Thursday, December 8, 2016

The New Job Threshold

My December 6th White Plight blog provided insights into a demographic segment – American white non-college grads (mostly men) in their middle age or older – whose workplace in America has been displaced. They voted hot and heavy for the “Make America Great Again” platform that involves reducing regulations and taxes on their former bosses, blasting away at trade treaties, demanding tariffs against cheap imports and penalties for companies that move operations overseas or simply out-source. They are part of a growing trend, particularly hard-felt in the developed world where expectations for work are much higher than in the poorest nations, of growing under-employment (if not seemingly chronic unemployment) for a body of under-qualified workers in a world of increasing complexity and competition.
The numbers that underlie this trend are both staggering and deeply troubling. Feeling abandoned and increasingly desperate, these under-employables are tearing away at their national political structures, finding blame in others and willing to sacrifice democracy and democratic principles to restore their economic well-being. They are the force that is willing to tear down their existing forms of government to allow “strongmen” (yeah, almost all men) to do whatever it takes to restore and validate their expectations.
“On the heels of a mostly positive jobs report from the Bureau of Labor Statistics (BLS) (4.6% unemployment is the lowest it’s been in nine years), the McKinsey Global Institute (MGI) released a more sobering snapshot of the world of work.
“A briefing by MGI director James Manyika, compiled from the company’s extensive research, took a deeper dive into employment numbers. He writes: ‘In the United States and the 15 core European Union countries (E.U.-15), there are 285 million adults who are not in the labor force—and at least 100 million of them would like to work more. Some 30% to 45% of the working-age population around the world is underutilized—that is, unemployed, inactive, or underemployed. This translates into some 850 million people in the U.S., the U.K., Germany, Japan, Brazil, China, and India alone.’
“Manyika says that unemployment figures typically get the most attention at the expense of those who are underemployed. Indeed, the latest figures from the BLS indicate that the labor force participation rate (a combined total of those who are either working or actively seeking work) is just over 62%, which represents a steady decline since 2000. Parsing the meaning of this decrease is complicated, yet it is often referred to in the broadest sense as proof that the labor market is shrinking due to a variety of factors. The result, regardless of the cause, is a lot of ‘untapped human potential,’ according to Manyika…
“This has serious economic consequences that affect every country. Wage stagnation has affected advanced economies despite increases in productivity. The brief also states that globally, 655 million fewer women are economically active than men. In a previous report, MGI revealed that advancing women’s equality could add $12 trillion to the global GDP by 2025.”, December 7th.
The United States is no exception. All of the positive economic news has been relegated to the top of the American economic ladder. Those at the bottom continue to fare badly, but they are being joined in droves by former stalwarts of the middle class now relegated to obsolescence through progress. Their unskilled, semi-skilled and older-super-skilled abilities are neither competitive in the global marketplace nor relevant in a world with new and more technical demands. Unwilling to spend time retraining to skills whose very definition scare them, they feel marginalized and irrelevant. My White Plight blog makes that perfectly clear. They are increasingly seeing themselves as a demographic group with nothing left to lose and simply refuse to believe that even without outsourcing, so many of their jobs have been replaced with automated manufacturing and processing.
While all of this new-tech may be costing jobs, at least in the United States and the developed world, about one-third of the newly created employment comes from this rapidly accelerating tech sector. “MGI research on the potential for automation across 54 countries and more than 2,000 work activities indicated that the number of jobs that can be fully automated by adapting currently demonstrated technology is less than 5%. That number could go as high as 20% in some middle skill categories.
“That said, even if a job isn’t completely taken over by a robot, MGI found that about 60% of all jobs have a least a third of activities that could be automated based on current technology (think: virtual assistants).” For those with the proper skills and education.
“McKinsey research found as many as 40% of employers in nine countries said lack of skills was the main reason for entry-level job vacancies. Sixty percent of them said that new graduates were not adequately prepared to work. They cited the lack of both technical and soft skills such as communication, teamwork, and punctuality as reasons they couldn’t fill open positions. A survey conducted by PayScale reached a similar conclusion. Chief among the complaints by hiring managers were that communication, leadership, ownership, and teamwork were missing in this new crop of workers.
“The brief also found that cross-border migration has a somewhat negative impact on the labor force. Manyika writes, ‘Migration boosts global productivity, but its consequences are often feared by native workers, who face labor market disconnects and a lack of well-paid jobs.’ He also notes that in the midst of such challenging labor market conditions, ‘popular sentiment has moved against immigration.’”
There another equally disturbing trend, one that shows a long, steady decline in the average standard of living for a huge segment of the American population. All the indicators suggest that, generation-to-generation, kids have to train more today even to earn (inflation corrected) less than their parents. “Rising income inequality has eroded the ability for American children to grow up to earn more than their parents, according to a new study from a team of researchers that could carry deep implications for President-elect Donald Trump's policy agenda.
“The research from a group led by Stanford's Raj Chetty, and also including economists and sociologists from Harvard and the University of California at Berkeley, estimates that only half the children born in the 1980s grew up to earn more than their parents did, after adjusting for inflation. That's a drop from 92 percent of children born in 1940… The fall-off is particularly steep among children born in the middle class, and for those born in several states in the industrial Midwest.” Wonkbook, Washington Post, December 8th. Ouch! The American dream is fading, and most of us are acutely aware of this decline. The resulting desperation and hopelessness do not portend well for any government.
All of these variable aggregate into the kind of massive disruption that is fully capable of bringing down governments and decimating democratic structures. In the end, failure to address these inequalities, redesign the economic basics that would restore income and dignity to these disenfranchised workers and create universal access to the education and training needed to thrive will probably change the face of Western democracy forever. Add a right to bear arms that has placed over 300 million guns across the country, and the possible danger is painfully obvious… particularly when their strongmen fail to deliver.
I’m Peter Dekom, and while we cannot stop progress or halt change, we most certainly can (and must!) provide humane and intelligent support for those caught up in the transition.

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