Are we really reaching full employment?

The other day, one of my nieces remarked that she’d seen a “really old film”. Was it a silent movie? No. Was it black and white? Not that either. What betrayed its age was a background detail: the presence of a non-flat screen TV.

It’s really not that long ago that the cathode ray tube was a part of everyday life – the vital component in the heavy, box-like TV screens and computer monitors sat in our living rooms and offices.

As far back as the early 1980s, I remember people speculating that flat screens were “five-to-ten years away”. The joke was that they always would be. But then, suddenly, they arrived – displacing CRT screens just about everywhere.

The thing is that just prior to this revolution, the old technology was never more ubiquitous – thanks to multiple TVs in many homes and computerisation in the workplace.

That’s a pattern worth bearing in mind as we contemplate the puzzling phenomenon of (nearly) full employment in the contemporary capitalist economy. It may be that our robot replacements are lurking, flat screen style, just around the corner. In five-to-ten years we human beings may find ourselves joining those cathode ray tubes on the rubbish heap of history.

But, so far, there’s little sign it. That’s puzzling because even if technologies like advanced robotics and AI aren’t quite in full swing, other potentially job-destroying factors – such as globalisation – certainly are. Furthermore, we’re only ten years on from the calamity of the global financial crisis – and still propping up a low-growth economy with piles of debt, QE and ultra-low interest rates.

And yet, as a special report in The Economist describes, most western economies are generating jobs like there’s no tomorrow:

“Across the OECD a jobs bonanza is under way. In the past five years the group has added 43m jobs. The unemployment rate—the number of people looking for work as a share of the total labour force—is at its lowest in decades… In 2018, the employment rate among people of working age was the highest ever in Britain, Canada, Germany, Australia and 22 other OECD countries.”

Furthermore, the jobs boom doesn’t seem to be leaving many people behind:

“The boom is broad based. Unemployment among unskilled workers and the young is tumbling, as is long-term joblessness.”

The UK’s ‘jobs-led recovery’ is especially interesting. Prior to 2010, private sector job creation was massively skewed to the richer half of the country, but, in this decade, the North-South divide has narrowed dramatically.

Nor can the jobs-boom be explained away as a sub-optimal shift to temporary, part-time and self employment. The big picture is much more solid than that. And as for wage levels, those appear to be on the rise again after a long period of stagnation.

Even if our long-term future is one of ‘fully automated luxury communism’, the present is one of fully employed luxury capitalism.

But to some critics, the ‘luxury’ part of that formula would be better described as ‘unnecessary’:

“David Graeber, an anthropologist, goes further. In ‘Bullshit Jobs’, a book published last year which has become akin to a holy tract for millennial socialists, he claims that a big chunk of modern employment is pointless and soul-sucking. ‘Huge swathes of people, in Europe and North America in particular, spend their entire working lives performing tasks they secretly believe do not really need to be performed,’ he argues.”

Of course, “bullshit” in this context is a subjective term. Deplorably, there may be some unkind souls who’d apply it to Professor Graeber’s profession!

Isn’t it better to see our surplus-to-requirements economy as a sign of progress? One can argue about how best to achieve and distribute frivolity-for-all, but as long as we don’t wreck the planet in the process, what’s wrong with a little luxury – or, indeed, a lot?

Of course, if luxury for some is only made available through the drudgery of others, then that is a problem. The kind of demoralising service-sector jobs described by writers such as James Bloodworth are clearly nothing to celebrate. And yet, as the anonymous authors of The Economist article point out, governments across the Western world are placing stronger requirements upon employers to look after their employees – for instance, through training opportunities, childcare provision, parental leave, health and safety measures and minimum wage levels.

Furthermore, and contrary to the prophecies of the free market fundamentalists, pro-worker regulation has not killed off job-creation – quite the opposite it would seem.

The authors offer various explanations for this jobs miracle – the most interesting of which is that technology has revolutionised the process of recruitment:

“Better tech improves the ‘matching’ of employers with potential employees. Not long ago those hiring put an advert in a local newspaper or spread the word by mouth. Now employers can shoot from the hip, posting vacancies on a slew of jobs websites. In the ten years to 2016 the cost of filling a vacancy fell by 80% in real terms.”

I suspect that we’ve hugely underestimated the significance of the progress made in solving this most difficult of coordination problems.

The perception that the digital age hasn’t made more of an impact on productivity levels is one of the great mysteries of contemporary economics. But perhaps we’ve been looking in the wrong place. Or, rather, we’ve been misled by the key statistics.

The standard measure of productivity is specifically one of labour productivity – i.e. GDP divided by the total number of hours worked. But what about hours not worked because people are unemployed – earning nothing and producing nothing? This zero productivity is excluded from the standard measure, making a high unemployment economy look much more productive than it actually is.

If the internet has enabled employers to employ more people and workers to find jobs more easily then it will show up in the statistics as a hit to productivity – because more of the least skilled workers will be included. That is perverse, because while these newly-included individuals may be less productive than other workers, they’re obviously more productive than the uncounted unemployed.

One day the robots may finally arrive with our P45s in their steely claws. But until then we need a better measure of productivity to show the job-creating effects of technology as a plus not a minus.

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