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The idea of posting or finding jobs online isn’t new. Craigslist, the pioneering Internet bulletin board, allowed the primitive, gentle folk of the 1990s to find day work, not to mention cheap dates. These new services are different, partly because they’re focused and carefully supervised, and partly because they take advantage of smartphones. Workers can load one of these companies’ apps on their location-aware iPhone or Android device and, if the impulse strikes, take a job near them any time of day. Employers can monitor the whereabouts of their workers, make payments on their phones or over the Web, and evaluate each job after it’s accomplished. That's new type of slavary.

Distributed workforce entrepreneurs and their investors are thinking big. They compare their startups to fast-growing companies such as Airbnb, which allows people to rent out their homes. In this case, the assets for rent are people’s skills and time. Leah Busque, a former IBM (IBM) software engineer who started and runs TaskRabbit, says thousands of people make a living (up to $60,000 a year) on her site, which operates in San Francisco, Los Angeles, New York, Chicago, and five other cities. “We are enabling micro-entrepreneurs to build their own business on top of TaskRabbit, to set their own schedules, specify how much they want to get paid, say what they are good at, and then incorporate the work into their lifestyle,” she says.

Venture capitalists have bet $38 million on TaskRabbit and millions more on similar startups. Other distributed labor companies, with names like IAmExec (be a part-time gopher) and Gigwalk (run errands for companies) are being founded every day. Listening to this entrepreneurial buzz all summer, I got a notion that I couldn’t shake—that the only way to take the temperature of this hot new labor pool was to jump into it.


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NEWS CONTENTS

Old News ;-)

[Feb 04, 2017] The End of Employees

Notable quotes:
"... Start focusing on the predators at the top of the pyramid scheme and then watch how those same culprits and their networks "come to the rescue" in order to capitalize on the "pain and suffering" they help to create. I see a pattern, don't you? ..."
"... Don't forget student debt. Not only are many recent graduates underemployed or unemployed, they're in the hole tens of thousands. Further incentive not to make any sort of financial commitment. Student debt should be cancelled to promote earlier family formation. ..."
"... It's almost a negative feedback loop. ..."
"... Very true. Capitalism only works as long as enough people (or states) are able to take up ever-larger debt, to close the gap (called "profit") between expensive goods and comparatively cheap labour. ..."
"... Good to point out Gat Gourmet. Almost all outsourced jobs in the beginning of places where I have worked were once part of the company. ..."
"... Still, it's hard not to notice there could be nothing more convenient to the corporate and governmental powers-that-be than a nonprofit that takes it upon itself to placate, insure, and temper the precarious middle-class. ..."
"... So which ivy-league management school / guru is most culpable in unleashing the whole lean-mean-outsourcing-machine monster because it's slowly destroying my ability to remain in IT. ..."
"... "how the big company love of outsourcing means that traditional employment has declined and is expected to fall further." – ..."
"... Story of my life! I'm still trying to get paid for freelance work that I did in December. This payment delay is wreaking havoc with MY cash flow. ..."
"... Another area of friction and waste with IT consulting and other contracting, is that an employee of a company simply and efficiently plugs into their existence administrative system (HR, timekeeping, payroll, etc). ..."
"... I work in engineering at a gigantic multinational vehicle manufacturer and the role of "consultants" has been expanding with time. Rather than consultants being people with specific technical expertise who work on one subsystem component with clear interfaces to other things, it now encapsulates project managers and subsystem / function responsible people who need to have large networks inside the company to be effective. ..."
"... Considering the huge amount of time it takes to get a new hire up and running to learn the acronyms and processes and the roles of different departments, it's a bit absurd to hire people for such roles under the assumption that they can be quickly swapped out with a consultant from Company B next week. ..."
"... It's pretty clear that management sees permanent employees on the payroll as a liability and seeks to avoid it as much as possible. ..."
"... Because they, unlike us, understand class. I can state for a fact that the Big Three auto companies are well aware of how much cheaper health care costs are for them in Canada and how much better off they would be here, cost-wise, with a national health care system where McDonald's and Wal-mart have to pay the same per hour or per employee cost as they do. But it turns out cost isn't everything. Corporate (capitalist) solidarity rules. ..."
"... Michelle Malkin ..."
"... “The Marxian capitalist has infinite shrewdness and cunning on everything except matters pertaining to his own ultimate survival. On these, he is not subject to education. He continues wilfully and reliably down the path to his own destruction”. ..."
Feb 04, 2017 | www.nakedcapitalism.com

The Wall Street Journal has an important new story, The End of Employees , on how the big company love of outsourcing means that traditional employment has declined and is expected to fall further.

Some key sections of the article:

Never before have American companies tried so hard to employ so few people. The outsourcing wave that moved apparel-making jobs to China and call-center operations to India is now just as likely to happen inside companies across the U.S. and in almost every industry.

The men and women who unload shipping containers at Wal-Mart Stores Inc. warehouses are provided by trucking company Schneider National Inc.’s logistics operation, which in turn subcontracts with temporary-staffing agencies. Pfizer Inc. used contractors to perform the majority of its clinical drug trials last year .

The shift is radically altering what it means to be a company and a worker. More flexibility for companies to shrink the size of their employee base, pay and benefits means less job security for workers. Rising from the mailroom to a corner office is harder now that outsourced jobs are no longer part of the workforce from which star performers are promoted

For workers, the changes often lead to lower pay and make it surprisingly hard to answer the simple question “Where do you work?” Some economists say the parallel workforce created by the rise of contracting is helping to fuel income inequality between people who do the same jobs.

No one knows how many Americans work as contractors, because they don’t fit neatly into the job categories tracked by government agencies. Rough estimates by economists range from 3% to 14% of the nation’s workforce, or as many as 20 million people.

As you can see, the story projects this as an unstoppable trend. The article is mainly full of success stories, which naturally is what companies would want to talk about. The alleged benefits are two-fold: that specialist contractors can do a better job of managing non-core activities because they are specialists and have higher skills and that using outside help keeps companies lean and allows them to be more "agile".

The idea that companies who use contractors are more flexible is largely a myth . The difficulty of entering into outsourcing relationships gives you an idea of how complex they are. While some services, like cleaning, are likely to be fairly simple to hand off, the larger ones are not. For instance, for IT outsourcing, a major corporation will need to hire a specialist consultant to help define the requirements for the request for proposal and write the document that will be the basis for bidding and negotiation. That takes about six months. The process of getting initial responses, vetting the possible providers in depth, getting to a short list of 2-3 finalists, negotiating finer points with them to see who has the best all-in offer, and then negotiating the final agreement typically takes a year. Oh, and the lawyers often fight with the consultant as to what counts in the deal.

On the one hand, the old saw of "a contract is only as good at the person who signed it" still holds true. But if a vendor doesn't perform up to the standards required, or the company's requirements change in some way not contemplated in the agreement, it is vasty more difficult to address than if you were handling it internally. And given how complicated contracting is, it's not as if you can fire them.

So as we've stressed again and again, these arrangements increase risks and rigidity. And companies can mis-identify what is core or not recognize that there are key lower-level skills they've mis-identified. For instance, Pratt & Whitney decided to contract out coordination of deliveries to UPS. Here is the critical part:

For years, suppliers delivered parts directly to Pratt’s two factories, where materials handlers unpacked the parts and distributed them to production teams. Earl Exum, vice president of global materials and logistics, says Pratt had “a couple hundred” logistics specialists. Some handlers were 20- or 30-year veterans who could “look at a part and know exactly what it is,” he adds .

Most of the UPS employees had no experience in the field, and assembly kits arrived at factories with damaged or missing parts. Pratt and UPS bosses struggled to get the companies’ computers in sync, including warehouse-management software outsourced by UPS to another firm, according to Pratt..

The result was $500 million in lost sales in a quarter. Pratt & Whitney tried putting a positive spin on the tale, that all the bugs were worked out by the next quarter. But how long will it take Pratt & Whitney to recover all the deal costs plus the lost profits?

There's even more risk when the company using contractor doesn't have much leverage over them. As a Wall Street Journal reader, Scott Riney, said in comments:

Well managed companies make decisions based on sound data and analysis. Badly managed companies follow the trends because they're the trends. A caveat regarding outsourcing is that, as always, you get what you pay for. Also, the vendor relationship needs to be competently managed. There was the time a certain, now bankrupt technology company outsourced production of PBX components to a manufacturer who produced components with duplicate MAC addresses. The contract manufacturer's expertise obviously didn't extend to knowing jack about hardware addressing, and the management of the vendor relationship was incompetent. And what do you do, in a situation like that, if your firm isn't big enough that your phone calls get the vendor's undivided attention? Or if you're on different continents, and nothing can get done quickly?

We've discussed other outsourcing bombs in past posts, such as when British Airways lost "tens of millions of dollars" when its contractor, Gate Gourmet, fired employees. Baggage handlers and ground crew struck in sympathy, shutting down Heathrow for 24 hours. Like many outsourced operations, Gate Gourmet had once been part of British Airways. And passengers blamed the airline , not the wprkers.

Now admittedly, there are low-risk, low complexity activities that are being outsourced more, such as medical transcription, where 25% of all medical transcriptionists now work for agencies, up by 1/3 since 2009. The article attributes the change to more hospitals and large practices sending the work outside. But even at its 2009 level, the use of agencies was well established. And you can see that it is the sort of service that smaller doctor's offices would already be hiring on a temp basis, whether through an agency or not, because they would not have enough activity to support having a full-time employee. The story also describes how SAP has all its receptionists as contractors, apparently because someone looked at receptionist pay and concluded some managers were paying too much. So low level clerical jobs are more and more subject to this fad. But managing your own receptionists is hardly going to make a company less flexible.

Contracting, like other gig economy jobs, increase insecurity and lower growth. I hate to belabor the obvious, but people who don't have a steady paycheck are less likely to make major financial commitments, like getting married and setting up a new household, having kids, or even buying consumer durables. However, one industry likely makes out handsomely: Big Pharma, which no doubt winds up selling more brain-chemistry-altering products for the resulting situationally-induced anxiety and/or depression. The short-sightedness of this development on a societal level is breath-taking, yet overwhelmingly pundits celebrate it and political leaders stay mum.

With this sort of rot in our collective foundation, the rise of Trump and other "populist" candidates should not come as a surprise.

I would add this. It was deplorable for Trump to have fired Acting AG Sally Yates after she ordered Justice Department lawyers to stop defending Mr. Trump’s executive order banning new arrivals to the U.S. from seven Muslim-majority countries.

