From Rick Bookstaber:
In a recent post I discussed the
potential for long-term, structural unemployment, the possibility
that some of what we are seeing in the unemployment picture will not be
resolved by an economic upturn. The focus of the post was on how
robots and computers are increasingly replacing labor as a factor of
production. One question, though, is why should we see this strongly manifest
in the labor market now. The move toward robotics might be
inexorable, but it also is gradual. So certainly it should not be the source of sky
rocketing unemployment in the wake of the 2008 crisis. This gets to
other effects of the crisis on the labor market.
The Great Labor Reset
The most opportune time to do a
structural home renovation is after a fire has gutted the house. The
crisis of 2008 did the same for the labor market. As much as anything
else, the 2008 crisis provided the cover for making changes in the
labor market that would have been fraught with institutional
push-back in a normal environment. There are institutional barriers
to outsourcing labor, reducing benefits and wages, and moving full
time workers to part time, even if a purely neoclassical analysis
suggests these changes can be absorbed by the supply and demand
equations of the labor market. So some of what we have seen in terms
of shifts in the labor market is not simply a reduction in hiring,
but a change in the labor-employer contract that would not have sat
well outside of the fog of war coming from the 2008 crisis.
Labor Laundering
One change in the labor market is what
I call labor laundering. Many employers need to protect good will
with their customers and cannot be seen as bullying workers. So they
outsource their labor pool to contractors, most commonly operating in
other countries, but also domestically through what are basically
next-generation temp agencies. For example, warehouse
packing is the sweatshop job of our time. The article “I
Was a Warehouse Slave”
gives a day-in-the-life view of these workers, effectively paid for
piece-work, without benefits, with one-day notice job security, in
physically grueling conditions. More than 20 percent of the American
workforce is now “contingent” – temporary workers, as well as
contractors and independent consultants....MORE
