s a national crisis! Not.]

“Because these trends have recently flattened, they may not get worse. But one new factor that is just around the corner is the depressing effect on labor-force participation of the Affordable Care Act.”

[Comment: That’s right, blame Obamacare, because Barrons will lose half their Republican readership if they don’t.]

“University of Chicago economics professor Casey Mulligan … and the CBO make no judgment about whether the Affordable Care Act is worth implementing. As Mulligan remarks, ‘There is room to debate the net welfare effect of safety-net expansions, but the fact remains they have a price.’ The price in terms of reduced participation in the labor market is not one to be taken lightly.”

[Comment: Yep, call ACA “welfare,” so your CEO readers get the point that ACA is bad for business and the economy “because it’s welfare” that undermines workers’ motivation to work.]

“During periods of sluggish growth in the economy, politicians and pundits focus on the need to create jobs. But what is needed over the long run is an increase in jobholders to create a sustained pickup in economic growth. Indeed, without them, the changes of supporting aging baby boomers through their long years of retirement will diminish.”

[Comment: Of course the one-percenters who comprise much of Barrons’ readership want economic growth, because they get all of its fruits. To get workers to come back and work at shitty jobs for shitty wages, threaten their grandparents and parents with starvation if they refuse to work at shitty jobs for shitty wages.]

It’s all here: Everything one-percenters want to hear and conservative propagandists want the one-percent to believe: People who don’t work are “bums,” safety-net programs are bad because prevent employers from forcing people to work for low wages, disability insurance (which is paid for by payroll taxes) is stigmatized as “welfare” and it’s implied that all welfare is some sort of taxpayer abuse, bashing Obamacare is thrown in as a freebie, and making not-so-subtle threats that if you don’t surrender to employers’ demands for cheap labor they’ll kill your grandparents.

Why am I asking you to read this long (for The Ave) post? Because I think it’s important you know what America’s CEOs and wealthy investors are reading. They believe this shit because it’s wrapped with respectable-sounding academic names and think-tank studies, never mind how cherry-picked and biased they might be.

This is what we’re up against: We’re arguing with people who sincerely believe that if you don’t work for cheap wages you’re a “bum,” and safety-net programs are “welfare” that enable slackers to live off doles, under-the-table jobs, and crime. The implication being, of course, those programs have to go. It might be laughable except those people hold most of the power in society.

We’ve got a hell of a fight ahead of us. That’s why I’ve posted this and asked you to read it. I wantedRoger Rabbit icon to make sure you know this.

(Cross-posted from HorsesAss.org with some editing for clarity, to correct typos, etc.)


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