But Sally Yates was a hero for another reason. Yates was cracking down on systemic abuses by holding top healthcare executives personally accountable for false Medicare and Medicaid claims and illegal physician relationships.

Now it's personal: Top execs made to pay for companies' false claims
http://www.modernhealthcare.com/article/20161001/MAGAZINE/310019964/now-its-personal-top-execs-made-to-pay-for-companies-false-claims

BeliTsari , February 3, 2017 at 6:38 am

I remember hoping: Well, maybe Obama will actually get some decent folks into the Judiciary bring kids home from Iraq, maybe try for Medicare over 55 (to the advantage of the insurance & Pharma sectors?) But the one thing I'd actually expected him to accomplish was enact https://www.congress.gov/bill/110th-congress/senate-bill/2044 which would get the Kleptocrats a few more years out of the moldering corpse of American Labor (and not hurt multinationals, who'd off-shored, outsourced or speciously re-classified their largely undocumented, 3rd party, contingency/ gig employees decades previously).

Wage-theft Democrats was a new concept to some of us more easily deluded working class Yankees, reeling from Bush. I think a strong fantasy life's essential nowadays.

jrs , February 3, 2017 at 3:06 pm

No kidding on that law, so basic. Why can't we have that law passed? (and other nice things)

BeliTsari , February 4, 2017 at 3:52 pm

I imagine that this is among the pesky downsides of living in our YOOJ autocratic neo-Confederate theocratic kleptocracy; wage theft has always been right at the top of both parties' platforms? If they can't hide it, who will they blame it on?

GlassHammer , February 3, 2017 at 6:52 am

Decline in family formation and a populace seeking to anesthetize itself are indications of a civilization in decline. Our problem is much bigger than employment.

Disturbed Voter , February 3, 2017 at 7:02 am

You can employ deplorables, you can enslave deplorables, you can kill deplorables. The only way that a "return maximizing" system won't choose killing, is if the unit cost of killing is higher than enslavement or employment. I can hope that the bureaucratic effect of increasing costs will work faster on the cost of killing or enslavement. Reducing the cost of employment (regulations) wouldn't hurt.

BeliTsari , February 3, 2017 at 7:26 am

We'd guessed this was why Dickens, Niccolò Machiavelli, Frederick Douglass, E. A. Blair & Marx were being burnt by the DeVos Christians. Why teach management for FREE, when the drooling Know Nothings will PAY to send their dead-eyed vipers to seminars or A Beka online curricula?

redleg , February 3, 2017 at 1:13 pm

It does hurt workers, contract or not.

Eliminate environmental protections and the entire industry that investigates, researches, enforces, litigates, and mitigates environmental impacts are likewise eliminated. These are generally highly skilled professions, and has wide ranging impacts from workers all the way to the global ecosystem. Then there are economic ripple effects on top of that.

If we are going to eliminate an entire career tree, health insurance is a better choice.

jrs , February 3, 2017 at 3:10 pm

Not sure what this has to do with the article, but yes people will LOSE jobs to Trump, skilled and socially beneficial jobs like at the EPA.

For heaven knows what, jobs building useless walls to nowhere I guess, which somehow in Trumps warped mind is a more productive line of work (it won't even work to curtail immigration).

BeliTsari , February 4, 2017 at 5:36 pm

Thank you for your astute, pertinent & seldom mentioned comment (which to those of us in QA, is something we've believed central to the issue, not a tangent or unexpected side benefit of our sharecropper corporatocracy).

We'd noticed contract buy-outs & forced early-retirement in the steel industry, in the 90's, our clients' engineers (scruffy & cantankerous, who'd stand by us if we were right & replace us if we got out of hand) were all replaced by clueless, gullible desk jockeys, devoid of empirically honed judgement eventually, we'd have 2-3 gnarled old timers, amidst crews of neophytes (first they tried very well trained & knowledgeable foreign nationals, then pensioners, let go from the vendors) finally, they tried to 1099 the desperate ones, on the run from skip-chasers, deputies & repo-men.

They'd try sending us half way across the country, mention nothing, then see what we'd do (once we figured out we'd earned no overtime?)

We'd be in Indian or Russian owned mills where 80% of the employees were totally undocumented foreign nationals, many of the balance wildly underpaid temps.

And the good-old-boy management resembled characters outa Harriet Beecher Stowe. Lots of our counterparts were straight back from Afghanistan & Iraq, verifying that most of their gig- economy contingency employment had all been the same, regardless of industry sector: off-shored aircraft, as well as bridge, structural, water, nuclear, inspectors what regulation?

Dave , February 3, 2017 at 11:49 am

Leveraging guilt to rationalize the Invitation of the least educated into your nation from the most barbaric failed states and cultures in the world is another sign of civic decay.

MP , February 3, 2017 at 12:21 pm

or those with potential who are "educated" and are "victims" of false advertising campaigns I mean propaganda

Dave , February 3, 2017 at 12:38 pm

Yup, many of the Taxi and Uber drivers around here arrived and took out private loans to get "educated" and now are deep in debt and are too ashamed to go home.

MP , February 4, 2017 at 9:26 am

Start focusing on the predators at the top of the pyramid scheme and then watch how those same culprits and their networks "come to the rescue" in order to capitalize on the "pain and suffering" they help to create. I see a pattern, don't you?

Barbarians are at the gates but you may be looking in the wrong place. Beware all types of people are "vulnerable" and they will more easily identify with other human beings living under a variety of diminished circumstances. Victim shaming won't be a viable option in the not so distant future.

JEHR , February 3, 2017 at 2:50 pm

Dave, I hope you are not including Syria in your "failed states and cultures" description. Syrians are very well educated and will add much to any nation's economy.

It is not a sign of "civic decay" in the Syrian culture, but a sign of civic decay in a nation that will not accept people from a war zone. An invitation should not be dependent on one's education but on one's need and desire to survive a war zone..

wilroncanada , February 3, 2017 at 4:42 pm

Iraqis were also comparatively educated, right up through university, under its autocratic leader. Libyans were, by and large, well educated, or at least getting so, under its autocratic leader. The most poorly educated, probably, are those countries which have been under US or European hegemony for generations: a lot of Central and south America, a lot of Africa, etc. Not to mention the US itself, which has been colonizing its own hinterland for many decades. The same applies to countries like Canada, Australia, etc. particularly in terms of their indigenous populations.

Felix_47 , February 3, 2017 at 6:20 pm

How about the worst drought in 900 years, and an exploding population? That had nothing to do with the problem?

Peter , February 3, 2017 at 7:07 pm

Don't forget student debt. Not only are many recent graduates underemployed or unemployed, they're in the hole tens of thousands. Further incentive not to make any sort of financial commitment. Student debt should be cancelled to promote earlier family formation.

thoughtful person , February 3, 2017 at 6:57 am

This trend matches up with the trends of dropping life expectancy, especially among the lower half of income earners, and with slowing economies globally.

It's almost a negative feedback loop.

Politcal implications: the rise of far right politics; if you are a monarchist, or want to create an aristocracy, these trends are probably in your interest.

Praedor , February 3, 2017 at 8:54 am

Sure, it is partly psychological but it also has direct connection (by DESIGN) to the fact that such people don't have healthcare, even with Obamacare insurance. The idiots that sing the praises of Obamacare and how millions now have insurance seem to think that means those people have HEALTHCARE to go with it.

Insurance is theft. Insurance is not even remotely "healthcare". Much of those newly insured have their insurance, thanks to a government subsidy, but STILL lack healthcare because their premiums and deductibles are too high to allow them to see doctors. Thus, they're dying or going to die sooner due to untreated maladies, but at least they paid insurance company CEOs their bonuses with their subsidized insurance payments!

Bugs Bunny , February 3, 2017 at 9:41 am

Mutual insurance however is (was) socialist by nature. The true mutuals were crushed out of existence by share for share conversions to private companies that ripped off policy holders and gave a big payday to the C suites and the lawyers. Thanks to inept state insurance commissioners and assemblies for that one.

d , February 3, 2017 at 1:14 pm

while having health insurance doesnt mean you have health care, not having it does mean not having health care at all, short of having a life or death condition, as hospitals (for now an way) are only required to stabilize you. they arent required to cure you.

but then the high deductible insurance is one of those scams that some politicians gave us because they could suggest that the patient (customer) could just shop around for better deals. course that depends on us patients knowing what medical treatment is best for us, and which is the cheapest of those., the former pretty much requires patients to be as knowledgeable as doctors. the latter means we have to know what the treatments cost. could luck with that

David , February 3, 2017 at 7:14 am

I would force policy-makers in every advanced western nation to read and reflect on the last paragraph, because it describes a mindset and a series of practices that are now found everywhere in western economies.

As David Harvey reminds us in his book on the Contradictions of Capitalism, Marx identified long ago that there was a contradiction between holding down employees wages, and still expecting them to have the purchasing power to buy the goods their cheap labour was making.

This problem has become more acute with time, simply because we buy a lot more "stuff" than they did in the 19th century, and we take a lot longer to pay for it, often on credit. Houses, cars, household goods, even computers, are now significant expenditure decisions, repaid at least over months, if not years and even decades. The social corollary of mass home ownership, after all, is some assurance that you will be employed over the life of the mortgage. Otherwise, not only won't you buy the house, you won't improve or extend it, or even maintain it, so a whole series of other purchases won't get made, and the construction and maintenance industries will have less work. Instead, you'll save money, so removing purchasing power from the economy.

I assume there are people in large private sector companies clever enough to under stand this, but as always they are focused on how much money they can extract from the system in the next few years. After that, if the system crashes, well, who cares, They're all right.

susan the other , February 3, 2017 at 12:59 pm

old tricks. John D. Rockefeller became a zillion times richer after he was forced to divest himself of his majority interest in his various companies.

And back then it was a simple case of anti-trust. There were no benefits to reclaim as profit or revenue or whatever.

This won't work in today's world because there really isn't anything left to exploit – but half-baked ideas die hard sometimes.

Altandmain , February 3, 2017 at 1:43 pm

There's a quote on this one:

http://quoteinvestigator.com/2011/11/16/robots-buy-cars/

Henry Ford II: Walter, how are you going to get those robots to pay your union dues?

Walter Reuther: Henry, how are you going to get them to buy your cars?

The Economist Article this one refers to is pretty awful, and totally ignores the wage-productivity gap.

