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Guest Post: Peak Employment
Submitted by GoJam of The Needle Blog,
Peak Employment
What is ‘Peak Employment’ ?
Peak employment is the theory that due to factors such as efficiency, driven by technological innovation, and demand, developed economies may have already passed beyond the highest point of employment and that from this point onwards employment will continue to fall and unemployment inexorably rise causing increased social tension. There is plenty of evidence to support this theory but before looking at the situation now it would be wise to look first at a similar period of dramatic technological change two hundred years ago, and try and understand why the Luddites, who opposed industrial progess were wrong and take it as a small warning against making similar mistakes.
It is almost exactly two hundred years since the Luddites were founded (1811) as a reaction to the Industrial Revolution sweeping Great Britain. Today they are thought of simply as technophobes but their concerns were genuine, even if their methods were shortsighted and ultimately futile. The Luddites were originally highly skilled, and relatively high paid, textile workers who were being supplanted by low skill and low wage labour who were needed to operate the new mechanized looms. Their solution was to smash up the looms.
The Industrial Revolution initiated profound social change in Great Britain. There was a huge migration from the countryside to the new industrial centres, creating a surplus of labour and driving wages downwards in these growing cities, and the new technology, being more efficient needed far less labour to produce far greater product.
The Luddites certainly saw that their standard of living was threatened but they might have been forgiven if they thought they foresaw ‘Peak Employment’. Afterall, if fewer workers were needed to produce the same quantity of product unemployment must inevitably rise, right ?
They were, as we all know, wrong. There were two main reasons why, the first was that Great Britain had a huge captive market in it’s growing empire, the second was that the Industrial revolution needed huge ‘support’ industries, like mining and steel production, and spawned newer technologies which created new markets and drove important infrastructure development, like the railways and shipping.
But if the Industrial Revolution did not precipitate ‘Peak Employment’ could it be said to have stoked social unrest ?
“The concept of “Skill Biased Technological Change” (SBTC) posits that technology contributes to the de-skilling of routine, manual tasks.A changing world and new technologies are usually to blame for the world’s worries.”
Was the invention of the printing press responsible for the Reformation and the religious unrest that followed ? Was the invention of the combustion engine, mechanisation, and the production line responsible for the early 20th century conflicts ? Or did atomic power shape the late 20th century conflicts ? These questions I’ll leave to you, as I think I’m already wandering away from the subject of this article, which is ‘Peak Employment’.
So, it’s time to now look at the most recent technological innovations which are shaping our world today, the internet and computerisation. I’m going to look at the UK but I’m sure the findings can be extrapolated for all developed western economies.
Clark’s Sector Model (1950)
Industry, and thus employment, can be divided in to 5 broad sectors.
“Primary: This involves the extraction of resources directly from the Earth, this includes farming, mining and logging. They do not process the products at all. They send it off to factories to make a profit.
Secondary: This group is involved in the processing products from primary industries. This includes all factories—those that refine metals, produce furniture, or pack farm products such as meat.
Tertiary: This group is involved in the provision of services. They include teachers, managers and other service providers.
Quaternary: This group is involved in the research of science and technology. They include scientists.
Quinary: Some consider there to be a branch of the quaternary sector called the quinary sector, which includes the highest levels of decision making in a society or economy. This sector would include the top executives or officials in such fields as government, science, universities, nonprofit, healthcare, culture, and the media.”
As you can see Clark’s Sector Model has been shown to be broadly correct in the 60 years since it was developed. Primary and Secondary sectors have decreased, Tertiary and Quaternary sectors have increased, the sub- branch, Quinary sector which Clark’s Sector Model does not address has also increased.
There is an alternative way of looking at sectors of employment and that is to look at those that are used to evaluate GDP. They are:
- Agriculture, hunting, forestry, and fishing
- Construction
- Production industries, Electricity, gas and water supply, Manufacturing, Mining and quarrying.
- Service industries, Creative industries, Education, health and social work, Financial and business services, Hotels and restaurants, Other social and personal services, Public administration and defence, Real estate and renting activities, Tourism, Transport, storage and communication, Wholesale and retail trade.
The first employment sector has become more efficient due to mechanisation but, for now, it is now kept relatively stable thanks to EU subsidy.
The second employment sector is slumping but has potential for growth but you only have to look at Spain and Ireland to see examples of how an artificially stimulated construction sector can result in a bubble.
The third employment sector is more complicated. The utlities are private monopolies, infrastructure improvements could create employment but it’s difficult to see this happening without state intervention of some sort. Manufacturing has been moving east and shows no sign of returning any time soon. Mining has reduced significantly over the last 30 years, Quarrying remains controversial and is resisted locally.
The fourth employment sector, the service sector, is by far the largest making up 73% of UK GDP and it is perhaps hit the hardest by new technologies, specifically Retail and Financial business services where jobs are being regularly shed. And what is left in that sector ?
A large bulk of it is the Public Sector, most of the rest is take-aways, cinemas, and theme parks. OK, that is a simplification but these sectors, excepting overseas tourist related, just circulate money around the economy. And that is the only employment sector which remains relatively high, for now, but it is plainly unsustainable.
Employment is falling, unemployment is rising but hidden behind those headlines is the fact that part time Employment is rising.
Less people have full time jobs, more people have part time jobs, which means that the hours of work are being spread increasingly more thinly across the population.
Some might argue that it is only because of the economic slump that all of these things are happening and that it is only temporary.
