You will remember that employers squealed they were having trouble finding workers, so Republican states ended extra EI benefits.
The end result? No more workers, but businesses were harmed by reduced spending.
Whoops?
One of the many fundamental “errors” in neoliberal thinking is that you want workers and recipients of government aid to not have a lot of money. After all, they’re a cost.
But every business’s employee is a bunch of other businesses’ customer, and every aid recipient is also a customer. Smart businessmen, or ones who have learned from experience (a.k.a., those who remembered the Great Depression) know this, and want high wages. It’s not a competitive disadvantage if everyone has high wages. Likewise, generous government benefits are good for business.
So smart businessmen want a high minimum wage without exceptions, and generous benefits.
One of the few real insights of modern economics is “marginal” thinking. For decision making, it doesn’t matter what the average cost of something is; what matters is the cost of the next unit — the next widget you make or the next employee. This means that supply matters a lot. For a job for which 100 people are applying, every open position puts employers in the cat seat.
If there are three, a lot less so. If there is one job-seeker per three open slots, well, you’re going to have to raise wages, both to compete and to increase the pool. I recently read an article where a homecare business was complaining that there was one person per ten open positions, but they also noted they paid a couple dollars less an hour than retail and menial labor jobs.
Anyway, even if the Covid death toll seems large, it’s the effect on marginal workers that matters. Add to that that many workers who kept their jobs are not going back to offices and the geography of jobs has also changed. People who run businesses in fancy, high-priced suburbs without any real transit, can’t expect nearly as many cheap workers, because they can’t afford to live in that suburb and traveling to it is hard. You create enclaves that price out blue collar and service workers, you need to go to them, and not vice-versa.
In the larger picture, an ongoing pandemic that just keeps killing and killing, and is killing the poor and minorities in much higher numbers, is naturally going to lead to a tighter job market. While the rich have gotten a lot richer because of Covid, the long-term affect is going to be higher wages.
There will be attempts to avoid this, as with making homelessness illegal, mass-evicting people, then throwing them in prison and using prison labor, but even that has its limits, when there are just less people.
This is a lesson Europe learned during the Black Plague (the people who survived were treated much better than those who lived before), but Europe didn’t fuck up the Black plague deliberately because it was making rich people richer.
Our wealthy are fundamentally stupid in fairly awe-inspiring ways, because they’ve spent the last 40 years destroying the very environment they will need — social, economic, and physical — for their own future prosperity, and indeed, survival. They think their money will protect them from the wasteland they’re creating, but that’s a bad bet.
Oh, I guess the older ones weren’t stupid, but if you’re filthy rich and not at least 60, I wouldn’t be fucking up Covid, destroying the social fabric of the West by encouraging right-wing authoritarianism, destroying democratic legitimacy, and crashing biodiversity while screwing up the climate.
Might come back to bite you on the ass. If you actually care about your kids (obviously you hate everyone else’s kids), you might find all this foolish, too, if you weren’t someone whose only talent is making money by hurting other people.
Anyway, one of the few silver linings coming out of this will be increased wages, unless the rich and their politicians can move hugely to forced labor. Understand that forced labor is the play: That’s why they’re cutting benefits, to force people back to work. It just didn’t work. That’s why they’re criminalizing homelessness, and there will be more policies along this line.
You’re a unit of production, expected to work for poverty wages, and they want to keep it that way even during a plague, even if they have to force poor people to keep working and send your kids back to schools w/out masks or proper ventilation.
This is who the rich are. Who we are, as a group, is people who accept this or even support it.
Meanwhile, employers of low-wage workers should be asking governments to increase the minimum wage significantly ($24/hour in the US, minimum, with automatic increases based on cost of living), not to help workers, but to help themselves. They could ask for transition subsidies for a couple years, and most of them would be fine, and making more money.
But we’ve trained our employers to be idiots, concentrating only the bottom line and not the top line.
(My writing helps pay my rent and buys me food. So please consider subscribing or donating if you like my writing.)
Ian Welsh
No comments related to the vaccine controversy, please. This blog has seen enough of that, everyone who reads comments understands the arguments for each side.
different clue
If I had a real house and yard, I would let my young adult children live with me, if I had any young adult children. I would not ask/expect them to “get a job” unless/until they could get a shinola job at shinola wages. I would do that for at least the next few years.