Here's an interesting article on that:
https://www.salon.com/2013/05/30/millennials_dont_hate_cars_they_cant_afford_them/

ThePanopticoin , February 3, 2017 at 4:44 pm

Very true. Capitalism only works as long as enough people (or states) are able to take up ever-larger debt, to close the gap (called "profit") between expensive goods and comparatively cheap labour. Watching developments in recent years, this very source of profit and thus base of the economic system is, even on a global level, quite limited

David Barrera , February 4, 2017 at 2:36 am

Sure. Marx Capital 1 on the crisis of production. Marx capital 2 on the crisis of realization but this constitutes just one undesirable aspect-this one indeed very macro- among the many others which the expansion of the "contracting-subcontracting chain" has brought and will bring about.

The Wall Street Journal article is-as it is to expect- late, blind to the core problems of workers and incapable to see and understand the true practical raison ( & reasons) d'ĂŞtre of outsourcing. I guess Yves Smith purpose was just to broadly replicate WSJ article

stukuls , February 3, 2017 at 7:34 am

Good to point out Gat Gourmet. Almost all outsourced jobs in the beginning of places where I have worked were once part of the company. The entire art department save two management employees were played off and rehired by a new company doing the same work with less benefits.

Then that company was later disolved. I have seen this many times in the corporate design field now. Usually ends with disaster and he hire of folks some back to full time but most to freelance. So I guess in a way it works out for the company in the end and not for the worker. Amazing the amount of money a company is willing to lose this way then use the same to pay workers better.

Arizona Slim , February 3, 2017 at 8:18 am

But-but-but freelancing is SO hip and cool! Just ask the Freelancers Union!

Arizona Slim , February 3, 2017 at 10:13 am

Here is the organization's official website:

https://www.freelancersunion.org/

And here is a critique, which I agree with:

http://www.dissentmagazine.org/article/the-i-in-union

H. Alexander Ivey , February 3, 2017 at 10:45 pm

An excellent critique, for those who were wondering. The take away paragraph, summing up the actual work done and purpose of, the Freelancers Union:

Still, it's hard not to notice there could be nothing more convenient to the corporate and governmental powers-that-be than a nonprofit that takes it upon itself to placate, insure, and temper the precarious middle-class.

As we sixties people use to say: "Right on!"

Marco , February 3, 2017 at 8:18 am

So which ivy-league management school / guru is most culpable in unleashing the whole lean-mean-outsourcing-machine monster because it's slowly destroying my ability to remain in IT.

BeliTsari , February 3, 2017 at 8:40 am

https://www.jstor.org/stable/40584994?seq=1#page_scan_tab_contents Indentured servitude had pretty strong adherents, before chattel slavery gained ascendancy in the colonies. You might as well credit Pharaoh Khufu?

Katharine , February 3, 2017 at 9:21 am

I don't know the answer to your question, but you would have to go back over twenty years to find it. What I find remarkable is that even though everybody affected in the early stages could see what a dumb, destructive idea it was, the MBA types never caught on, even though most of them were not so far up the hierarchy they could not ultimately be affected.

just_kate , February 3, 2017 at 12:34 pm

Jack Welch

Gaylord , February 3, 2017 at 8:39 am

Contractors need Guilds or Trade Associations that are well organized and legally able to set minimum standards for billing and performance. This is an area where Trade Unions have failed with respect to some professions, and apparently (from what I've heard) the RICO statutes need to be amended to allow for this. It's time to rig the other side to make companies think twice before replacing employees with temp workers or contractors, to keep jobs within the US, and to provide a cushion and a "floor" to those that take the risk of entrepreneurship, preventing a race to the bottom.

akaPaul LaFargue , February 3, 2017 at 12:10 pm

Yes! Geographically bound temp unions or hiring halls for all temp workers allied with low-wage worker associations. This is NOT something that established unions want, so who will agitate for it?

jrs , February 3, 2017 at 3:21 pm

Something like the I.W.W is what I'd like to see. Yea I know the response is: they are still around? Well not what they were long ago of course, but with the prison strike, yes around and rising.

Northeaster , February 3, 2017 at 8:40 am

"how the big company love of outsourcing means that traditional employment has declined and is expected to fall further." –

This line pissed me off this morning more than most other mornings. I literally just said goodbye to a long-time colleague (Big Pharma) who is being outsourced as of today. The kicker(s):

  1. The job is not high tech
  2. Employee(s) trained their replacement who are H-1B from India
  3. The company is moving the division to India

Of note, my state (MA) is responsible for over one-quarter of all H-1B's every year. Thankfully a few in the industry are helping get the word out, like Nanex's Eric Hunsader yesterday. The outsourcing, off-shoring, and H-1B abuse has to stop, but not sure The People have the will to hold political office holders accountable enough to truly change this paradigm.

https://twitter.com/nanexllc/status/827185042761859073

Northeaster , February 3, 2017 at 9:00 am

Edit: MA is in the top 10, California is number one:

https://www.foreignlaborcert.doleta.gov/pdf/PerformanceData/2016/H-1B_Selected_Statistics_FY2016_Q4_updated.pdf

Vatch , February 3, 2017 at 9:56 am

Norm Matloff's blog often covers H-1B issues. Here's one of his recent posts:

https://normsaysno.wordpress.com/2017/01/13/h-1b-reform-proposal-a-great-start-or-a-cruel-ruse/

Ann , February 3, 2017 at 1:10 pm

He has an op-ed piece in the Huffington Post today:

http://www.huffingtonpost.com/entry/trump-h-1b_us_5890d86ce4b0522c7d3d84af

sgt_doom , February 3, 2017 at 6:54 pm

Agreed, but I've been saying the exact same thing since 1980, so I've been lobbying and being a volunteer activist against this for many years, and yet I still run into women (not too many men anymore) in their 60s and 70s who believe offshoring of American jobs, and insourcing foreign visa replacement workers is fantastic (truly, we are a dumbed down society today, where they routinely protest on behalf of the financial hegemons).

Best book on this (and I am no conservative and have never voted r-con) is Michelle Malkin's book (with John Miano), Sold Out!

This has been going on for a long time, and by design: with every "jobless recovery" one-fifth of the workforce is laid off, and one-half of that one-fifth will never find another job, while one-half of the remainder, will only find lower-paying jobs.

And each and every time, more jobs are restructured as temporary or contractor type jobs. We've had a lot of "jobless recoveries" to date.

A recent study from Lawrence Katz and Alan Krueger found that 94% of the new jobs created over the past some years were all part-time, while a study from Rutgers University a year or so ago found that one-third of the new jobs created couldn't be verified as actually existing!

Nothing particularly new here, as it has been going on for quite some time (another great book is Ron Hira's book, Outsourcing America ).

Damian , February 3, 2017 at 8:46 am

In every category of labor – blue and white collar – the press is on to increase the supply and reduce the demand for labor.

The book ends: The Clintons in 92′ put thru the WTO / NAFTA – shut down 10's of millions of jobs and factories – blue & white collar. Obama did the same, with anticipating Hillary would be elected, put forth the TTP to enable unlimited H1-b for tech workers from off shore. The Neo Liberal Democrats were at the forefront of of this 25 year Plan for labor devaluation (with Republican help).

The Immigration Policy by government both illegal and legal were at the epicenter of increasing the supply in all categories with various programs while Obama also increased the regulations to wipe out more factories and deliberately reduce demand.

The solution is eliminate immigration in all forms until the 95 Million are employed and wages rise by the equivalent of what was lost in the past 15 years plus Tariffs to enable a marginal cost compared to imports to allow domestic factories to expand demand.

Increase the demand and lower the supply of labor will mean potentially a switch will occur from 1099 to W-2 as companies have to secure labor reliability in a short labor market which is squeezed.

The Millennials sooner or later will figure it out. Identity Politics which enables a greater supply of labor and diversion of attention to intangible values at the expense of tangible values has to be substituted for Labor Only Politics.

These young people have been duped based on the recent focus of the demonstrations. They don't understand they were screwed deliberately and with great malice by "Going with Her".

sgt_doom , February 3, 2017 at 6:56 pm

I've been keeping count over the years, and as close as I can find, over 170,000 production facilities were shipped out of the country. (Or, as David Harvey phrased it: "Identity politics instead of class analysis.")

Scott , February 3, 2017 at 8:58 am

One aspect of outsourcing that the article does not hit upon is the impact on company cash flows, which has some importance to large outsourcing initiatives. A company must pay its employees within 6 (it might be 7) days of the end of the pay cycle, which is typically two week. By contrast, when outsourcing, at the end of the month the contractor will provide an invoice, the company will then pay according to its payment cycle. This could be 30, 45, 60, 90, or even 120 days. The contractor still must pay its bills, in essence it's providing a low cost loan to firm (which often has a lower cost of capital). This approach, including the extension of payments has been largely driven by financial/business consultants.

Arizona Slim , February 3, 2017 at 10:15 am

Story of my life! I'm still trying to get paid for freelance work that I did in December. This payment delay is wreaking havoc with MY cash flow.

Scott , February 3, 2017 at 11:25 am

It can actually get worse – they might not pay you at all, hoping that you'll file a lawsuit, which will be interpreted according to the contract, rather than legislation which covers employment issues. The litigation costs might exceed any payments you'd receive.

My guess is that this wouldn't happen to an individual working under a 1099 (as word might get around), and very large firms often have leverage (not providing continuing services), but medium-size firms often get held up for months and years (especially once the contract has ended).

redleg , February 3, 2017 at 10:16 pm

Or they can go Chapter 7 during that time, where your almost 6 figures in billables gets paid 4 years later as mid- 2 figures.

Left in Wisconsin , February 3, 2017 at 10:49 am

Excellent point.

Another thing the article glosses over is that most outsourcing is simply wage cutting. I have never once seen confirmation of the notion that "specialist" firms provide better services at comparable labor costs than firms can do in-house. The double-bubble is that firms (and public sector employers) often spend more on outsourcing than they would doing the work in house despite the wage savings, which all accrue to the outsourcer of course.

diogenes , February 3, 2017 at 12:38 pm

When the airlines went on their deliberate BK spree in the 90's, they outsourced flying to regional carriers. Regional a/c (45-90 seaters) have higher CASM's than the a/c the airlines actually owned. In brief, it is cheaper to transport 100 passengers on a 100 seat a/c than to transport 100 passengers on two 50 seat a/c. That's been a fact since the Wright brothers broke the ground.

FWIW, SouthWest never went the regional route, never went BK and pays their unionized employees quite well.

The BK spree was all about breaking labor, not operational efficiencies that would actually save money.

d , February 3, 2017 at 1:23 pm

but now it seems the majors are not to happy with the regionals , cause customers cant tell the difference between them, the next problem is that for some reason the regionals cant find pilots. seems that pilots dont want to work for less than 30,000 a year.

