Job Prospects in Our Changing Economy

Wondering how to improve job prospects for so many of the unemployed, Mr. William Galston makes the typical errors of many about job creation in this Wall Street Journal article. To begin, banks and lending institutions have two functions in relation to job creation. The first, consumer lending, even mortgage lending, is only a method of allowing people to have now what they would otherwise have to save for. Thus personal consumption and the increased production necessary to provide for that consumption is enhanced by consumer lending. But in the long run, which we might have reached by now, consumer lending will stop increasing production, as we reach and stay at some level of consumption the lending leads to.

The second function, lending for industrial or commercial ventures, is where capital is reallocated to new possibilities, which should create new job opportunities for all levels of workers. This is true in the short run, but in the longer run, improvements in productivity will reduce the number of workers needed to satisfy the demands of production. What Mr. Galston ignores is that these decreases in jobs must be made up in new jobs, but since industry doesn’t need the workers in production, they must, of necessity, find jobs in services. These jobs have been increasing, and some pay better than others. An entry level restaurant worker will not make as much as a nurse, teacher or truck driver. Nor will those jobs pay as much as lawyers or accountants or, my favorite, government employment. Unfortunately, we have been adding too many government employees and, even though they are paid well, their jobs actually impede the rest of the economy in being able to provide the new jobs people need and want.

Politicians, being concerned about voters and thus, indirectly, the people, say they are concerned about jobs, then having government as their only tool, use it as the answer. So they create more government jobs, or give away benefits, in their mind a replacement for jobs, but neither action helps the general population. Two things are needed for a stronger economy, one offering broader opportunity for people in a heavily industrialized, very productive economy.

The first is less government interference in the market. Government employees, needing to justify their positions, make rules and enforce regulations whose net effect is slow the ability of the people to adjust to new economic circumstances. Paperwork which must be sent to and approved by a government bureaucrat, does nothing to help the economy or the person filling out the form, and is only necessary for the bureaucrat to justify their employment, to say ‘look how much paperwork I must process’. Benefits meant to replace jobs, while needed in some cases, are not a replacement for jobs. So the government focus on more and varied benefits, while based on kindheartedness, are not the answers for people in need of jobs.

The second thing which is needed is a general belief that service jobs should be good paying jobs. For the last three decades or more, a college education has been advocated as the only way to get ahead. Studies are done showing how much the differential is between the earnings of someone with a college education and those without. Perhaps if one is going to be a nurse or teacher or accountant, but not if one is going to be a HVAC mechanic or a truck driver. In my opinion, garbage men are among the most important people in our society, but people look down on them and don’t expect they should be paid well. Why not?! Let us do without them for two weeks. We could do without lawyers for two years and few would notice the difference, but garbage men? And what of mechanics and lawn services and other service providers? How well would you do without a butcher or someone to pick the produce which you enjoy fresh at the grocery store without thinking of the labor which went into getting it there. Yet people complain if the price of services are too high. No doubt, some of these whiners are the same people who constantly harp that teachers should be paid more.

It will not be long before the low pay in the service industries causes problems for the rest of us. At that point pay will go up as the demand for their services becomes greater. Already this is happening in the transportation and construction industry. Jobs are left unfilled and because of that, work, which is available, is not being done. Sooner or later a factory will shut down temporarily, or fresh fruit will not be at the Kroger, because there wasn’t a truck driver to deliver it, and a new building will sit waiting on a crew to put in the concrete. Yet the offices will be filled with people with college degrees pushing computer buttons and shuffling papers. There is no lack of paperwork being done in Washington, DC and environs, and the people are well paid to do it. Yet that paperwork shuffling inhibits the economy and makes it more and more difficult for the rest of us to create new jobs, or keep them.