That would be my little part in shrinking the worker pool in order to torture employers into raising wages and improving conditions.
If several million homeowners with young adult children did the same thing, they could have a mass additive effect on labor shortage creation and forced job-and-pay improvement.
What would I ask my live-in young-adult children to help do around the house and yard? Help me work on the intensive food-gardens and micro-orchards ( if enough space for such). And energy-conservation lifestyling in-around the house. The more food/ harvested-roofwater/ house-made warmth and coolth, etc. we could make at home, the less money we would need for buying these things.
In the meantime, what of those things actually within my reach am I actually doing?
When I buy things and services, I buy shinola things and services ( when there are any) at a shinola price in the hope that the thing or service provider is paying a shinola wage. You can’t support always the high wage always and expect to be able to pay always the low price always.
Ché Pasa
You would think this is self-evident. Well, at one time it was. The plutocracy benefited enormously during that oh so brief period when most workers were paid well, ordinary standards of living were rising, and it didn’t cost an arm and a leg and firstborn for a largely worthless education needed for jobs that “weren’t hiring.”
But then they saw that the working classes had too much money and time on their hands.
More than they were “worth.” The neolib answer? Take it away. And make sure the plebs never had those benefits again.
I don’t blame it solely on Republicans. Dems are — with few exceptions — just as neolib and their R peers. What has been shocking the system, outside the plague, is the realization that Biden, an arch neolib from the old days, isn’t playing by the rules any more.
His way, now, is even more transformational than the rice-bowl-breaker who preceded him. Hmmm.
Hugh
Covid has made large scale changes in our society, but we remain in denial about them. The mantra is always getting back to normal and business as usual. But we are never going to get back to those old normals, get used to that, and with kleptocratic elites those old normals are not worth going back to. Add in climate change, and we really should be thinking about the kind of society it will demand of us. What happens when most of the Southwest and even the Northwest burns and there is no water? What happens when the South and the Gulf and Atlantic coasts flood every year? What will a zero emissions US look like, how big a population can we afford and sustain, what about the rest of the world?
Plague Species
Yeah, the abortion legislation is ultimately about forced labor too. It’s meant to produce slaves with no options.
An Epidemic Of Non-Essentialism
Z
The corruption of the financial markets are the primary reason why the people who have a large say in wages are more interested in their company’s stock price than consumers being able to buy their product. There are all sorts of metrics used to boost stock prices that are lent credibility through Wall Street besides sales and profits and the CEOs make their big money through stock options. Wall Street cares more about busting down labor costs than they do actual profits so they incentivize this system and they got their loyal money printers at the Federal Reserve to provide the carrots for it.
We used to have Henry Ford who was quoted as saying he wanted to pay his workers enough so that they could buy his cars. Now we got Elon Musk who makes most of his money through selling dreams, cryptocurrencies, and stock.
Z
different clue
Also, if you spend your shoes and clothes money getting the shoes and clothes you already have repaired over and over and over again, you are supporting a tiny-scale micro-businessperson thingfixer who might well be making the equivalent of better-than-minimum wage. And the thingfixer might well be enjoying herm’s self-employed micro-business work more than if he/she were an employee somewhere.
And if/when you must buy shoes and/or clothes, buy shinola shoes/clothes at a shinola price whose workers were hopefully paid a shinola wage. If an aggregated mass of millions of people take that approach, it might have a general-drift pressure effect against shit goods, shit services and shit jobs at shit wages all at once.
Hugh
So cutting unemployment benefits going into Labor Day? Probably just a coincidence, right?
someofparts
lifted from comments at NC
“Over the years I’ve done lots of video work for a variety of major fashion brands. While I’m just the lowly video person I’m often in the room with top execs from the companies and get to overhear lots of chatter about the business. … Public facing lies of success (even to their staff) while behind the scenes omissions [admissions] of impending doom for the company while they cash out.
