A favorite conservative attack on President Obama is that his policies — and even his personality — amount to an assault on American businesses. “President Obama himself is the most anti-business president in my lifetime. With rhetoric not befitting a president he has attacked oil companies, banks, airplane users, Wall Street and anyone who makes money,” wrote Gary Shapiro, president and CEO of the Consumer Electronics Association.
However, according to the latest data, President Obama has been very good for America’s biggest businesses. Last year, in fact, the Fortune 500 made a record $824 billion, topping the previous record set before the Great Recession:
Watch this video and begin to realize that things need to change.
“There is a mismatch between what science knows and what business does.”
This is not to badmouth companies (other than to say that CEOs get paid too much). Their goal is to maximize profits. It they can do that without hiring they will. And the data show they are.
Giving companies more tax breaks will not cause them to hire more people. They will just have greater earnings. The GOP path will not create new jobs. It will just increase the bottom line.
But creating jobs with financial stimulus will not make them sustainable. Remove the stimulus and business will revert back to hiring few people. The Democratic path will not create longterm employment unless the stimulus continues.
In previous times, increasing earnings resulted in the hiring of more people. Thus both the Democratic approach (add money to the economy to increase earnings that way) or the Republican approach (cutting taxes or regulations) could work.
But not this time. The Bush Tax cuts had little effect on job creation. And the stimulus may have kept things from getting worse but do not seem to be providing the long lasting benefit they have in the past.
Neither approach works like it did in the past.
It may really be different this time. What worked in the 20th century may not work in the 21st.
I expect the reason is that technological solutions are simply replacing the need for more people as companies expand profits. Moore’s law is now making an indelible impact on the job market. Technology does the jobs of people much too well.
In my own field, a robot can do 100 times the work of technicians. So what happens to those 100 technicians that had been paid a pretty good wage?
Technology is not only driving down the price to do things. It is driving down the cost of labor to the point where many people may simply never find a job that pays a living wage.
We have seen this break between productivity and wages since the 1980s.
If wages had followed the productivity curve, as they have ever since the 1800s, then the median salary would be over $90,000. That increased productivity is what is driving company’s earnings, so they are making almost exactly what we would expect based on the productivity curve. It is just labor that is not.
How are they able to maintain increasing productivity but without having to pay workers more or hire more workers (the 20th century approach)? Technology is partly the answer.
Here are the employment numbers for every recession since 1940:
And here are the ones just since 1980 separately:
The time taken to return to previous employment levels has been increasing substantially since 1980. Prior to 1980, everything was back to normal in a year or two. The unemployment was caused by cyclical trends, not a fundamental restructuring of the economy.
At this point in the respective recoveries, employment following the 1981 recession was up 11% from its bottom, the 1990 was up 8%, the 2001 was up 3%. he current recovery is up only 2% from its bottom.
And these numbers do not include the young people entering the job market each month. If these are included, the time to a similar unemployment level may take another 10 years.
Every recession since 1980 has taken longer for employment to reach previous levels.
The recent data suggest that the efforts by both parties will have little effect on increasing long term jobs substantially. The GOP can only make the rich richer and the Democrats can only create short-term jobs.
The reason previous fixes are not working is that things are fundamentally different this time.
There are some data to indicate that these changes are structural, not cyclical. Technology has replaced many jobs so dramatically throughout society that there really are fewer opportunities for employment, even while the economy expands.
Extrapolate this and at some point everything will fail because there are not enough people with enough money to buy anything being produced by technology.
I think that some radical changes might be needed to prevent that fall.
One may be to create legislation to shorten the work week. A single worker can produce in 11 hours what it took them 40 hours to do in 1950. Why not get paid the same amount as they would have in 1950 for 11 hours of work instead of all the money going to company’s bottom line? In fact, a worker today gets done in 23 hours what it took a worker in 1975 to work 40? Why not pay them the same then for 23 hours work?
The shortening of the work week, something last done over 70 years ago, would help the employment situation and help transfer some of the earnings to the people actually working.
It would also reduce much of the stress of those who are working much longer hours than they should.
The Jetsons had it correct in some ways. George earned enough for an upper middle class lifestyle by pushing a button a couple of times a week. We may want to do something similar.
At least for those things based purely on mechanical skills.
Or perhaps people should be paid by what they actually do, rather than the hours they take to do it. Perhaps better motivators than just hours or money. Autonomy, mastery and performance may be the models for 21st century organizations.
We may need a whole new way of valuing work.
Incentivized rewards work great for things with defined processes, especially 21st century ones. But those are exactly the sorts of jobs more easily replaced by technology.
For 21st century tasks, money may not be the best motivator.
To survive the 21st century, we will have to make some radical changes in employment and business practices. If not, things will not be very much fun.