A number of articles in recent days have led me to consider the unequal relationship between jobs - their availability and nature; wages - minimum wage in particular; and government benefits - both 'entitlement programs' and support payments. It's an increasingly unstable situation. Consider:
- Many jobs are being automated or are in danger of automation, as we've pointed out repeatedly in these pages over the past couple of years.
- One factor driving the switch to automated solutions to replace personnel is the demand for an increase in the legally-mandated minimum wage. As a CBS report has just reminded us: "The reality is that most business are not going to pay $15 dollars an hour and keep their doors open," says David Sutz, who owns four Burger Kings in New York. "It just won't happen. The economics don't work in this industry. There is a limit to what you're going to pay for a hamburger." That applies all over the world - consider this report from India, for example.
- Wages aren't the only problem. Many jobs are difficult to fill with people who are either qualified for the position, or who are willing to put in the hard work required for success. I've lost count of the number of friends and associates who've complained to me that they simply can't find enough willing hard workers to fill all the positions they have available; and of those they do hire, between a third and a half are gone (voluntarily or involuntarily) within three to six months due to lack of a work ethic or some other disqualifying factor. They now hire only with extended probationary periods, to allow them to sort the wheat from the chaff before the cost of permanent benefits kicks in. Again, this drives the increased adoption of automation to replace personnel.
- Many of those who should be working are receiving government benefits that make it uneconomical to work hard and increase one's income. For example, the Illinois Policy Institute reports: "For single-and two-parent households in Illinois, there is a significant welfare “cliff” where the household may become worse off financially as they work more hours or as their wages increase. That is because the available welfare benefits decline by a greater amount than the increase in earned income." That's why many potentially suitable employees are deliberately making the decision not to work, and to rely on handouts instead. They're financially better off that way.
- However, state-provided benefits are dependent on taxes. If insufficient money comes in, they can't be paid - but if there are fewer workers earning income that can be taxed, then there's less money to pay to those depending on benefits to survive. Fewer workers = more on benefits: but lower tax income = less money available for benefits. It's a vicious circle.
I don't think many government entities - national, state or local - have fully realized the interwoven complexity of this situation; or, if they have, they've simply continued to borrow money to pay what they can't raise through taxes, thus punting the problem down the road for future generations to deal with. That crisis is almost upon us on a national level, and in many states as well.
We either break this vicious circle, or let it become a whirlpool of financial malaise that will drag us all into it. If we leave that choice up to our present generation of political leadership . . . hey, what's that sucking sound?