Watched for over a decade as one major brand was used like an ATM by their share holders and turned from a status brand name into a product you would only use scrub floors with. Just recently GBG filed for bankruptcy and is liquidating brands like Frye (boots), Aquatalia (shoes), Ely & Walker (western wear), 7 Jeans (denim), and tons more once notable brands that have been turned to husks. Last year it was Lord & Taylor that collapsed after years of hemorrhaging money and staff.
Have watched as loyal underlings get shafted while the top brass cash out and make millions.”
NL
Respectfully disagree. The so-called main economy does not matter to wealth creation. If profits are there – good, and if not – it is not a huge deal to Wall St. Conventional profit making is not and – honestly – has never really been the main maker of wealth. A major spigot of wealthy is debt. Debt is created hand over fist by government borrowing, pension fund borrowing, corporate borrowing, rising housing prices and through many other mechanisms. And when debt becomes unpayable, the FED steps in and purchases it at the face value — no loss, no responsibility, free money. Record rises in government and other debt are matched by record rises in personal wealth. Loans are made, the government, corporations and municipalities record debt on their accounting books, and loan money quickly moves through the banking system and settles in accounts of private individuals, mostly the wealthiest. At the same time, velocity of money is near zero. Velocity of money is how quickly money changes hands because of selling and buying. Zero velocity means that the wealthiest just keep their money in banks and bank-like financial institutions without using them to buy anything (except may be a mega house here and there) and that the wealthiest have so much money stashed that the rest of people’s money are a tiny amount in comparison and what the rest of us do with our money does not affect money velocity.
American money is private money. This means that privately owned bank create money when they make loans. The government has to borrow money from private people and banks before spending money. Some celebrate this, because they believe that private individuals will discipline the government and therefore the public in spending. Left on their own – the thinking goes – the public will spend more money than it collects in taxes and cause inflation and currency collapse. Private banks can simply refuse to buy government debt and give the government money. The government will then either have to raise taxes or cease operation. Refusal by the private banks to lend may also cause deflation and economic collapse (because money may become too few to facilitate economic exchange). No amount of voting can change this. The voters do not matter for money creation or where the money goes and never did. Of course, private money has its drawbacks, namely that private individuals make private money primarily for themselves rather than for the public or a public good (if there is such a thing). They have absolute power over money. The alternative would be the government issuing money for its own needs and public money as a utility. Switching from private to public money would mean the end of America as we know it.
Ending unemployment benefits and ending evictions and foreclosure moratoriums serve purely disciplinary purposes. Like they say ‘idle hands are the devil’s workshop’. People can’t be left sitting home doing nothing for years – they lose any employment skills they ever had, crime will go up and all sorts of other unhealthy behaviors will show up. The on-going discord and division based on all sorts of real and imagined differences occupies people’s minds and keeps them going in the economic circle without much pondering about their economic reality and thus – counterintuitively – social and political discord and chaos maintain stability of the economy and society (if you admit to existence of a society).
NL
One more thing – seems that Ian and some commenters here are trying to find a feed-back mechanism that would punish the ruling classes and the wealthiest for the perceived abuse of the public and the working classes. My view now is that there is no such mechanism in existence. In fact, artificially-created and real political and social discord, division and chaos, disregard of one another’s dignity and plain abuse and exploitation are exactly what keeps our economy and society stable. This has been this way from the beginning. Some say that the neo-liberal economics is something new in the US, no — it has always been here at the core. This seems unbelievable, but evidence for this is strong. I am not sure the wealthiest are to blame, everyone has a portion of blame. When we begin changing the foundation of our economy (ie., private money, markets, etc) and stop pushing one another to the limit to perform economically, then I will start worrying about our country, until then, please carry on. What we are what we are. This is our way of life, and it has been this way from the beginning.
different clue
The real economy ( and the real ecology under it and all around it) are the only places where people find or create wealth. The real economy makes things and does things ( goods and services). The moneyconomy just emits or issues more money or debt measured-as-money. The moneyconomy and its operators are not creating any wealth at all.
The Fair Deal- New Deal- Square Deal reforms and initiatives permitted people in their society to create a non-neoliberal economy and society for a while. It was durable enough that the anti-New Deal neoliberals and cryptoconfederates had to spend several decades overtly and covertly plotting and conspiring to destroy it by repealing most of its laws and subverting most of its rules and regs and its rule-regging power.
