Our Long-Term Underemployment Problem

by Nathan Arbor

“As unemployed Americans find part-time, temporary, and seasonal work, the official unemployment rate could decline. However, this does not necessarily mean more Americans are working at their desired capacity.”  (Gallup, April 1, 2010)

Reports of job statistics have been so discouraging for the last several months that paying serious attention to the underemployment problem in the US seems almost academic. The August 6 numbers from the Bureau of Labor Statistics show adult unemployment holding steady between 9% and 15%, depending on the demographics, and recent news about strength in the balance sheets of the manufacturing sector, in the midst of a serious buyer’s market for workers, suggests that manufacturers have continued to use technology to reduce their long-term need for such workers.

As everyone looks desperately for what might bring these unemployment numbers down significantly — the fantasy in many, if not most, US cities being that somehow “small business” hiring can solve the problem — we need to recall the mid-90s, when the prospect of decreased long-term demand for full-time workers was raised by economists and technologists alike. Read Bill Clinton’s campaign speeches from 1992, gently explaining Robert Reich’s ideas about the future of wage work in a “global economy”; or read about the future of work and leisure in popular books written in the 90s by computer scientists like Hans Moravec, Nicholas Negroponte, and Ray Kurzweil; and you can find concerns that remain with us today, and will continue to remain even if we have some sort of “robust” economic recovery.

At the very least, the visions from the 90s suggested that the future would bring a need for a flexible American worker who was ready to cope with the unknown and peculiar combination of employment, underemployment, and unemployment that would likely characterize his working life. One of the reasons for Clinton’s immediate push for health-care reform and a massive job (re)training program — and watching his passionate and sensible State of the Union address from 1993 is especially heartbreaking these days — was an awareness that the changing world of work required a more stable system for assuring the health and capabilities of American workers. With these concerns in mind, the underemployment numbers reported by Gallup last week are especially sobering — Underemployment was steady in July at over 18%, and at a remarkable 28.4% for 18-29 year-olds — because it’s not clear that this has only or even mostly to do with the Financial Crisis of 2007-8.

Is there a realistic remedy for long-term underemployment in the US in the early decades of the 21st century, even with a significant economic recovery in the next 5 years? As technology continues to advance, and the phrase “global economy” has become a redundancy, we have to consider the possibility that the answer is: No. As technologists have pointed out for decades, this really could be a very good thing … if we learn to change the expectations we have about work, consumption, and the role of government! And if the answer is: Yes? Well, it will almost certainly involve significant changes in these very same expectations, and this is admittedly grim news for anyone who has observed the American resistance to changing course in the last 30-40 years.

In Judith Stein’s excellent new economic history of the 1970s, Pivotal Decade (Yale, 2010), one finds a brief mention of the origin of self-service gas stations. These began to spread in the early 1970s, around the time of the first oil crisis of that decade, and by 1978 “Americans … pumped 40 percent of the gasoline they used.” (Stein, 208). Although Stein makes little of this particular fact, it seems a sort of American epiphany: Given the choice between conserving or voluntarily cutting back on consumption, and having their neighbors be unemployed, Americans have historically and overwhelmingly chosen the latter. Variations on this same theme can be observed in the tone of the popular objections to health-care reform, immigration policy reform, and of course taxation; and, unfortunately, without the sort of leadership that can convince Americans to examine and change even this small feature of their character, it’s very difficult to imagine that a sustained 15-20% underemployment rate will lead to anything other than extreme income inequality and the social outcomes that extreme income equality always brings.

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