The Monkey Wrench

For the past 100 years, our understanding of economic cycles was built around a particular view of the working life: education leads to jobs; jobs have built-in mobility structures to allow promotion, advancement and skill enhancement; and, retirement is supported by a scheme in which everyone pays into social security programmes via their paycheck. Every so often, a recessionary moment might cast a few (million) out of the labour force, where a host of insurance programmes will keep the rent paid and food on the table. And, soon enough, an uptick in business will bring these castaways back in as full-time employed persons who can begin the process anew.

This model is not only becoming quaint, but within the next 10 years, it may be a forgotten relic. The full-time US employee whose paycheck supported this model has left the room. Notice that Obama’s advisors are saying little about the lack of job creation accompanying the putative turnaround. A few off-the-cuff statements from aides have posited that employers are being “cautious” in hiring. But, this is an inadequate answer, and more importantly, it is using 20th century indicators to understand 21st century economic conditions.

Laid-off and unemployed American workers are, in fact, coming back to the world of work, but not as full-time employees of a single firm. Subcontracting, freelancing, hiring for short-term projects, and part-time flexible employment schemes are becoming de rigueur. Even if technology continues to eliminate jobs, we will still need more humans than machines. However, we may not need people around all the time. Paying a full-time living wage, plus the accompanying taxes for health, unemployment and disability insurance, is simply an untenable proposition.

There are several consequences. First, the US system of social insurance will never yield the kinds of benefits that once defined its ‘safety net’. It will not be possible for Obama or future presidents to keep expanding coverage and extending unemployment benefits. Budgets are shrinking, the dollar is losing value, and the invoice from the Chinese will take away funds otherwise available for domestic workers. The workforce should develop survival strategies, whether this means increasing work hours, eliminating luxuries, constricting consumption, or forgoing education for children. Who can predict the needs of American workers who will likely go without healthcare for several decades of their working lives? What societal unrest might follow, no one knows.

We should also put aside conventional measures of fluctuations. Today, with part-time work on the rise and workers combining temporary jobs and multiple income streams, it is difficult to gauge labour market trends. Add to this the fact that individuals might receive “unemployment benefits” while (illegally) hiding their income and you start giving up in despair. Corporations need these measures for decision-making. But so too are government officials at city, state, and federal levels handicapped when they cannot estimate patterns of revenues, expenditures, and needs. What will be the demand made on public housing? Hospitals? Mental healthcare facilities?

Don’t look to the current administration to publicise these fundamental changes. With billions of dollars in economic subsidies having been committed, nothing less than a simple statement of economic progress will be tolerated by our president—unless, of course, his government needs to justify spending a few more billions, in which case they will say the economy is growing complicated and additional funds are necessary. Either way, I doubt you will hear the voice of the American worker in these debates. They are too busy working multiple jobs to grant an interview.

(The author is professor of sociology at Columbia University and author of Gang Leader For a Day. He is also a guest blogger at http://freakonomics.blogs.nytimes.com)