Repealing the anti-Fair Deal/ New Deal/ Square Deal laws and decontanimating all the neolib and crypto confed moles and embeds out of the “Administrative State” might allow for restoring the FND Deals. Maybe.
In the meantime, if millions of happy normies can become unhappy campers, and figure out how to pursue some of their own biophysiconomic survival activities outside the realm of ” ever more emitted money and credit”, they may be able to create small zones of defensive survival for themselves.
That might be an arena of economic combat, if thought of that way.
Hugh
We exist for the economy instead of it existing for us. There is a feedback mechanism: the guillotine.
Purple Library Guy
The problem is that while everything the article says is true, up to now the very rich have had no reason to care. Yes, “business” does better in a high wage environment, because people with money buy more stuff. But the very rich don’t actually care how well “business” is doing. The postwar-to-70s time was golden age for both average people and economic growth, but it wasn’t much good for the hyperrich because those average people had much more political power and insisted on the hyperrich being effectively taxed.
The hyperrich don’t care how much general prosperity or even economic growth there is–they just play people who care about that on TV. If the overall pie is smaller, but THEY GET MOST OF IT, they like that better than if the overall pie is bigger, but their share is restricted. Neoliberalism was never about increased prosperity or economic growth–if it had been, they would have stopped doing it after ten years when it became crystal clear that it was seriously reducing economic growth. They didn’t because while the collective action problem Mr. Welsh describes is quite real, they don’t give a damn.
NL
When banks and some such financial people hear about ‘real’ economy and how only ‘real’ economy creates wealth, they just chuckle, get in their expensive vehicle that people in the ‘real’ economy can’t afford and go to that expensive place where most can’t get in. Sure, sure, real economy creates things, but the financial economy regulates the real economy (and a regulatory institution, it does have value and facilitates thing-creation) and takes a large amount of those things, and nothing the real economy can do about it. Live with it.
The New Deal was never intended to repudiate our economy based on private money, private property, wealth inequality and economic exploitation of one another. FED and the private money were set up in 1913 and left largely untouched through the New Deal. The economy was modified to the extent that the labor was restored from its pitiful condition through some protection and safety net (birth rates went up from the late 1930s, thus replenishing the pool of labor), the workers were also made to consume and aspire for more consumption and the ruling wealthiest classes ceased conspicuous consumption, stepped back and began implementing policy more from behind by social messaging and some such.
‘economic combat’ — People are too busy arguing about Repb vs Dem and some such, divisions are many. Who has time? Get over yourself…
different clue
@NL,
Thank you for your interest in my comment. I am always happy to hear from you. Please let me know if you have any other concerns.
different clue
Here’s something interesting . . . . world leaders ( and some Brazilians) concerned that Bolsonaro is pre-stoking and hoping to set off a Trump-Insurrection style insurrection in Brazil which Bolsonaro hopes will actually succeed.
https://www.businessinsider.com/brazil-bolsonaro-backing-capitol-riot-inspired-coup-former-leaders-warn-2021-9
If he succeeds, lets see which governments rush to recognize his coupsurrection government. And which ones try helping it stay in power from “behind the scenes”.
bruce wilder
FED and the private money were set up in 1913 and left largely untouched through the New Deal.
Not true: some of the most radical and succesful reforms added up to serious financial repression. (Financing WWII with forced savings by working and middle class people and various measures to cap corporate profit in war production reinforced those institutional reforms with widely dispersed capital and low private debt.)
NL
–>some of the most radical and succesful reforms added up to serious financial repression. Financing WWII … reinforced those institutional reforms with widely dispersed capital and low private debt.
Not true, there was nothing radical about financial ‘reforms’ of the New Deal, nothing. There were debt destruction of the Great Depression and then war economy, there was no ‘reinforcement of institutional reforms’, and the so-called reforms were defensive. The reforms added some of what we now call transparency to stock trading by establishing SEC and insulated a vanilla bank customer from money loss owing to speculation and poor bank management on the part of the bank. The latter was achieved through FDIC and the so-called separation of commercial and investment banking. SEC and FDIC are still here, and Glass-Steagall was repealed. Maybe repeal of Glass-Steagall contributed to 2008, may be, I am not super convinced. In any event, vanilla bank customers did not lose money in 2008, so the so-called financial reforms of the New Deal worked as intended. New Deal did not touch private money, in fact, it created FOMC and the modern FED in the same Glass-Steagall and follow-up laws.