Harris , February 3, 2017 at 4:53 pm

The FAA increased the number of hours required to be a pilot to 1,500 from 250.

Yves Smith Post author , February 4, 2017 at 4:45 am

Yes, but that is a one-time benefit. Once you've shifted the payment cycle, your quarterly reported cash flow will be more or less the same.

PKMKII , February 3, 2017 at 9:24 am

Another area of friction and waste with IT consulting and other contracting, is that an employee of a company simply and efficiently plugs into their existence administrative system (HR, timekeeping, payroll, etc).

With a consultant, there has to be reconciliation between the vendor's records and the company's records, which means work hours burned matching everything up. And that assumes they do match up neatly; If the vendor says "our consultant worked 50 hours this week, pay them as such" and whoever oversees the consultant at the company claims they only approved for 40 hours, now you've got a mess on your hands, could potentially go to the lawyers.

rusti , February 3, 2017 at 10:03 am

The idea that companies who use contractors are more flexible is largely a myth. The difficulty of entering into outsourcing relationships gives you an idea of how complex they are. While some services, like cleaning, are likely to be fairly simple to hand off, the larger ones are not.

I work in engineering at a gigantic multinational vehicle manufacturer and the role of "consultants" has been expanding with time. Rather than consultants being people with specific technical expertise who work on one subsystem component with clear interfaces to other things, it now encapsulates project managers and subsystem / function responsible people who need to have large networks inside the company to be effective.

Considering the huge amount of time it takes to get a new hire up and running to learn the acronyms and processes and the roles of different departments, it's a bit absurd to hire people for such roles under the assumption that they can be quickly swapped out with a consultant from Company B next week.

It's pretty clear that management sees permanent employees on the payroll as a liability and seeks to avoid it as much as possible.

Jim Haygood , February 3, 2017 at 12:24 pm

" It's pretty clear that management sees permanent employees on the payroll as a liability. "

No doubt correct. But why is that? Over time, mandates on employers - particularly large employers - just keep escalating. Health care; pensions; overtime; layoff notifications: regulators just keep raising the ante. Employers respond by trying to reduce their profile and present a smaller target to their predators. Staying under 50 employees wins a lot of exemptions from federal regulations.

Taken to an extreme, some developing countries (Argentina being one example) have European-style labor regulations guaranteeing job security and mandating generous compensation when employees are laid off. With hardscrabble small businesses being in no position to shoulder such risks, the result is that about 40 percent of employment is trabajo en negro , with no benefits or protections whatsoever - a perfect example of unintended consequences.

Editorial comments such as "these [contracting] arrangements increase risks and rigidity" ignore that government employment regulations also increase risks and rigidity. There's a balance of power. Overreaching, such as Obama's surprise order to vastly increase the number of employees subject to overtime pay, leads to employer pushback in the form of more contracting and outsourcing. Getting whacked out of the blue with a big new liability is unfair.

diogenes , February 3, 2017 at 12:47 pm

Actually, the overtime rules were an attempt to restore overtime that GWB took away:

http://www.nytimes.com/2004/08/23/us/controversial-overtime-rules-take-effect.html?_r=0

Concur about costs, and health care is the big one. Every other industrialized nation we compete against has national health care. Given that, why doesn't business support Medicare for all and get health costs off their books? Plus it would be a damsite easier to start up a business if one had health care.

susan the other , February 3, 2017 at 1:16 pm

Yes. I've never understood why corporations aren't all over this.

Left in Wisconsin , February 3, 2017 at 8:08 pm

Because they, unlike us, understand class. I can state for a fact that the Big Three auto companies are well aware of how much cheaper health care costs are for them in Canada and how much better off they would be here, cost-wise, with a national health care system where McDonald's and Wal-mart have to pay the same per hour or per employee cost as they do. But it turns out cost isn't everything. Corporate (capitalist) solidarity rules.

H. Alexander Ivey , February 3, 2017 at 10:56 pm

Yes, yes, damn yes!! It's about your class, not your race, not your education, not your gender. As Lambert might say, identity politics (your race, your education, your gender) is used to keep your eye off the prize: economic opportunity and security.

DH , February 3, 2017 at 2:21 pm

It is also easier to have part-time workers because they are still covered by health insurance in some sort of national health insurance system. In the US, the part-time workers will have high turnover as they look for full-time jobs to get access to health insurance.

Workers are also more likely to start their own businesses to provide services since the health insurance is just a fee they pay instead of an astronomical non-group insurance bill. COBRA insurance premiums are ginormous if you need to continue coverage after you leave a company.

Economists have been decrying the lack of employee mobility and small business formation over the past decade or so. Health insurance is probably a primary reason for this. Obamacare hasn't been around long enough and with enough certainty to change that dynamic yet.

jrs , February 3, 2017 at 3:37 pm

It's probably part of it, though I suspect the bad labor market is part of it as well. It's one thing to quit a job to start a business when you think "if it doesn't work out, I can always go back to my old career and easily be hired", another when quitting a good job means one might not land another ever.

susan the other , February 3, 2017 at 1:24 pm

haven't seen any more info on Hollande's "Flex – Security" plans to give corporations a way to lay off workers to improve the corporation's revenue. French Labor was having none of it and then Hollande went negative in the polls and was done for. Our contracting out former corporation departments sounds like bad quality control at best. If the state – whatever state you can name – is going to prop up all corporations everywhere because they can no longer successfully compete then something is fundamentally wrong with the system that demands such murderous and mindless competition.

d , February 3, 2017 at 1:32 pm

well there also that wage theft rules, that employers don't like. course if you look at work mans comp, you will find that it no longer works to protect employees any more. and maybe that is also why employers are get rid of employees. plus there is all of that needing to manage them. but you still end up having to manage vendors too, and while i suppose you could hire another vendor to manage the vendors (not really sure this will work out well), it still leaves the biggest problem

since consumers are about 70% of the entire economy (always wonder if this is true. because almost all corporate 'investment' is done because of customer demand), seems like this business fad, will end up with fewer customers (which seems to be the way its working too, as evidenced by the falling sales figures from companies, even Apple), so it like business is like lemmings, going a cliff, because some one else started

Lune , February 4, 2017 at 3:09 pm

So are you a proponent of Medicare-for-all? It would be a tremendous benefit to corporations to get out of the healthcare business and also increase employees' willingness to become freelancers and consultants, since they'd never have to worry about healthcare.

The truth is that citizens expect a certain amount of social welfare and security. This can be provided by 1) individuals themselves, 2) private players e.g. corporations, or 3) public players e.g. govt. Each has downsides. If you expect individuals to provide for themselves, it will less inefficient than having professional managers, and individuals will cut down on other consumption and save more, thereby hurting an economy such as ours which is highly dependent on consumption. This leaves companies and government. If companies lobby against public welfare programs like nationalized health insurance, unemployment insurance, social security, etc., they shouldn't be surprised if government foists those requirements back on them through back-door regulations.

To be fair to companies, most of the ones engaged in the "real economy" e.g. manufacturing, actually wouldn't mind medicare for all, or some other program that relieves them of the burden of providing healthcare to their employees. But they're being drowned out by the financial economy of Wall St., banking, insurance, etc. who depend on putting more money in the hands of individuals from whom they can extract much higher fees than they ever could from govt or corporate HR depts.

If companies don't want increased health mandates, for example, their enemy wasn't Obama: it was the private health insurance companies that didn't want a public plan.

Lune , February 4, 2017 at 3:17 pm

Sorry, I meant individuals will be less *efficient*.

Altandmain , February 3, 2017 at 1:45 pm

Yeah when I worked for one of the big 3 at an assembly plant, I felt that the use of temporary contractors could have very negative implications.

Most of the staff though were reasonably well paid, although asked to work long hours. I think though that overall, highly paid permanent workers pay for themselves many times over.

DJG , February 3, 2017 at 10:11 am

One aspect of the whole fandango that I don't get is how the IRS allows whole departments within a company to be outsourced: If people show up at your plant or office every day to work on your tasks, they are your employee, not a contractor. Is this melting away of the idea of an employee because of lack of enforcement or some change in IRS rules that I am not aware of?

Basically, if you control a worker's day, and if that worker works regularly for you, the person is your employee. I don't see how companies get away with this sleight of hand–avoiding, at the most basic legal level, who is on staff or not. [Unless the result, as many note above, is to increase class warfare.]

goldie , February 3, 2017 at 1:35 pm

The company doesn't get away with it if someone is willing to whistleblow to the IRS and said company fails the IRS 20-Factor Test (IC vs. employee). The nice thing there too, is that the tax burden will be on the company and not the employee. While I don't advocate being a stoolie, if a company wants to screw me over turn-about is fair play. I do the best I can to avoid those kinds of companies in the first place.

sgt_doom , February 3, 2017 at 7:02 pm

" One aspect of the whole fandango that I don’t get is how the IRS allows whole departments within a company to be outsourced . . "

If I understand your question correctly it is because a federal regulation was enacted by congress (I believe one of them was faux-progressive, Jim McDermott, no longer in congress but co-founder of the India Caucus, to replace American workers with foreign visa workers from India) which forbids oversight of the foreign visa program - and yes, they established a federal regulation killing oversight of the program by the government!

Suggested reading:

Sold Out, by Michelle Malkin and John Miano

fooco1 , February 4, 2017 at 2:54 am

Someone quoted Norm Matloff (a known bigot) above. You are now quoting anchor child Filipino bigot Michelle Malkin of all people ? It's not helping your case.

The H1-B program is a few hundred thousand legal tax paying people a year. There are 21 million Mexican illegals in this country. What do you think has more downward pressure on wages ? .005% H1-B (yeah, you read that right) of the total immigrant/wage pressure ? It's idiotic and a purely bigoted worldview.

Yves Smith Post author , February 4, 2017 at 3:08 am

We are supposed to regard "a few hundred thousand" as bupkis when they are concentrated in one sector?

The H1-B visa program has has a huge impact on wages in the IT sector and has virtually eliminated entry-level computer science jobs. This is strategically foolhardy, in that the US is not creating the next generation of people capable of running critical infrastructure.

And the illegal immigrants do pay taxes: sales, gas, and property taxes through their rents. And many actually do pay FICA. The Treasury recognizes that certain Social Security numbers are reused many times, and it's almost certainly for illegal immigrants. In fact, the IRS encourages illegal immigrants to "steal" Social Security numbers:

http://www.forbes.com/sites/robertwood/2016/04/13/irs-admits-it-encourages-illegals-to-steal-social-security-numbers-for-taxes/

That article whinges about possible tax credit scamming, but even that estimate is well below what they pay in FICA, $12 billion. And pretty much none of them will draw benefits.

