Planning for the Post-Employment Economy

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Eric Gar­land did a great job of sum­ma­riz­ing an aston­ish­ing cleav­age that is defin­ing more and more of the econ­o­my. But there’s more to this phe­nom­e­non, espe­cial­ly as it plays out over time. And there might even be an upside. First, to sum­ma­rize Eric’s post (which you should read in full):

The theme in all of these arti­cles is the epi­dem­ic of adult-age peo­ple in Amer­i­ca work­ing for amounts of mon­ey that can­not pay the bills, a behav­ior they are expect­ed to con­tin­ue well into their late twen­ties and ear­ly thir­ties, depend­ing on the indus­try…

And that’s why the offi­cial stance of these bro­ken, obso­lete insti­tu­tions is so fun­ny. They are look­ing at America’s young peo­ple and hon­est­ly ask­ing with a straight face — hey, what do you need mon­ey for, any­way? YOU SHOULD BE FULFILLED JUST TO BE WORKING HERE! YOURE LUCKY TO HAVE A CHANCE

To rephrase his terms, the biggest cleav­age in Amer­i­can life today isn’t nec­es­sary between class­es, though that is grow­ing and seri­ous. Rather, it is between old and young. And this has very seri­ous impli­ca­tions.

Accord­ing to Pew, between 1984 and 2009, the wealth of those above 65 years increased by over 40%. Mean­while, those under 35 saw their wealth decrease by 68%. The only pos­si­ble way to inter­pret this is the old in Amer­i­ca are enrich­ing them­selves at the expense of their chil­dren. More­over, as Eric notes, old peo­ple expect young peo­ple to be grate­ful for this dis­grace­ful state of affairs and work for below-pover­ty wages (often, for no wages at all).

So before we look at the future impli­ca­tions of this new eco­nom­ic set up, let’s briefly sum­ma­rize what young peo­ple face enter­ing the econ­o­my:

  • Young peo­ple grad­u­ate with an aver­age of $27,000 in loan debt.
  • If you go to busi­ness school, that MBA will cost an aver­age of $102,355. If a stu­dent is espe­cial­ly lucky, they’ll get away with only an extra $30,000 in debt (though that’s on the low end of things: most social sci­ence degrees costs upwards of $80,000).
  • The aver­age start­ing salary for entry-lev­el work­ers is around $44,000. But just in case that sounds great, keep in mind that 53% of those who grad­u­ate are either job­less or under­em­ployed.

So young peo­ple are tak­ing on ever greater amounts of debt for ever shrink­ing job prospects. And still, old peo­ple want the young to feel grate­ful for the oppor­tu­ni­ties they have.

This state of affairs has sev­er­al long term impli­ca­tions. Whether they’re wor­ry­ing or not depends on how old you are: if you’ll still be around to expe­ri­ence it, it’s a night­mare. If you’re near­ing retire­ment, you prob­a­bly don’t care (at least not enough to do any­thing about it).

For starters, the fun­da­men­tal social com­pact that has defined the nor­mal Amer­i­can expe­ri­ence has changed. It is still chang­ing but let’s just admit it’s fun­da­men­tal­ly dif­fer­ent that it was even twen­ty years ago. Home own­er­ship is an increas­ing­ly dis­tant dream. Young peo­ple will earn less than their par­ents. Social mobil­i­ty is a joke. The econ­o­my is de-cou­pled: GDP and labor pro­duc­tiv­i­ty are soar­ing, but house­hold wages are stag­nant and unem­ploy­ment is flat.

In a recent sto­ry, George Pack­er sum­ma­rized what this means for nor­mal peo­ple.

The good news: between 2005 and 2012, Unit­ed Tech­nolo­gies saw its prof­its increase by thir­ty-five per cent.

The bad news: between 2005 and 2012, Unit­ed Tech­nolo­gies hired a net total of zero work­ers. Last month, four days after the price of its shares passed a record high of nine­ty dol­lars, the com­pa­ny announced that it would elim­i­nate three thou­sand employ­ees, after hav­ing let go four thou­sand in 2012.

So the implic­it rules by which the Amer­i­can econ­o­my once worked are gone now. And we don’t yet know what’s replac­ing it. For one thing, it seems increas­ing­ly clear that jobs are just not com­ing back. Tech­no­log­i­cal inno­va­tion and effi­cien­cies are rend­ing most tra­di­tion­al jobs obso­lete. Even cre­ative jobs will be auto­mat­ed as com­put­ers get bet­ter and bet­ter at doing rou­tine tasks like writ­ing, design, and even tele­vi­sion pro­duc­tion.

In the long run, this is great: effi­cien­cy is a long term good. But the age of hyper-effi­cien­cy is going to require incred­i­bly painful shifts in our soci­ety and econ­o­my to cope.

For one, what will the post-employ­ment econ­o­my mean for peo­ple my age (ear­ly 30s) and younger? I have no idea. If machines gen­er­ate most of the val­ue in the econ­o­my, I can’t say how that val­ue will be dis­trib­uted or how we will ben­e­fit from it. Gene Rod­den­ber­ry laid out an over­ly hap­py view of what would mean in Star Trek (though clear­ly it has tons of issues); the ear­ly Bol­she­vik eco­nom­ic exper­i­ments sug­gest this could be a dark, hor­ri­fy­ing future as well.

Anoth­er pos­si­bil­i­ty is that humans will fig­ure out new ways to gen­er­ate val­ue apart from the tra­di­tion­al means of pro­duc­tion with which we’re famil­iar. The only thing we know for sure is that it won’t look like the increas­ing­ly obso­lete indus­tri­al econ­o­my. And in the mean­time, as old peo­ple des­per­ate­ly hold on to the old engine of eco­nom­ic pro­duc­tion, younger peo­ple are left out in the cold.

In time, our soci­ety will right itself. But it can do that one of two ways: embrac­ing the cur­rent change, or by embrac­ing total col­lapse. A per­ma­nent under­class of job­less youth is inher­ent­ly desta­bi­liz­ing. The path we make will depend on what the old peo­ple run­ning the econ­o­my and gov­ern­ment choose: whether they decide to adapt to what’s com­ing or self­ish­ly hold on to their accu­mu­lat­ing wealth at the cost of every­one (and every­thing) else.

I hope they’ll choose the for­mer. But I fear they’re choos­ing the lat­ter.

joshua.foust
Joshua Foust used to be a foreign policy maven. Now he helps organizations communicate strategically and build audiences.

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