Private debt growth resumed immediately in 1945! at a somewhat faster rate than before the Great Depression from 1865 to 1915. It was almost a perfect V-shaped recovery in private debt as a % of GDP. And debt growth continued at roughly the same pace until 2008. That is from 1945 to 2008.
We need to stop romanticizing the New Deal. There is not a single moment in our history when we question private money, private property, inequality or pushing each other economically.
Joan
@Hugh, those are questions that need to be asked!
@different clue, (what is shinola?) I think your plan is a great idea. While the adult children are helping around the family farm, they can also teach themselves skills that will be useful as supply chains break down. Home remedy emergency medicine in case industrial medicine is unavailable, for one. Or more mundane things, such as sewing, carpentry, fixing shoes, food preserves/canning, anything that inspires them and could be useful to a local economy. And the benefit of these things is that they can be done out of the home, and for barter or cash under the table.
I am currently teaching myself one such skill, and it has been incredibly inspiring. Some nights I’m so excited about it, I can’t sleep.
On the topic of the labor market, unfortunately I think the big companies will drive empty semis south of the border, load them up with people, and drive back into the States. Here’s hoping I’m wrong, and better working conditions and unionization can be gained.
Anytime an American says “We need the Mexicans; American citizens won’t do these jobs.” I swiftly refute it. I hear this from both Republicans and Democrats. It’s class-based rather than party-based.
Trinity
They don’t care about the “real” economy, as noted. They make their money from stock buybacks and government handouts. They are the only ones allowed to receive handouts. If poor people are also getting handouts, what does this say about them? This is all about ego, not policy.
These are people who are so incredibly broken, they require massive amounts of external proof of their worth, because they are unable to manufacture any sense of self worth internally, and it has to come from somewhere. The weird behavior we observe is what narcissists (or worse) do: they lie, cheat, steal, or destroy anything that stands between themselves and their ability to feel superiority. They, unlike normal people, operate in the real world as a false self, and that false self (they are superior, they are special, they are perfect) must be maintained at any cost, and the costs are usually very high. Just ask Trump’s children what that looks like. Except we don’t need to ask them, we see what this looks like every single day.
“Our wealthy are fundamentally stupid in fairly awe-inspiring ways.”
They aren’t stupid. Quite the opposite, they are insanely smart, but lack empathy, and any shred of conscience. You could almost say they lack a “self”. When we make a mistake, we say “oops!” And then try to do better. They don’t make mistakes, ever. (Oh, they so make mistakes. They just don’t acknowledge them, or they find a scapegoat to take the blame, or they kill anyone who knows).
They don’t live in the real world we inhabit, they live in one that is manufactured specifically to hide their brokenness, their flaws, their insanity, their humanity! The lesson in this at the national scale was (and still is) Trump. He cannot accept he lost, because that suggests he is less than worthy, that he is flawed, less than perfect. He is literally unable to accept this. And the headlines illustrate this same situation with others in other situations every single day. They must “win” in all situations. If they don’t “win”, they will destroy the game board and start all over until they do win.
It’s really, really important to understand what they are and exactly why they do what they do, and that some of them are extremely dangerous. This should be clear. Because our stupid culture reveres broken and malicious people, they are the deciders, and their collective decisions are imposing global havoc on the rest of us. As noted, it has always been this way, going back 1500 years or more.
We are (some of us are) somewhat removed from the direct danger they represent at the moment, but the majority are not so lucky. The danger they represent (on a small scale) is exactly why “ice floes” were important to small groups of people where one bad decision or one selfish person’s actions could mean starvation and death for the entire tribe. For us, the bad decisions based in insatiable egotism have been made, continue to be made on the same basis, and starvation and death (for many living things) is already well underway. Any pivot to a focus on the “greater good” is the only thing that will save humanity, and that includes a massive shift in what (and who) is valued.
different clue
@Joan,
I have come to realize that I date myself every time I refer to shinola. When I was young, everybody knew shinola and it was part of the language.
