Where Have All the Jobs Gone, Ma?

Something odd has been happening to the world of work. The direction it’s heading in isn’t good

As I have been working, I have seen jobs slowly being stripped out of the economy by the forces of capitalism and globalisation.

In the 1970s, unskilled manual jobs were being stripped out of the economy, largely by technical progress. Containerisation of shipping, automation of routine work and the rudimentary computers began to do that.

In the 1980s, skilled manual jobs were stripped out of the economy, partly as a result of Thatcher’s policies of fostering financial services and deprioritising manufacturing, and partly as a result of the twisted wreckage the unions left behind in the 1970s.

In the 1990s, we saw the stripping out of clerical jobs as office automation replaced these. The rise of financial services and IT seemed to increase the requirement for middle-ranking office jobs. The massive IT surge ahead of the millennium bug sowed the seeds for the next wave of job losses.

The 2000s saw business process outsourcing eating away at mid-level and IT jobs, precisely the ones that we have been training all our new undergraduates for. Employers now bleat that they need immigration to be able to keep the economy going. They are right in one way. The reason they need immigration is because they no longer want to train British graduates.

My company used to have a graduate training program. It now finds it far cheaper to hire people from India in six-month visa than to take time training graduates. What we have is a tragedy of the commons. There is an oversupply of people in the world, and business is using wage arbitrage to drive their labour costs down.

There isn’t anything wrong with immigration per se. In the 1950s, there was a general shortage of labour – read books describing life in 1950s such as Colin Wilson’s autobiography and jobs were easy to come by, drop and switch. This easy jobs market was great for creativity as people could lead more flexible lives – this article makes out that

the revolution in art, culture, tolerance, and opportunity that happened in the 1960s occurred because bright people could drop out.

and it’s hard to argue with that. However, somebody had to man the buses and keep the wheels of the city running, and into this prolific jobs market Britain recruited immigrants because it needed the extra hands.

However, in a recession, amplifying youth unemployment by allowing companies to substitute them with temporary hires and socialise the costs such as healthcare sounds bizarre to me.

This is but one small part of the problem, however. Up to the 1980s, it was quite possible to run a family on one person’s income. That isn’t so easy now, largely as a result of the high cost of housing in the UK. This can’t so easily be laid on the door of capitalism, more to social changes. House prices will always rise to the level where they become marginally affordable to the typical household, because supply is limited on a small island and the only countervailing force on price is the ability to pay. The fact that it takes two average salaries to be able to afford a house makes those with dependents into particularly fearful wage slaves, and contributes to the anomie of modern working life.

This RSA video on The Crises of Capitalism asks some interesting questions about how we got here and why it is that we put up with this carry-on.

Postscript 6 Aug 2010 – the FT has this article dissecting the decline of the American Dream over the last 30 years