Thu Jul 17th, 2008 at 06:07:26 AM EST
Dave Pollard's blog "How to Save the World" is always a real mix of a vast number of topics.
A recent post caught my eye (and is well worth reading in full, as it touches on many of the questions that ET mulls over about the future) but the following excerpt hit right at something I've wondered about a lot:
What are the jobs in a "post-industrial" or "financialised" or "Anglo-Disease" economy?
And what is the relationship between employment in large firms and small ones?
Diary rescue by afew
How to Save the World
What If You Had 30 Minutes to Teach a Graduating Class?
Here are some of the data I would show them:
- Large corporations have, for years, been eliminating more jobs than they have created, and this trend is accelerating. The data supporting this (for the US) are shown
above.below. [I moved it to make the quote more readable - Metatone.] Just to keep even with growth in the labour force, the US needs to create 150,000 net new jobs per month, and Canada needs to create 20,000.
- Virtually all the new jobs that will be created in the next decade (all by small to medium sized employers) will be low-paying clerical, administrative, and retail sales and service jobs. The data supporting this (from the US Department of Labor) are shown below.
Since 1970, the top 5% of income earners have more than doubled their real incomes and net worth. For the other 95%, real income and net worth have decreased. If home prices and stock prices dropped a mere 30%, the majority of the population of affluent nations would have a negative net worth. We have more assets than ever before, but far more debts, and average spending is now 4% more than average earnings. This is despite the fact that, during this period, most families grew from one-income to two-income families.
I find the first graph very interesting, because this move from employment in large firms to employment in SMEs can be presented in a number of ways:
- The neo-liberal rhetoric posits it as a great increase in freedom, economic dynamism and goodness and apple pie. Said rhetoric also posits that the change is an inevitability and just "a fact of the natural world."
- Some on the left have noted that the decline of employment in large firms is also a decline of employment in firms who have the infrastructure to provide benefits on a "social pooling" model.
- What's obsessing me today is that this move of employment from large firms to smaller ones is very often an outsourcing of risk:
For example, a current trend in pharmaceutical firms is to close down research labs and move to a model where small "entrepreneurial" firms (often spun out of university labs) do the risky research and then the large corporation buys them up and take the product to market. It's cheaper in the long run to only buy successful small firms than run your own R&D capacity.
This of course has lots of hidden implications for the kind of R&D that is done, the relationship with the public purse and various other issues. However, I'd like to concentrate on what it means for the group of scientists who may previously have worked in the R&D labs.
Where previously they were likely to have a long career at a middle class salary. The ones who had the luck and skill to come up with good products (say 10% of them) would not gain much by it, whilst the corporation might earn vast amounts from it. The other 90% would do all the running down dead ends for their middle class career.
Now, the process is for people to take their ideas into smaller companies, often with some ownership stake. They tend to draw a decent entry level salary at first, just like they would have in the lab.
10% have some success, their companies get bought out and they are set for life, much richer than they would ever have been in a corporate lab.
But the other 90%... well, they draw that decent salary for a few years and then the company goes bankrupt. And they have to start again from scratch. Probably part of the company was secured on their assets. The cost of failure falls directly upon them and for majority of them they will lose their house, maybe there will be a divorce, etc. etc.
So what I see is an arrangement that allows corporations to proceed, earning more money than before, pushing the risk on to individuals. And these are not individuals to weep for, they are not poor, they are well educated, they are by no means anywhere near being "the downtrodden of society." And yet 45% of them will not manage to attain the financial stability that we've built our notions of a "normal life" upon. Another 35% will manage, but it's likely that the continual cycle of company failure and restart will impose greater costs on their lives than a more stable career.
And yet of course, all focus is always upon the 10% who strike it rich in personal terms...