This is from memory, but I believe they collect over $4 billion from these SSN per year. And most of these jobs are seasonal and/or too low wage for them to pay much in the way of income taxes when they are being paid in cash.

fooco1 , February 4, 2017 at 7:31 pm

H1-B is not in one industry, the .005% is spread across entry level jobs in all industries: finance, automotive, insurance, arts, film, automation, etc. The total amount of H1-B is minuscule, vanishingly close to zero in a country of 300+ million and 20+ million illegals.

You don't seem to be complaining about the tens of millions that used to concentrated in one sector..actual manufacturing. Wonder why ? Here's a hint: that sector used to make computer peripherals, keyboards, mice, terminals, monitors, LCD's, chips, motherboards, pretty much everything in the USA.

Employees in china, taiwan, etc pay zero USA taxes and they displaced millions of manufacturing jobs. And ironically, you are using an entirely outsourced computer (that actually displaced tens of millions of jobs in the aggregate) to complain about the minuscule .005% H1-B effect. A few hundred thousand entry level coding jobs (which are ridiculously simple and lo-tech, google 13 year olds getting Microsoft certified to see how low down on the value chain this is). You genuinely think writing a few for-loops (I am simplifying a little but you get the idea) is hard ?

Certainly, way way less capital intensive and way way less barrier to entry than Hi-Tech manufacturing. It's all going to be outsourced much faster than manufacturing was, since there is literally no barrier to entry. And H1-B is a good thing, relatively speaking, compared to full on outsourcing (just like manufacturing was).

Like I said, the only explanation for these anti H1-B posts is plain old bigotry. No other explanation comes close.

fooco1 , February 4, 2017 at 8:08 pm

Might as well finish my train of thought..then I'm outta here.

There are less H1-B visas this year than refugees , Refugees (not to mention the 20 million illegals) also put downward pressure on wages across all industries, but of course, those are all food servicing/picking/janitorial jobs and who cares about those people right ? (sarcasm for the impaired)

So, coming back to H1-B's..let's take the logical alternative and ban all H1-B's entirely and deport the ones on H1-B visas. What happens then ?

1) They can do the job exactly as well remotely (all they need is email/internet/skype).
2) They get paid even less (but more than zero).
3) They pay no taxes.
4) Their output is words..code is the same as prose and math. Good luck banning math/words..if it can be printed on a t-shirt, it ain't bannable. (See the famous bernstein crypto case from the early 90's for a illustration of this).
5) And finally..there are zero new jobs added for native USA'ians (which would now cost more, given the alternative).

It makes the situation far worse than it is today. There is fewer local coffee shop selling coffee, fewer rental units getting rented, fewer groceries getting bought, cars being purchased, etc.

For a easily displaceable and low barrier to entry coding gig, there isn't any easy answer. H1-B's are actually the best solution (or at the very least neutral), not the problem.

FluffytheObeseCat , February 4, 2017 at 7:22 am

The H1-B visa program is operated so as to wreck the bargaining power of native born young U.S. workers. Young Americans are increasingly likely to be nonwhite AND from the less valued (not Asian) subgroups of nonwhite. The damage H1-Bs do to our white Baby Boomers is almost incidental at this point; they are aging out of the workforce. And given the intense age bigotry of the IT subculture, they are not a factor within it at all at this point.

H1-B visas lock our striving, capable working class young people out of upward mobility. Kids who are now graduating from say, San Jose State with skills as good as those of South Asians don't get jobs that they are qualified for, because they are shut out of entry to the business. They are disdained in Silicon Valley because the majority of entry level conduits to employment are now locked up (via social contacts, and "who-you-know" relationships) by men from the subcontinent.

Your race argument is pernicious and I suspect, promoted in the full the knowledge of this fact. It is a great shame that we are relying on kooks like Malkin to promote obvious truths, but the shame belongs to our morally derelict 'liberal' chattering class, not those who listen to her and her ilk for lack of other sources.

vegeholic , February 3, 2017 at 10:22 am

An underappreciated aspect of contracting versus cultivating your own employees is that it hollows out the organization to the point that it may no longer have competence to perform its mission. Having an apparent success at contracting out menial tasks, the temptation is to keep going and begin to contract out core functions. This pleases the accountants but leaves the whole organization dependent on critical talent that has very little institutional loyalty. When an inevitable technical paradigm shift occurs, who can you count on to give you objective and constructive advice?

Costs of training and cultivating employees are high, and it is tempting to think that these costs can be eliminated by using contractors. It is strictly an apparent, short-term gain which will in due time be revealed as a strategic mistake. Do we have to learn every lesson the hard way?

Portia , February 3, 2017 at 10:55 am

yes, and when I read that Pfizer farms out research, I also wondered if retention of the outsource company contract is results-related. could new drug results hinge on a company wanting to keep their Pfizer contract by telling them what they want to hear?

Ann , February 3, 2017 at 1:06 pm

Agreed. Every time a company offshores jobs or goes through another round of layoffs, it loses its institutional memory. This is particularly acute in the mainframe IT systems that prop up the TBTFs (yep, they offshored these too). After a while, nobody understands exactly how these systems work and can only get to the bottom of them by reading code, which is a pretty flawed way to learn the business. This has been going on for years and nobody cares.

sgt_doom , February 3, 2017 at 7:03 pm

Amen to that, something I've been preaching for over 35 years now!

wilroncanada , February 3, 2017 at 6:14 pm

It pleases the accountants, that is, until their jobs too are outsourced. First they came for the janitors

Denis Drew , February 3, 2017 at 10:35 am

Centralized bargaining - a.k.a., sector wide labor agreements - is the only strategic answer to contracting out. Done in continental Europe, French Canada, Argentina, Indonesia.

(Take a vacation from reality with Soma - one gram and I don't give a damn.)

L , February 3, 2017 at 10:40 am

The one word I don't see in your excellent writeup is loyalty . Companies, like countries depend to a great extent on social constraints to keep people committed to the group. You cannot monitor all people all the time and doing so causes them to turn against you. But companies staffed with contractors and temps and temps supervising contractors have no loyalty to the company. Ergo no one employee has any reason to go the extra inch or to turn down the chance to sell out for personal gain should the opportunity arise.

All that imposes real costs that companies conveniently ignore because they are not always realized in share price.

PhilM , February 3, 2017 at 5:54 pm

I was going to add the same thought, but use the label "goodwill." It is something that appears on balance sheets in enormous amounts depending on what the accountants think it may represent.

There is a "goodwill bank" in the labor pool of any given company, and when the balance hits zero, the company will fail, "emigrate" its capital, or go public to the greater fools. Companies are engaged in a savage race to the bottom that is inherent in corporate structure: executives are now playing with somebody else's money, and somebody else's life. If corporate liability were suddenly returned to the days of the partnership, what a change we would see. And those days were not so long ago: Wall Street remembers the 1960s.

PS What a treat to come here and see informative journalism and commentary instead of the monkey cage.

oliverks , February 3, 2017 at 11:52 am

My daughter was recruited and interviewed by Genentech and then sent to work for an organization called PPD. PPD did nothing in this relationship, other than take money from Genentech pocketed about 1/2 of that and then pay her the rest. I really couldn't figure out what the heck the point of this was, other than some long running strategy to ultimately depress salaries of Genentech chemists.

DH , February 3, 2017 at 2:29 pm

One of my kids works in a unionized metal foundry (they still exist in the US!). When they need new workers, they bring several in through a temp agency for several months. If they can cut it and are acceptable, then they get pulled into the union or into the plant management team. This allows them to try out several people on a rent-to-own basis, but in the long run they become loyal company employees with very low turnover.

jrs , February 3, 2017 at 3:45 pm

Contract-to-hire is not new. The problem from an employee perspective is trying to evaluate when a company is actually serious about hiring if the contractee does a good job, and when it's just empty promises and they have no intent of making full time job offers at all.

DH , February 3, 2017 at 2:31 pm

BTW – the Genentech scientists probably get a bunch of benefits like bonuses and stock options, etc. that are not available to the contract workers. They probably have more protections if they are terminated or laid off whereas the contract workers would be done that day. The really good contract workers may get offers to work at the company for the long-run.

j84ustin , February 3, 2017 at 12:14 pm

Outsourcing is done in the public realm, too; my first job after grad school was with a major housing authority – except it wasn't for them (despite me having a "housingauthority.org" email address). I worked for a contractor of the housing authority, who paid us shit and treated us like cattle. I lasted three months.

j84ustin , February 3, 2017 at 12:36 pm

***but I was still a W2 employee! silver lining.

jrs , February 3, 2017 at 3:48 pm

Oh yes it definitely happens in the public realm, a lot with local government, more and more it seems.

akaPaul LaFargue , February 3, 2017 at 12:19 pm

One area not discussed in this post is municipal outsourcing. What this means in practice is the loss of organizational memory . assuming that records are not adequately maintained since the "old-timers" were still around. But with the loss of human memory banks, no new ones (digital?) have taken their place. Further, when consultants are hired for a specific project, when they have completed that project, what they have learned as ancillary knowledge is lost cuz the end-product is all that counts, not the process.

Dave , February 3, 2017 at 12:57 pm

i.e. Rip up the entire street to find where the pipe is because the old public works director who was replaced with a bright young woman with a degree before he qualified for his pension, got even and deleted the maps on the software. :-)

wilroncanada , February 3, 2017 at 6:41 pm

Didn't Yves mention this loss of institutional memory in reference to fianancial services, or was it banks, and their IT?

Further to government outsourcing:
Back a few years my wife and I worked for a school district on the East coast of Canada. The janitorial service had been outsourced a few years previously, with the former head janitor becoming the main contractor, who then hired other cleaning staff to work for him. He/she was already being squeezed to reduce his rates, leading to work not done or his working from 8AM to midnight to save an after-school employee. So–lower employment overall, all at minimum wage, including the main contractor.

One district had bucked the province-wide trend by keeping its own cleaning staff. Visiting the schools in that district those few years later, one could see the result, in vastly superior level of cleanliness, better co-ordination between admin and teaching staff with cleaners, and much better relations with students as well.

The staff weren't bosses, the cleaners weren't minions, and the students weren't customers. They were a team.