But I think there is enough evidence to suggest that this is a long term trend that has just been disguised by the boom of the last ten years and is only now really becoming apparent.
I fear that we have already passed Peak Employment and the downward trend will continue, perhaps disguised by increasingly more part time employment.
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Also - we are not really Capitalist anymore. Capitalism requires freedom. At some point along the scale of increasing regulations, you have to stop pretending that you are free.
No, YOU VOLUNTARILY SUBSCRIBE TO THIS SYSTEM. NO ONE SAYS YOU HAVE TO LIVE WHERE YOU DO. (my wife has lived in four different countries)
DEFINE "FREEDOM!" People push all these buzz words all the time, yet they don't bother to state what they mean when they use them.
CapitalISM is an ISM, it's a THEORY. THEORIES, if they aren't based in science and physics, lose their virginity when they're mixed in the social arena.
If we were packed at the density of 1 person per square meter do you think we could have "freedom?"
If you think that regulations are bad then you don't believe in ANY rules. You should not, then, object to me shooting you.
This is reality. Deal with it. None of this is going to last. Your wish of less "regulations" WILL arrive. BUT... be prepared to dodge bullets...
The real problem is not greater productivity requiring fewer workers but government programs that interfere in the free market by redistribution schemes that allow large segments of the population to not have any incentive to become producers. Millions living on the dole is a recipe for cultural destruction. Just because a society can provide basic necessities for them does not mean that it should do so. These people can not take pride in themselves but turn to externalities that lead to violence and crime.
Absolutely.
You can produce more than you consume.
Therefore the most people produce, the more the capacity to consume.
The incentive should be removed, people would move to production and more consumption will be allowed.
US citizen economics.
Chicom AI HQ to agent AnAnonymous, Chicom AI HQ to AnAnonymous:
you have been recalled due to an obvious and severe malfunction in your mental flux capacitor. Please report for reprogramming immediately.
Ah, wonderful. US citizenism at work.
AnAnonymous, in a moment of self glorification, said:
It is clear that enjoyment of yourself being the leader of US citizenism, but now do you are the standing on pedestal and screeching of vainglory? Shamingful heapment upon you muchly.
Ah, the wonderful and incessantly anti-American trolling of our reigning bigot of autistic and retarded, denialistic time-traveling algebraic coconut hobnobbery!
Chinese Citizenism at work.
There's no such thing as peak employment.
We're hitting or have hit peak 38-40 hour week employment.
The key is to reduce the working week.
The fastest way to do that is to mandate when overtime pay kicks in.
Mandate and enforce overtime to start after 35 hours per week at 150% of hourly earnings whether you're on a salary or wage and you'll suddenly (6-12 months) see US unemployment vanish.
Add a zero, subtract a zero... IT DOESN'T MATTER because there are not enough resources to maintain the growth meme! If people have more money, assuming that costs magically go down, this will only make matters WORSE.
Sorry, but there are no "solutions" to the problem of growth, other than to learn how to live with less (and eventually, if the wind-down doesn't happen quick enough, and assuming that our total consumption decreases, it'll be a LOT less).
Farmer societies worked 24/7. Industrialization brought the standard 40 hour week. We should be seeing another decrease now.
Dishonest money is the problem causing a distortion of reality. Anything defined in terms of dishonest money can only be partly true at best or completely wrong at worst.
"Farmer societies worked 24/7"
Where did you come up with this? No time to sleep?
"Industrialization brought the standard 40 hour week."
No, activists (usually in the form of socialists [just presenting the facts]) fought and died to force the industrialists to limit the number of hours they could work a person: they also fought for child labor laws.
That's because socialists tend to temper their selfishness with a bit of also selfish big-picture egalitarianism.
There's no point working 80 hour weeks if you have to support unemployed people who break into your house and steal your stuff.
Egalitarianism through selfishness.
I want you to be employed so that you dont turn into a feral and rob me.
I can either pay you to be my security gaurd, or I can cut my own hours so that you might have a place at the table.
The selfish person would (usually) rather work fewer hours rather than pay for security.
That's the big picture. If I work too hard, you're going to fuck me one way or another.
So I have socialist tendencies through pure self interest.
In the year 2500, the world population is approaching half a trillion, mostly fair-skinned English-speaking Mormons living in high-rise megacities built of steel, glass, and plastic (no wood). Between these cities, every square foot of every continent is cultivated in tubers irrigated with purified seawater. High temperatures and CO2 levels make these tubers grow fast, and genetic engineering gives their flesh the taste of fruit, grain, nuts, fish, steak, and every other food imaginable. Except for pigs with human-transplantable organs, large land animals exist only in zoos. There are no landfills or cemeteries; all waste is automatically separated into its chemical elements and recycled. Energy is nuclear and abundant, and the occasional meltdown is cleaned up quickly.
Another source of power is 21st-century environmentalists spinning in their graves.
What about employment? That's impossible to predict even four years in advance, the time needed to get a bachelor's degree. Employment exists only in the brief time between (a) discovering a new way to "add value" and (b) figuring out how to add this value automatically.
Are people actually giving MDB the time of day. A Troll is as a troll does.
I've been pounding this drum for a long time now. Sad thing is, you havent seen anything yet. It can and will get worse. We've barely tapped into the potential efficiencies across industries and governments. Thats why Ive been a big proponent of limiting immigration. Its an economic issue not political. Why import the problems of overpopulation in other countries here.