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The Jobs Crisis Goes Global

Three global capitalist research institutes recently released reports documenting a growing ‘global jobs crisis’. The World Bank, the OECD, and the International Labor Organization (ILO) all came to the same conclusion.  The Group of 20 nations’ employment ministers thereafter meeting in Australia issued a joint statement on the three institutes’ conclusion that “the world’s largest economies are failing to create enough jobs and too many of those that are being produced are of a low quality to generate a meaningful boost to global growth” (The Financial Times,  September 10, 2014). As the World Bank’s senior director for jobs put it, “there is little doubt there is a global jobs crisis”.

All three reports identify converging trends across all the advanced economies (AEs) of Europe, North America, and Japan.  Not only is total unemployment rising long term, but the percentage of youth employment and the chronically long term jobless are also growing. So too are part time and temp jobs rising sharply as a percent of the labor force in the AEs.

Dimensions of the Jobs Crisis Today

The percent of long term jobless to total unemployment has risen from around one-fifth before the 2008 crash, to about one third today.  Since the long term jobless tend to be concentrated among those older than 50 years, the AE economies’ job markets therefore appears to be deteriorating at ‘both ends’ of their labor force spectrum, the young and the older. Youth unemployment is rising to record high levels everywhere in the AEs. At the same time, those in the middle, 24 to 55 years old, are finding that jobs that are available are ’low quality’ part time, temporary, and contract ‘contingent’ jobs that provide far less pay, few benefits, broad exclusion from protective labor laws, and little security of continued employment.

In the USA in particular, a still fourth major jobs problem is also taking place, a harbinger perhaps for the other AEs as well: about 8 million Americans have completely ‘dropped out’ of the US labor force since 2007. They aren’t even counted among the unemployed and underemployed in the USA, given the erroneous way the USA defines and calculates employment and unemployment.

Rising youth unemployment, rising long term duration of unemployed, rising proportion of contingent labor for those even able to find employment, and millions altogether giving up on formal work means something is clearly wrong in AE labor markets and economies, is worsening, and increasingly appears structural and chronic—i.e. the ‘new normal’ as they now say, where the ‘new normal’ means, in effect, ‘we (capitalist policy makers) can’t or won’t do anything about it, so just learn to live with it’.

It is important to note that the global jobs crisis now documented by the above three global reports is simultaneously a global wage crisis.

Capitalist 21st Century Wage Strategy

When one looks at today’s deterioration of wages in the AEs from a class perspective, and not just in the limited way governments report wages, the picture is indeed dire.  Millions more jobless today mean zero wages for those millions that should be factored into the total wage decline data but isn’t reflected in government figures. Only wage trends for those still with jobs is reported, and even then only for those with full time jobs. Millions more partly employed, working in part time, temp and contract jobs receive lower pay, which further reduces total wages for the working classes. Millions more dropping out of the formal workforce, with some perhaps working in the ‘shadow economy’ at reduced and occasional pay, means still lower total wages for the class.  Reducing retirement and healthcare benefits, and/or raising the cost for those benefits for those still employed, constitutes yet another form of ‘wage reduction’. Then there’s the growing trend of outright wage theft that is a growing problem, especially in service sector jobs in the USA where employers increasingly just cheat workers out of part of their wages by payroll accounting tricks.  Then there are policies that allow inflation to undermine the purchasing power of minimum wage laws. Minimum wage law adjustments become more infrequent and less generous.  But all that is still not the entire story. Allowing workers’ pension plans to collapse altogether, into which they diverted part of their wages for years as a contribution to their pensions, means all those wage contributions are wiped out. That represents a form of ‘deferred’ wage reduction.   And it doesn’t stop there either. With less wages and income, workers are forced to turn to more credit and debt in order to finance their basic expenses.  That too leads to a wage decline, as rising debt and interest payments lay claim in the present to workers ‘future’ wages not yet paid. Banks and credit card companies thus steal wages that haven’t even been paid yet by overloading workers with debt and credit, for which workers have little alternative given their lack of other forms of wage reduction .

21st century global capital has thus evolved multiple ways to reduce wages today.  But the biggest contribution to wage-earnings reduction for working households, the biggest impact, derives from the chronic rise in the millions of unemployed, the growing percentage of ‘contingent’ (part time, temp, contract) and ‘low quality’ jobs, and the millions forced into the ‘shadow economy’ of intermittent, occasional work, still lower paid, or even worse.

The Terrible Triad: Jobs, Wages & Inequality

The global jobs crisis also leads, according to the three ILO, OECD and World Bank reports, to a corresponding decline in disposable income and consumer spending, which contributes significantly to rising income inequality trends. So the jobs crisis means not only wage reduction but the rise of inter-class income inequality as well.

In the USA alone, median working class family incomes have fallen in real terms (adjusted for inflation) by more than 8%. That includes a 4% drop during the so-called ‘recovery’ since 2009. As corporate profits surged to historic record levels after 2009, and the wealthiest 1% saw their share of total incomes rise to 22%, more than ever before in US history, working class families’ incomes continued to deteriorate in the recovery.  And that deterioration is not limited to the post 2007 recession period. It was going on since 2000, and even before that to the early 1980s.

The triple problems of jobs destruction, wage decline, and income inequality have become so severe in the AEs in general, not just the USA, that the global capitalist press, and capitalists themselves, are showing signs lately of growing concern about the trends and problem. Given that, now that it is ‘safe’ to discuss the triple crisis, mainstream economists have jumped on the ‘income inequality’ bandwagon and have begun writing feverishly about it as well.

But while identifying the data indicating income inequality, economists have little to say so far as to its fundamental causes—and even less to say about the ‘jobs crisis’ as the crux of the problem triad.  They identify the magnitude of the problem, but provide little explanation of the fundamental, originating causes—especially the fundamental ‘class basis’ of the problem in its inability to create enough decent paying jobs. Instead they limit themselves to calls for token tax reform, when the tax system is not the cause but just an enabler of the income transfers from the corporations to their owners, stock & bond holders, and senior managers; or suggest ways to reduce senior corporate executives’ excess compensation; or ways to tweak the minimum wage which, while benefiting the lowest paid a little, still leaves out the jobs and wage decline crisis for hundreds of millions of remaining workers.

It is not surprising that mainstream AE economists of either wing have not been successful at proposing theoretical solutions to the current global economy’s inability to generate a sustained recovery on a general scale. Nor is it surprising that capitalist politicians and policy makers in governments and central banks have been unable to do so in fact. Neither economists nor politicians have addressed, or are about to address, the fundamental problem of the global jobs crisis today raised in the three reports: the crisis of the decline in the quantity and quality of jobs.

Jack Rasmus is the author of ‘Epic Recession: Prelude to Global Depression’ (2010) and ‘Obama’s Economy: Recovery for the Few’(2012), by Pluto Press, London, UK, and the forthcoming ‘Transitions to Global Depression’(2015). He hosts the Alternative Visions radio show on the Progressive Radio Network, and serves as the ‘Shadow’ Federal Reserve Chair, in the Green Shadow Cabinet. His website is www.kyklosproductions.com. He blogs at jackrasmus.com, and tweets at @drjackrasmus.

Source: teleSUR English

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Jack Rasmus is author of the recently published book, ‘Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression’, Clarity Press, August 2017. He blogs at jackrasmus.com and his twitter handle is @drjackrasmus. His website is http://kyklosproductions.com.

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