Glen , February 3, 2017 at 12:21 pm

I don't think there will be a change in this because it's too profitable for the CEOs to strip mine the companies assets (knowledgeable employees are an asset) for maximum "shareholder value" (always replace "shareholder value" with "my compensation"). I suppose this will change when all companies are stripped to the bone and go under. But we now call these "too big to fail" and prop them up with taxpayer dollars.

We need to change incentives. These might help:

Make corporations really pay taxes so that it makes sense to invest in the company rather than strip it.

Don't prop up TBTF companies, let them fail so that many small companies can grow.

Stop all the fraud and corruption. Send corrupt CEOs to jail.

Medicare for All would be a boon for businesses, especially the smaller and mid-sized ones.

Herb Kelleher, CEO of Southwest, was once asked where he ranked shareholders vs employees. He replied employees were first (because if the employees are not happy, then the customers are not happy), customers (they pay the bills), and shareholders (they buy and sell shares in seconds). If the company is successful, the shareholders will come. We somehow need to get back to these company values. A successful company starts with the employees.

Arizona Slim , February 3, 2017 at 2:12 pm

Thank you, thank you, THANK YOU, Glen!

JimTan , February 3, 2017 at 12:58 pm

Wow – good post.

This is a pretty ugly development in our history. The 'end of employees' is a very accurate description of what is going on in our gig economy related to a specific legal contradiction. In the U.S., we've adopted a vast body of labor laws ( many in response to the Industrial Revolution and Great Depression ) that are primarily designed to protect "employees" from exploitation. Buried deep in our tax law is a second designation for worker called "independent contractor", defined as a self-employed person providing services to other businesses that is exempt from most labor laws on the principle that a self-employed person can't exploit themselves. The key here is labor laws protect 'employees' from 'employer' abuses. Changing a workers classification from employee to ( self-employed ) contractor, will change an employers classification to customer, and remove the workers legal protections from exploitation. Labor law protections include minimum wage and hours, workplace safety and health, wrongful dismissal protections, anti-discrimination protections, employee benefits security, and worker compensation protections. This contradiction is allowing many companies to sidestep centuries of laws enacted to stabilize and and protect our society. Some companies push this power imbalance even further by transferring many of the business costs associated with their revenue to employee contractors ( see Uber ).

Hopefully when there is enough public outcry, regulators and prosecutors will decide to challenge these interpretations of existing laws and force businesses back in line regardless of their political influence.

Arizona Slim , February 3, 2017 at 2:09 pm

Call it what it really is - the frig economy. Because it keeps frigging us over.

JimTan , February 3, 2017 at 2:24 pm

Incidentally, the slippery logic that removes labor law protections by classifying a worker as self-employed ( both employer and employee ) might also grant businesses protections from their workers via consumer protection laws against fraud and unfair practices ( when businesses become customers of their now self-employed former employees ).

vegeholic , February 3, 2017 at 1:44 pm

As has been stated several times, sometimes government entities are the worst offenders here. Grover Norquist & Co. insisted on shrinking the size of government. The obedient elected officials and managers immediately replaced employees with contractors and could claim that they had indeed reduced the size of government. Unfortunately the budget probably went up since we now have to provide profit for the rent extracting contract vendors.

redleg , February 3, 2017 at 10:37 pm

They replaced govt employees with their contractors.
FIFY
Dual purpose- Eliminate the government's ability to govern while capturing the tax revenue.

Democrita , February 3, 2017 at 2:11 pm

A few years ago I was working for a family of local weekly papers, run on a shoestring (of course) with pathetic salaries for the tiny staff. At one point, they heard about possibly outsourcing design–layout of modular pages–to cheap labor in Romania. But when they ran the numbers .our in-house designers were already cheaper than the Romanians!

Second point: At my current magazine I am one of just two full-time staffers on the edit side. Our copy-editor/proofreader is paid on an hourly basis, and works off-site. Our designer works on a monthly retainer, off-site. And so on.

That makes the relationship between us and our workers competitive and antagonistic: They try to do the least amount of work, and we try to pay the least amount of money. So when the publisher wants to be "innovative" or try something different, the designer resists. He doesn't want to spend any more time on us than he normally does. So we don't do anything well, we get by with just good enough.

Point 3 – institutional knowledge: One of our key competitive advantages has been/is being eroded because there are things we haven't done in two years due to turnover. When I arrived and took up one such project, hugely important to the company's bottom line, no one could tell me how it was done. Everyone who had been involved in it was gone. We've now spent several months reinventing this particular wheel.

But the publisher doesn't see that as money. He only sees money as money.

DH , February 3, 2017 at 2:24 pm

BTW – the financial sector is ripe for this. Automation is taking over many positions and people in active investing is getting slashed big-time. Ironically, places like Vanguard may actually be some of the last bastions of actual employees.

Detrei , February 3, 2017 at 2:35 pm

The problem with these short term contract jobs are immense. Employees that don't have a steady income have difficulty getting loans for cars or homes. They certainly have less protection too. Our son worked for SKY TV as a part time employee through a temp agency for 3 years, working 40 hour weeks. But when an unstable full time employee assaulted him, in front or several witnesses, he was the one fired on the spot without explanation. He was a non-person. The temp agency didn't want to get involved for fear of losing their contract. With no union, no rights and little money, there was little he could do. They knew he couldn't afford a lawyer and involving the police wouldn't get his job back. This goes on all the time now. 20 years ago would have been unthinkable. I see a revolution coming, in many countries

Pelham , February 3, 2017 at 2:39 pm

Given the long evident fact that our corporate owners and their servants in government will not do a bloody thing to make life better for us, what can we do? As a first step toward any solution, we need to recognize that nothing is possible within the narrow boundaries of our political and economic system.

Vatch , February 3, 2017 at 3:03 pm

What you describe as a first step seems a lot like a claim of inevitable failure. Rather than expect failure, I recommend as a first step that we try to block a few of Trump's predatory cabinet nominations. Andrew Puzder, the nominee to head the Labor Department, and Steven Mnuchin, nominated to be the Secretary of the Treasury, seem to be very relevant to the scope of this article. Also Tom Price, nominated to be the Secretary of Health and Human Services. Tell your Senators that you don't want them to be confirmed. It's easy, although you might need to make a few extra phone calls, because the Congressional phone lines are often busy these days.

https://www.senate.gov/senators/contact/

Sorry, I know I'm being repetitious. But it's better to do something positive than to bewail our political impotence.

JEHR , February 3, 2017 at 3:04 pm

Or everything is possible within Witness–Trump as Pres.!!!!!

JEHR , February 3, 2017 at 3:03 pm

I ask, Why can't banks be fully automated? You wouldn't need CEOs and COOs and CFOs in banks because IT can do all those jobs automatically. Then we would find out that we only need ONE bank–the central bank and, voila, the banks no longer can create money by making loans. (I'm sure there is a weak point in this argument!!!) However, I can see something like this happening in the future if only we separate investment banking from commercial banking.

Sound of the Suburbs , February 3, 2017 at 3:20 pm

Marx saw capitalism as an endless class struggle between the bourgeoisie and the proletariat.

He wasn’t far wrong.

1920s – high inequality, high banker pay, low taxes for the wealthy, robber barons, reckless bankers, globalisation phase (bourgeoisie in the ascendency)

1970s â€" low inequality, worker and union power, high taxes on the wealthy (proletariat in the ascendency) (probably more true in the UK than the US)

2000s â€" high inequality, high banker pay, low taxes on the wealthy, robber CEOs, reckless bankers, globalisation phase (bourgeoisie in the ascendency)

The pendulum swings back and forth and always swings too far in both directions.

If the human race could take a more sensible, big picture view they might see it as a balance between the supply side (bourgeoisie) and the demand side (proletariat).

The neoliberal era has been one where a total ignorance of debt has held sway.

Redistributive capitalism was removed to be replaced with a capitalism where debt based consumption has become the norm. without a single mainstream economist realising the problem.

The world is maxing out on debt, this system is set to fail due to a lack of demand. The Bourgoisie have been in the ascendency and made their usual mistake.

“The Marxian capitalist has infinite shrewdness and cunning on everything except matters pertaining to his own ultimate survival. On these, he is not subject to education. He continues wilfully and reliably down the path to his own destruction”.

Keynes thought income was just as important as profit, income looks after the demand side of the equation and profit looks after the supply side.

He has the idea of balance.

Just maximising profit â€" The Bourgeoisie looking after their own short term, self interest with no thought of the longer term.

1) Money at the top is mainly investment capital as those at the top can already meet every need, want or whim. It is supply side capital.

2) Money at bottom is mainly consumption capital and it will be spent on goods and services. It is demand side capital.

You need to keep the balance.

Too much capital at the bottom and inflation roars away.

Too much capital at the top and there is no where sensible to invest and the Bourgeoisie indulge in rampant speculation leading to the inevitable Wall Street Crash, 1929 and 2008.

Today’s negative yield investments?
Too much capital at the top, no one wants it and you have to pay people to take it off your hands.

Sound of the Suburbs , February 3, 2017 at 5:07 pm

We are actually using 1920s economics, neoclassical economics.

No wonder everything looks familiar, the Bourgeoisie have no imagination.

“Stocks have reached what looks like a permanently high plateau.”Irving Fisher 1929.

In 2007, Ben Bernanke could see no problems ahead.

Their beliefs were based on an absolute faith in markets based on neoclassical economics which states markets reach stable equilibriums.

We should actually learn from mistakes, not repeat them.

1920s levels of inequality â€" what a surprise it’s the same economics.

We have moved on to the 1930s now:

1930s/2010s â€" Global recession, currency wars, rising nationalism and extremism

1940s â€" Global war

Something to look forward to.

jerry , February 3, 2017 at 5:24 pm

"You need to keep the balance." The post war era was balance, that was the middle of the pendulum swing, we have never seen you're next sentence:

"Too much capital at the bottom and inflation roars away." When? Name one instance outside of extraordinary political situations like weimar germany and zimbabwe where this has occurred?

Inflation is the boogey man that the elite throw around to scare us into submission. They don't care when its inflation of house prices, they don't care when its inflation of healthcare costs, education costs, etc. etc. But they damn sure start sweating a lot when its the cost of labor that goes up. Shocker.

Check my article about this very topic (shameless self promotion) : https://marginallyattachedblog.wordpress.com/2017/01/04/inflation-worries-from-trump-fiscal-stimulus/

FreeMarketApologist , February 3, 2017 at 3:28 pm

"Gate Gourmet had once been part of British Airways. And passengers blamed the airline."

You can transfer expenses, you can transfer legal and regulatory liability risk, you can transfer financial risk, but it is virtually impossible to transfer reputational risk. Companies who think they can do so (or ignore the fact) do so at their own peril.

