The macroeconomic shifts that began well before the pandemic experienced a heightened acceleration from the combined impact of the giant and unnecessary corporate tax cut in 2017 and the lockdowns and concomitant worker/consumer absence throughout the economy. Add cheap corporate borrowing ability, and the picture become even clearer. Even as the positive medical results in urban areas that imposed the severest lockdowns probably saved hundreds of thousands of lives and more than an equal number of businesses, the negative survivability impact on small, often undercapitalized businesses with limited access to debt was often devastating. What we might not have realized is that for large, well-capitalized businesses, those lockdowns were a Godsend.
First, it allowed corporate America to lay workers off without much of a challenge, even from that small (under 7%) unionized private sector of workers. Debt for the biggest was plentiful, so survivability was not much of an issue for most service and manufacturing sectors, hitting hardest on travel, hospitality and entertainment/sports venues. That contraction of the workforce, sold as temporary until the disease were contained, was never really intended to be temporary for so much of corporate America. Instead, that downtime permitted so many companies to install and absorb automation, much more sophisticated systems that automated financial transactions (even retail, look at Amazon for example), warehousing, manufacturing robotics and even complex professions including medical and legal. All driven by artificial intelligence.
So as the economy reopens, even as there is increasing pressure from the Biden administration to standardize a living wage across the workplace, the harsh reality remains that increasingly human labor has been replaced by automation. Where workers once earned a living, much that revenue has been shifted to the companies that own the labor-replacing automated machinery, an amplifier of income inequality. People make less, company machines make more. In a world where AI is the dominating economic transitional force, it is moving us from an information age into a time where economics are increasingly a product of thinking machines replacing people. This is a big deal, one that has put a downward pressure on wages for all but the most skilled and educated workers, who are feeling that automation pressure at a lower, but rising, level. Workers who can implement artificial intelligence systems are experiencing soaring wages, however. More structured government jobs also have a more solidified earnings base.
Rick Newman, writing for the May 24th Yahoo/Finance, presents the underlying numbers: “The latest data shows there are 8.1 million jobs available in the U.S. economy, the most since at least 2000. But hiring is weak and the unemployment rate is going up, not down. Many Republicans claim federal unemployment benefits of $300 per week, on top of what states pay, are making it more lucrative for unemployed Americans to collect benefits than rejoin the labor force. At least 22 states—all with Republican governors—are ending the federal jobless benefit early.
“But many open jobs appear to pay less than they did before the coronavirus pandemic exploded a year ago, suggesting many workers are really refusing to take lousy jobs. A recent study by Bank of America finds that the average pay of open jobs is lower than before the pandemic in 12 of 15 sectors. Pay is up in 2 sectors and flat in 1. The data comes from research firm Revelio Labs, which uses algorithms to scrape data from job-posting sites such as Monster and Indeed.
“On average, the pay for posted jobs is 5% lower than the average for 2019, which Bank of America uses as a baseline for pre-pandemic wages. The biggest drop is in retail trade, where the average pay of posted jobs is 21% lower. The next biggest pay drop was in professional and business services, down 14%, followed by a 12% drop in transportation. Pay for open jobs in information, which includes many tech positions, rose by a startling 38%.” But as anyone going to a grocery store, seeking to buy or rent a home or tried to gas up their car has discovered, costs are skyrocketing…
“The drop in offered pay for open jobs suggests there’s a lot more slack in the labor force than other data does: Businesses can’t be that desperate for workers if they’re offering lower pay than they were 18 months ago. Some big employers, such as Amazon, Costco, McDonald’s and Chipotle, have said recently they’re raising pay to draw needed workers. But if offered pay is below pre-pandemic levels in most industries, that means many smaller companies are not following suit.
“To some extent, big pay declines are intuitive. The retail sector suffered badly as many businesses had to limit operations or shut down last year, so it would make sense that pay would be depressed as the industry tries to bounce back. Retail businesses that suffered losses may also be paying less by necessity, or seeing if they can shave labor costs while they get back on their feet…
“The biggest drop in jobs was in arts and entertainment, with a 25% decline, while pay for new jobs has fallen 9%. The hotel and restaurant industries have seen a 16% drop in employment, and a 4% drop in pay for advertised jobs. Cause and effect can be tricky to ascertain, but part of the reason for depressed pay in these fields is probably a glut of workers.”
It is strange that the political party associated with “understanding business” – Republicans – are mired in economic theories that actually push against economic growth. “Supply side” (aka “trickle down”) economics remains the most sacred axiom in the GOP economic platform, even though that theory has NEVER EVER worked in the real world. A dramatic misunderstanding of the change in the composition and operation of the job market in technologically advancing times has led to what can only be viewed as a GOP assumption that American workers are spoiled and lazy. It does not help when the misapplication of words – like “creeping socialism” – are used to support the fallacy of completely disproven economic theories that they are simply unwilling to relinquish.
Fatal also is the failure to misunderstand that the damage of unwarranted tax cuts, deferred maintenance on critical infrastructure, expansion of military expenditures are economy killers, while investing in infrastructure, education, research and human capital actually are economic drivers with a hard dollar return on invested capital. That the purported “business representatives” on Capitol Hill no longer understand how an economy works, are more consumed with inane conspiracy theories and false economic assumptions, is a toxic reality. They believe that they can fool enough Americans with these false pledges and take back the Congress in 2022, fostering their gridlock mentality. They could be right, but that would be exceptionally unfortunate for a nation struggling to recover from the pandemic and unprecedented disunity.
I’m Peter Dekom, and the dissociation of facts from political platforms may prove to be our ultimate undoing.
Posts
No comments:
Post a Comment