So . . . technically, Shinola was a famous-in-its-day brand of shoe polish. In those days everybody wore leather shoes. I know that it came in black and brown. Maybe other colors too. Here is a link to Shinola.
https://en.wikipedia.org/wiki/Shinola
The brown shoe polish was a lovely shade of pure fecal brown. The exact same color as standard average fecal material. This gave rise to the saying . . . .” He doesn’t know shit from shinola.”
I guess a word-concept isn’t that useful if it is so datedly obsolete that it needs an explanation. But it is so deeply burned into my core-brain that I use it anyway. For example, I sometimes speak of the difference between GMO Corporate shitbeef versus artisanal pasture-and-range grassfed shinola beef.
Shit jobs ( or McShit jobs) at shit pay versus shinola jobs at shinola pay.
I like ” shit/shinola” so much that I will keep using it and explaining where it came from is a small price for me to pay.
different clue
@Trinity,
I remember a little humor-bit from TV that kind-of illustrates what you are describing about the upper and especially the over class.
I used to watch Gilligan’s Island. You suspended your disbelief and enjoyed the episodes and didn’t ask “why” . So in one episode, the castaways had to piece back together the pieces of a big slab of rock with mystical writing on it. I don’t remember why. But anyway, somewhere in the process, when they have the pieces and are trying to jigsaw puzzle them back together, Mr. Howell says ” put that piece right over there.” It doesn’t fit and Gilligan says ” You’re wrong, Mr. Howell. It doesn’t fit.”
And Mr. Howell says: ” Wrong!? A Howell is NEVer wrong. Break off a piece and MAKE it fit.”
I refer to that as the Howell Doctrine. A Howell is never wrong. Break off a piece and make it fit.
different clue
@Joan,
It sounds like you are living a Better Reality. Are there still things you might want to add from time to time at the Surviving Bad Times weekly thread?
I suspect 99 out of 100 homedwelling families won’t be living on a real farm, no matter how small. They will be living in a suburb or a nearburb or an exurb. They will have a house and a yard of whatever size. So perhaps the young adult children living at home to withhold their labor from the McShit labor market can do and learn about super-intensive gardening and micro-orcharding for a suburban doomstead setting.
And they might be able to try speculative things like . . . . developing super-deep the soil on each side of the driveway so that when rain falls on the driveway and runs to the edges, there is a 3-or-so many-feet-deep layers of super-soil to soak in all the water. And then maybe food-bearing trees of whatever kind can be planted in the driveway-side super-soil. And they can be trained to grow into a high tunnel-arch form over the driveway from each side, maybe meeting in the middle overhead. That way catching and using the sunlight otherwise just wasted heating up the driveway.
Joan
@different clue, Thanks for the explanation of Shinola! Now that you mention it, I think I’ve heard that phrase before.
Yes! I haven’t been spending as much time online, so I haven’t been commenting here as much as I usually do, but I will post again over at the Preparing for Bad Times Ahead thread this weekend. Right now I’m scrambling to get shipments and source locally the supplies I need to work on this project through the winter in case there’s another shut down (hope not).
The burb conundrum is an interesting one. If I lived in a burb and didn’t have an option to move, I’d be troubleshooting how to convert it as close to a family farm as possible, and I’d look long and hard at what I’d do if I couldn’t afford car transportation in the future. Obviously most burb homes are very large, and the more feasible thing would be to have a small cottage and tiny driveway with more land to garden. That’s no easy fix, though. At least the extra rooms in the house can hold more people and potentially workshops.
Aaron
This story, though unverified, bears repeating”
“CIO President Walter Reuther was being shown through the Ford Motor plant in Cleveland recently.
A company official proudly pointed to some new automatically controlled machines and asked Reuther: “How are you going to collect union dues from these guys?”
Reuther replied: “How are you going to get them to buy Fords?””
Trinity
Different Clue, I have heard (and used) the sh!t/shinola phrase before, but never ever knew where it came from. Thanks for this. Now I can explain it to the younger crowd.
And Aaron, what a wonderful quote. Can I borrow that?