Barbara , February 3, 2017 at 4:37 pm

My d-i-l, a research professional, has survived five down-sizings, assuming an additional work load each time. The last time she also got a small promotion (well, you'd think they'd give her something positive after all this). To myself I thought, they're going to wear this woman out till she has nothing left to give and dump her.

It's worse. The corporation (company is a concept from my early working days) just announced that everyone would have to bid for their projects(jobs). What this means of course is "how much are you willing to give?" not to mention pitting one employee against another.

Not prescient enough, was I?

jerry , February 3, 2017 at 5:30 pm

Love the article.

I "work" (temp/contract/no benefits) at a large multinational electronics company in cust service and have seen this first hand. In response to a couple years of dropping profits, they outsourced the entire department (couple hundred employees) to the Philippines. They cut full time employees, replace them with temps for half the pay, because people will do it, and we live in desperate times with no bargaining power.

As someone mentioned, its a negative feedback loop, less demand, less employment, less demand, until the whole world is greece. We won't make it through another world war, the world is too globalized, too connected, too advanced technologically. We need a relatively peaceful populist revolution – which we seem to be seeing the first real signs of – or our species is done for.. and the sad part is I'm not even exaggerating.

sgt_doom , February 3, 2017 at 7:07 pm

Best overall reading list on this subject:

Sold Out by Michelle Malkin

Outsourcing America by Ron Hira

America: Who Stole the Dream? by Donald L. Barlett

One Nation Under Contract by Allison Stanger

Dick Burkhart , February 4, 2017 at 6:07 pm

One point you missed is that a company cannot manage, let alone write a contract very well unless it has sufficient expertise on staff. It is not sufficient to hire a consultant unless that arrangement is more or less permanent. Too many things can go wrong, as they often do even with competent staff when projects are complex or innovative.

!--file:///f:/Public_html/Skeptics/Political_skeptic/Neoliberalism/War_on_labor/index.shtml--> !--file:///f:/Public_html/Skeptics/Financial_skeptic/index.shtml--> !--file:///f:/Public_html/Skeptics/Financial_skeptic/unemployment.shtml--> !--file:///f:/Public_html/Skeptics/Financial_skeptic/casino_capitalism.shtml--> !--file:///f:/Public_html/Skeptics/Political_skeptic/neocons.shtml--> !--file:///f:/Public_html/Skeptics/Political_skeptic/Neocons/Militarism/new_american_militarism.shtml--> !--file:///f:/Public_html/Skeptics/Political_skeptic/Propaganda/index.shtml--> !--file:///f:/Public_html/Skeptics/Financial_skeptic/Casino_capitalism/pseudo_theories.shtml-->

[Jan 21, 2017] If we look at the numbers for involuntary part-time workers, it dropped from 6.8 million in December of 2014 to 5.6 million in December of 2016.

Jan 21, 2017 | economistsview.typepad.com
anne : January 20, 2017 at 07:53 AM , 2017 at 07:53 AM
http://cepr.net/blogs/beat-the-press/people-are-choosing-to-work-part-time-why-is-that-so-hard-for-economic-reporters-to-understand

January 20, 2017

People are Choosing to Work Part-Time, Why Is that So Hard for Economic Reporters to Understand?

It is really amazing how major news outlets can't seem to find reporters who understand the most basic things about the economy. I guess this is evidence of the skills shortage.

Bloomberg takes the hit today in a piece * discussing areas where the economy is likely to make progress in a Trump administration and areas where it is not. In a middle "muddle through" category, we find "Full-Time Work Is Likely to Stay Elusive for Part-Timers." The story is:

"Trump has highlighted the number of part-time workers in the U.S. economy, saying 'far too many people' are working in positions for which they are overqualified and underpaid. While the proportion of full-time workers in the labor force remains below its pre-recession high, it's made up most of the ground lost during the downturn. But it hasn't budged much in the last two years, even as the job market has gotten tighter. Some economists point to the gig economy as the driving force (pun intended) behind part-timers. Others see a broader shift in the labor market that's left many workers stuck with shorter hours, lower wages and weaker benefits."

Okay, wrong, wrong, and wrong. In its monthly employment survey (the Current Population Survey - CPS), the Bureau of Labor Statistics asks people whether they are working more or less than 35 hours a week. If they are working less than 35 hours they are classified as part-time. The survey then asks the people who are working part-time why they are working part-time. It divides these workers into two categories, people who work part-time for economic reasons (i.e. they could not find full-time jobs) and people who work part-time for non-economic reasons. In other words the second group has chosen to work part-time.

If we look at the numbers for involuntary part-time workers, it dropped from 6.8 million in December of 2014 to 5.6 million in December of 2016. That is a drop of 1.2 million, or almost 18 percent. That would not seem to fit the description of not budging much. Of course Bloomberg may have been adding in the number of people who chose to work part, which grew by 1.4 million over this two year period, leaving little net change in total part-time employment.

Of course there is a world of difference between a situation where people need full-time jobs, but work part-time, because that is the only work they can find and a situation in which people work part-time because they don't want to spend 40 hours a week on the job. Most of us would probably consider it a good thing if people who wanted to spend time with their kids, or did not want to full time for some other reason, had the option to work part-time. This is what in fact has been happening and it has been going on for three years, not two.

Come on Bloomberg folks -- did you ever hear of the Affordable Care Act (a.k.a. "Obamacare")? As a result of Obamacare workers are no longer dependent on employers for health care insurance. This means that many people have opted to work part rather than full time. This has opened up full time jobs ** for people who need them, even though it has left total part-time employment little changed.

In total, the number of people involuntarily working part-time has fallen by 2.2 million since the ACA has been in effect, while the number choosing to work part-time has risen by 2.4 million. The sharpest increase in voluntary part-time employment has been among young mothers *** and older workers **** just below Medicare age.

It is really incredible that this shift from involuntary part-time to voluntary part-time is not more widely known. It is a very important outcome from the ACA.

* https://www.bloomberg.com/graphics/2017-how-well-know-if-trump-is-making-america-great-again/

** http://cepr.net/blogs/cepr-blog/obamacare-and-part-time-work-part-2-involuntary-part-time-employment

*** http://cepr.net/blogs/cepr-blog/the-affordable-care-act-still-family-friendly

**** http://cepr.net/blogs/cepr-blog/obamacare-is-good-for-older-workers-too

-- Dean Baker

libezkova -> anne... , January 20, 2017 at 10:34 AM
My impression here is that in this particular issue Dean Baker is out of touch with reality.

Question: how many people in this 1.2 million drop because they retired at 62 forced to take a half of their SS pension, or left workforce?

Also, can you consider Wal-Mart or Shop Right cashier working 36 hours for $7.5 an hour and without any benefits (as he/she can't afford them) fully employed.

Single mothers are probably the most important category to analyze here.

sanjait -> anne... , January 20, 2017 at 01:33 PM
This is an example of how the libertarian and Republican conceptions of liberty and freedom are so off the mark.

When people can afford to work part time instead of full time to do things like raise children, attain higher education or start companies, that is freedom. When the inaccessibility of health insurance forces them to work full time when they would otherwise prefer not, that is not enhanced freedom.

[Jan 11, 2017] Jared Bernstein questions Paul Krugman's sudden concern about crowding out

Jan 11, 2017 | economistsview.typepad.com
New Deal democrat : , January 10, 2017 at 05:36 AM
Today Jared Bernstein (see sidebar on right of this blog) questions Paul Krugman's sudden concern about crowding out. I agree.

In the first place, conditions have not changed drastically in the last two months. Krugman's would have more credibility on this subject had he voiced similar concerns at any point before the election. I don't remember him having any problems with Hillary's infrastructure spending plan for example.

Also, looking at two of my favorite metrics for underemployment -- Not in Labor Force but Want a Job Now, and Part Time for Economic reasons -- are each about 1,000,000 above their numbers in the late 1990s and the 2005-06 peaks. Since the jobs situation is clearly decelerating from its peak two years ago, I do not believe this 2,000,000 shortfall is ever going to be filled before the next recession.

In short, I really don't see the basis for a "crowding out" argument at this time.

pgl -> New Deal democrat... , January 10, 2017 at 06:01 AM
If we are below full employment (I think we are in part for reasons you note) then concerns about crowding out are indeed premature. But if we were at full employment (again I have my doubts) then this issue should be part of (not the end all) policy discussions.
Fred C. Dobbs -> pgl... , January 10, 2017 at 06:22 AM
1 in 3 Workers Employed in Gig Economy,
But Not All By Choice
http://www.usnews.com/news/articles/2016-10-11/1-in-3-workers-employed-in-gig-economy-but-not-all-by-choice
US News - Andrew Soergel - Oct 11, 2016

A new study published by the McKinsey Global Institute estimates the U.S. holds between 54 million and 68 million "independent workers," which it defines as "someone who chooses how much to work and when to work, who can move between jobs fluidly and who has multiple employers or clients over the course of the year." It includes individuals working on short-term contracts and those who rent or sell goods and services.

"A full-time job with one employer has been considered the norm for decades, but increasingly, this fails to capture how a large share of the workforce makes a living," the report said. "Digital platforms are transforming independent work, building on the ubiquity of mobile devices, the enormous pools of workers and customers they can reach and the ability to harness rich real-time information to make more efficient matches." ...

Independent work: Choice,
necessity, and the gig economy
http://www.mckinsey.com/global-themes/employment-and-growth/independent-work-choice-necessity-and-the-gig-economy?cid=soc-web

Peter K. -> New Deal democrat... , January 10, 2017 at 07:35 AM
To me the "crowding out" argument put forward by Krugman and conservative economists demonstrates a bias against the government. They want monetary policy not fiscal policy to be the means by which investment and employment levels are managed by the government.

J.W. Mason has interesting blog post about the Zero Lower Bound.

"In the dominant paradigm, this is a specific technical problem of getting interest rates below zero. Solve that, and we are back in the comfortable Walrasian world. But for those of us on the heterodox side, it is never the case that the central bank can reliably keep output at potential - maybe because market interest rates don't respond to the policy rate, or because output doesn't respond to interest rates, or because the central bank is pursuing other objectives, or because there is no well-defined level of "potential" to begin with. (Or, in reality, all four.) So what people like Gourinchas and Rey, or Paul Krugman, present as a special, temporary state of the economy, we see as the general case.

