When people think about what will happen to jobs as the blue model continues to crumble, most have a picture in their heads of the type of change that is happening, and it is based on the experience of the last thirty years.
- Manufacturing jobs are going away.
- Professional and white collar jobs will continue to grow in number and pay.
- The new jobs for unskilled people will be mostly badly paid and undignified: retail service occupations, bedpan changers in geriatric homes, call centers (if these don’t go to Bangladesh), or domestic service for white collar yuppies.
- Inequality will relentlessly grow, with dire social consequences.
- Defending the blue model, however hopeless that may be, is the only way to stand up for the American way of life.
The biggest flaw in that picture is, perversely, its one optimistic belief: the assumption that white collar jobs and incomes will continue to grow. This optimism is key to the Democratic Party’s idea of how to keep the country running. If the upper middle class is going to continue to prosper and grow, then the option of keeping the blue model on life support by a new wave of redistributionist policies makes a lot of sense to a lot of people.
After all, there are going to be more affluent people, and they are going to be more affluent than before. Globalization is making this group rich while making others poor. Surely the state can capture some portion of that enhanced income and use it to help the losers? At the very least, upper middle class affluence can underwrite the government bureaucracies that operate as employment agencies for the middle-middle class, keeping millions of teachers, safety officers, sanitation workers, clerks and administrators employed at various levels of government. This will help fight the economic polarization we face both by preserving a large middle-middle class and by preserving the government’s ability to provide services to the growing numbers of needy and left behind.
There are several problems with an approach that envisions steady long term growth in the numbers of people dependent on government services and transfer programs to keep them afloat, but the crucial problem for the redistribute-to-perserve approach may be practical, not theoretical or moral.
Increasingly, it looks to me as if large chunks of the upper middle class are about to get whacked. Many of the learned professions are going to see their incomes cut and the private sector is going to seek much greater productivity improvements by replacing expensive US-based executives with cheaper foreign ones — and even cheaper computer technology. Lawyers, accountants, business managers and executives, university professors and administrators, architects, designers, upper level civil servants, NGO managers: this means you.
What’s happening is that computers and software are reaching the point where they can effectively displace more and more routine skilled labor — just as for the last forty years we’ve seen automation reducing the need for routine human labor in factories. At the same time the cost structure of the learned professions is so high that current patterns are increasingly unsustainable.
Some professions have already been hit. Jobs have disappeared and professional schools have closed down in the mainline Protestant church. The traditional three year seminary education is too expensive, and declining congregations cannot pay graduates enough to support the student loans and tuition costs needed to meet the educational requirements these denominations have established. Seminaries are imploding across the country even as poorly paid pastors struggle with student loans.
Journalism has also taken a series of painful hits and large number of mid-career journalists have lost their jobs, their security and their places in the upper middle class. Publishing has taken a similar series of hits.
Law currently seems at a tipping point. Salaries are down at most firms, applications to law school have fallen (normally in bad economic times they go up), and experienced practitioners are cautioning young people that, generally speaking, it is an unwise investment to take on significant debt to get a law degree — especially at anything but a first tier school.
Other professions and occupations seem likely to follow this path. While I am in no position to forecast the timing or the extent of these shifts, the Department of Labor’s Occupational Outlook Handbook seems wildly optimistic in its predictions of rapid job growth in many white collar fields.
When people think about this possibility at all, they generally think one dimensionally. They see a further widening of economic divisions: Gordon Gekko and a handful of wildly successful types will swan around in the penthouses, buying and selling politicians like used cars while the rest of the population sinks into proletarian squalor. Wealth and celebrity for a handful, hunger games for the rest.
But here, I think, is what they miss. The young people who find that the doors to secure upper middle class lives as lawyers or as members of other safe and respectable professions are closed aren’t going to sit peacefully in their parents’ garages for the next forty years. Some may — more, if marijuana is legalized and prices fall.
But there are going to be a lot of people who are well-educated, ambitious, and expect something more out of life than a beanbag chair, a sound system and a bong. The creativity and enterprise of this generation is the resource that can (and in my view, will) power America’s economic renaissance and lead us into a new kind of economy.
These kids have been raised to point toward bureaucratic, institutional success. Go to school, stand in line, keep your nose clean, get the grade, get into the next good school, and repeat until you get a job offer. At that point, get on the escalator of success — as an associate in a law firm, for example — and if you do your job well, you will have a reasonably smooth ride to the top.
Graduating into a world that looks less and less like the world they’ve been led to expect, these young adults are going to have to figure out new ways to get ahead. They are going to have to become entrepreneurs. Some will go to work as freelance college and educational consultants. There are lots of parents who don’t think their kids are getting all the help they need from their guidance counselors. Some will come up with new products or new services and take advantage of today’s open media and low costs to develop smart niche businesses that haven’t existed before.
I linked to this ad for a startup company a few weeks ago; I was amazed to learn how many of my students, younger relatives, interns and twenty- and thirty-something acquaintances had seen this ad, said “Why didn’t I think of that?”, and started to think about what else they could do. If you haven’t watched this yet, take a minute to see how a new generation is recovering the can-do, entrepreneurial spirit of past eras of rapid American growth.
There are a lot of Mikes out there, and these are the people who can build us a future worth living in. (And they are also the people who are going to be creating jobs for the Alejandras of the next generation.)
Whether the Dollar Shave Club is a good deal and whether the company will succeed I do not know, but I do know that it is ideas and companies like this that will make the difference between a prosperous future and the hunger games scenarios so popular today across the political spectrum.
The trick is that we have to make life easy for Mike. We have to kill zoning laws that keep him from running his company from his house. We have to reduce the time it takes him to comply with the legal requirements to set up his business to the absolute minimum — like a two minute session filling out some forms on the web. OSHA and the EPA have got to stay out of his hair as much as possible. And if he’s going to be able to give Alejandra a job it needs to be the simplest thing in the world to hire and pay her — and, for that matter, to fire her if sales slow. His taxes need to be low, predictable and easy to calculate and pay.
A lot of the policies we have in place now make it harder for the Mikes of this world to start out. Tax preferences and givebacks to attract big employers into a city hurt Mike-type businesses. His rates go higher to make theirs lower. Fans of the big government, “smart planning” approach think it’s better to subsidize big companies and lure them into a community, but the reality is that an army of Mikes (or an Army of Davids, if you prefer) will, over time, create more jobs and more wealth and do more for a community than the big boys can do.
If local, state and federal governments want to prep the country for a brighter future and get us through the transition doldrums into a new era of innovation, growth and full employment as quickly as possible, they need to try to figure out what they can do to help a new and hungry generation of entrepreneurs launch businesses and careers.
This is almost always going to be about dismantling barriers rather than creating new “helping bureaucracies.” There may be some cases where affirmative government programs can help: looking at bank regulations, for example, to make it easier for banks to offer finance to fledgling enterprises. We ought to have financial regulations in place that make it easier for small investors to pool their resources into mini-VC funds that make start-up finance more available and share the benefits of these gains with retail investors rather than holding them tight for the big boys.
Health care reform should, among other things, concentrate on reducing insurance costs for young entrepreneurs and their employees. Mike and Alejandra probably do not need all the bells and whistles; they need catastrophic care coverage, and some kind of high deductible, narrow policy could make it easier for Mike and his employees to have peace of mind even as they do what young people do — take risks and cut costs to build a future. Forcing them into expensive pools with prices artificially jacked up in order to subsidize premiums for the middle aged and the steadily employed puts an obstacle in their path.
We also have to stop indenturing rising generations of students under ever-increasing loads of debt. The educational system we have now is a high cost model, founded on the assumption that students leaving the system will begin as well paid salaried employees who can afford to repay their loans out of their earnings. It is an enterprise-hostile learning model.
Fledgling entrepreneurs have to keep debt and fixed costs to a minimum. Making this country enterprise-friendly means developing an educational system that students can go through without accumulating large debts. A state that wants to be on the cutting edge of the future should be thinking less about setting up enterprise incubators and more about how to restructure its educational system so the next generation graduates debt free. Debts drive students toward salaries and security; that is exactly the opposite of what our incentives should do.
The Mikes (and the Debbies and the Kishawns and the Chantelles and the Maliks and the Fatimas and the Juans and the Marias of this world) do need help. The career paths they’ve been trained for are narrowing and they are going to have to launch out in directions they and their teachers didn’t expect. They were bred and groomed to live as house pets; they are going to have to learn to thrive in the wild.
To give them a chance, America is going to have change directions. We have to stop issuing new and more complex regulations every year — and start to tweak, redesign, simplify and in some cases roll back what we’ve got. We have to stop focusing so much on making this country a safe and predictable environment for big business and large corporations, and look to make it a more welcoming place for start ups.
The faster we do this, the faster our future will start to look brighter. The future is filled with enterprises not yet born, jobs that don’t yet exist, wealth that hasn’t been created, wonderful products and life-altering services not yet given form.
It’s time for America to start clearing a path for this brighter future; a cornucopia is headed our way, but we need to demolish the obstacles that stand in its path.