One way of looking at this is that the ZLB is a device to allow economists like Krugman and Gourinchas and Rey - who whatever their scholarly training, are aware of the concrete reality around them - to make Keynesian arguments without forfeiting their academic respectability."

http://jwmason.org/slackwire/rogoff-on-the-zero-lower-bound/

JohnH -> New Deal democrat... , January 10, 2017 at 08:02 AM
What's shocking to me is that, according to 'liberal' economists like PK and pgl, the goal of monetary and fiscal policy is not just full employment but rising real wages.

So far the economy has somehow managed to reach low unemployment, though nowhere near maximum employment (the Fed's mandate.) And real wages, except for supervisory personnel, have yet to show real growth.

Nonetheless PK and pgl want to preempt any move to maximum employment and rising real wages by advocating that Trump avoid any fiscal stimulus!!!

Methinks that these 'liberals' are really conservatives in sheeps clothing...or maybe working in New York has given them too close an affinity to the Wall Street worldview.

New Deal democrat -> JohnH... , January 10, 2017 at 08:16 AM
The common thread between your comment and Peter K's, I think, is that there is intelligent deficit spending and then there is counterproductive deficit spending.

It's pretty clear that significant infrastructure spending, like the building of canals in the 19th century (because water transportation is so cheap in terms of energy needs), doesn't crowd out, because of all of the growth it produces. On the other hand, if government just gives away money that will be parked unproductively, that will tend to crowd out.

The bottom line is that Krugman's concern is premature. There may be a hidden agenda, of course, that his real concern is that the GOP wants big deficits in order to "starve the beast" and attempt to justify cuts in programs like social insurance.

Peter K. -> New Deal democrat... , January 10, 2017 at 08:31 AM
I agree with Jared Bernstein who says the Republicans' tax cuts for the rich can be opposed on their own merits or demerits.

Fear of deficits has been too often used by the Pete Petersons and Republicans to advocate against government spending. The economics isn't clear.

http://jaredbernsteinblog.com/paul-krugman-goes-all-crowd-out-on-us-is-he-right/

JohnH -> New Deal democrat... , January 10, 2017 at 08:34 AM
Exactly. I prefer Bernie's approach: work with Trump if he wants to improve the lives of ordinary Americans, oppose him if he simply wants to enrich the wealthy.

Stimulus that boosts employment and wages is still needed. Opposing any stimulus now is not appropriate.

Peter K. -> JohnH... , January 10, 2017 at 08:37 AM
I agree but I doubt Paul Ryan or the Freedom Caucus will allow any government spending of the kind Sanders would approve of.

Possibly Trump will want some drama and mix it up with Republicans over an infrastructure bill.

I just think they might need some Democrats to pass the measure and am not clear on the legistlative mechanics.

Bush was able to pass his tax cuts for the rich on a simple majority vote because of the "reconciliation" maneuver.

JohnH -> Peter K.... , January 10, 2017 at 09:25 AM
I expect enough Democrats will be readily available to assist Trump. If not, there are parliamentary procedures that can be used...procedures that Democrats refused to sully themselves using for the common good.
Peter K. -> New Deal democrat... , January 10, 2017 at 08:35 AM
"if government just gives away money that will be parked unproductively, that will tend to crowd out."

I guess I agree with you that government or private investment has to be judged on the merits of each case.

But just look at the epic housing bubble. It would have been better if the government had taken that money and just gave it out to the average citizen to spend.

Dan Kervick -> New Deal democrat... , January 10, 2017 at 08:12 AM
I think Krugman is basically lobbying for the Fed to Volckerize any potential positive economic impact of Trump spending with a big anti-inflationary rate hike, which he & his party cronies can then blame on crowding out and the "market" response to excessive government borrowing. They want a quick hard recession that they can use to win Congress in 2018. Remember that the orthodox BS about monetary policy is that the Fed doesn't in any way set, determine or engineer rates, but just uses anti-price-stickiness nudges to help the market achieve the "neutral" equilibrium rate rate it is in some sense "trying" to get to on its own. So, if the Fed trashes the economy, they & Krugman will say its hands are clean.

Remember:

1. Krugman is a party hack in the first place;

2. Krugman represents the faction of the party that has no solid ideas about how to fix what is wrong with our country and our planet; so they can only succeed politically if the other side fails worse;

3. Krugman is on record as believing that the US has suffered something like a coup engineered by a conspiracy between the FBI and Vladimir Putin. So at this point, given the politically extreme circumstances he thinks prevail, there is no reason to think he is beyond making things up for the cause, as exigencies require.

Peter K. -> Dan Kervick... , January 10, 2017 at 08:28 AM
Of course you are right, Krugman advocates different economics depending on whether a Democrat or Republican is in office.

But I am not strongly against the idea of the Fed raising rates too quickly, despite the morale shadiness of the idea.

They seem intent on doing it anyway even if Hillary had won.

Yes ultimately I guess I would be in favor Yellen "helping" Trump (or low wage workers) as Trump regularly accused her of doing for Obama during the campaign.

It would improve workers' bargaining power and lives. But a Republican loss in 2018 would also help.

Hobson's choice. Pick your poison.

More fundamentally, I think Krugman is pushing a conservative view of economics which happens to line up with mainstream academic economics.

Peter K. -> Peter K.... , January 10, 2017 at 08:32 AM
The other thing is that if Trump gets some of his policies through the Fed would eventually be facing asset bubbles again.
Dan Kervick -> Peter K.... , January 10, 2017 at 08:47 AM
"More fundamentally, I think Krugman is pushing a conservative view of economics which happens to line up with mainstream academic economics."

Yes, this is a real problem. Krugman has a fundamentally conservative ("New Keynesian") view of the economy and how it should work. It's a free enterprise & market economy that generally just needs some helpful stimulatory nudges from the government: monetary nudges most of the time; fiscal nudges when we're in the special circumstances of a liquidity trap.

The problem is that by laying down all of these orthodox, conservative markers, our ability to do anything truly dramatic and socially innovative is damaged over the long haul.

pgl -> Dan Kervick... , January 10, 2017 at 08:56 AM
Keynesians are the new conservatives? Is this like Wednesdays are the new Thursdays? Party on!
Dan Kervick -> pgl... , January 10, 2017 at 09:21 AM
"New Keynesians"

New Keynesianism was neither Keynesian nor New Classical, but somewhere in between the two. It modified the New Classical approach based on rational expectations and efficient markets by accepting that prices were sometimes sticky in the short run and markets sometimes imperfect. Two of the leading figures of New Keynsianism were Paul Krugman and Gregory Mankiw.

Ultimately, the differences between the New Classicals and the New Keynsianians are relatively minor. Both accept the long-run optimizing efficiency of a liberal capitalist economy, but disagree only over how much government and central bank gear-greasing is needed.

pgl -> Dan Kervick... , January 10, 2017 at 09:33 AM
I have stated many times - I'm an old fashion Keynesian. Krugman is too. So take your straw man to the set of The Wiz.
Dan Kervick -> pgl... , January 10, 2017 at 10:01 AM
Krugman is not really an old-fashioned Keynesianism. He was one of the creators of "New Keynesiansim". Also read his introduction to Keynes's General Theory. He pours cold water on the really important policy suggestions at the end of the book in Book VI, which he mistakenly suggests Keynes's did not seriously intend.

Even more old-fashioned "Hicksian" Old Keynesianism is just one version of conventional liberal macro, which is primarily a tool for the countercyclical stabilization of our day-to-day capitalist economy. That's not enough to fix what is wrong with our planet or or domestic society, both of which are facing deeper, more structural economic crises that are very grave. We're going to have to be much more radical and ambitious.

Peter K. -> Dan Kervick... , January 10, 2017 at 09:03 AM
Yes as Jared Bernstein writes

"One implication Paul draws from these dynamics is that Republicans, motivated not by improving the economy but by bashing Obama and the D's, inveighed against deficits when we needed them and are about to shift to not caring about them when deficits – again, according to the model – could actually do some harm.

But how reliable is this crowd-out hypothesis? It's actually pretty hard to find a correlation between larger budget deficits and higher interest rates in the data.

...

So is Paul making a mistake to continue to depend on the model that has heretofore served him-and anyone else willing to listen-so well? My guess is that deficit crowd-out is not likely to be a big problem, as in posing a measurable threat to growth, anytime soon, even if deficits, which are headed up anyway according to CBO, were to rise more than expected.

The global supply of loanable funds is robust and, in recent years, rising rates have drawn in more capital (pushing out the LM curve). Larger firms have enjoyed many years of profitability without a ton of investment so they could use retained earnings (the fact of unimpressive investment at very low rates presents another challenge to this broad model). And most importantly, while we're surely closer to full employment, there are still a lot of prime-age workers who could be drawn in to the job market if demand really did accelerate.

(This, by the way, is the only part of Paul's rap today that I found a bit confusing. He's a strong advocate of the secular stagnation hypothesis, wherein secular forces suppress demand and hold rates down, even in mature recoveries. His prediction today seems at odds with that view.)"

http://jaredbernsteinblog.com/paul-krugman-goes-all-crowd-out-on-us-is-he-right/

Bernstein isn't that radical. He was chief economist for Joe Biden in the White House.

I think the epic housing bubble, financial crisis and slow recovery are causing to people to push back against the New Keynesian compromise and search for a better economics, which just may be an older type of economics.

John San Vant -> New Deal democrat... , January 10, 2017 at 11:14 AM
This is incorrect. Full Time employment has accelerated after a slowdown earlier this year while part time employment yry was noticeably lower in the 4th quarter. That created the illusion of slowdown in NFP. The U-6 was quite quite different.

This will probably reverse in the first half of 2017 as yry full time employment growth goes ahead of 2016 boosting overhead NFP and continuing to lower U-6 down to 8.7-8% by June.


New Deal democrat -> John San Vant... , January 10, 2017 at 11:53 AM
Here is the data in support of my argument:

https://fred.stlouisfed.org/series/LNS12032194
https://fred.stlouisfed.org/series/NILFWJN

Compare now vs. 1999 and 2007. Each is about 1 million higher than during those periods.

anne -> New Deal democrat... , January 10, 2017 at 12:11 PM
Nicely done:

https://fred.stlouisfed.org/graph/?g=ckxp

January 10, 2017

Part-time for economic reasons, 1994-2016

https://fred.stlouisfed.org/graph/?g=ckxr

January 10, 2016

Not in labor force but want a job now, 1994-2016

John San Vant -> New Deal democrat... , January 10, 2017 at 12:12 PM
You are undermining your argument with those graphs. The point is, NFP will likely reaccelerate unless there is another slowdown. Most likely that gap will close in the coming year.

I think need to let the inventory slump go. It was a mistake and it being recorrected.

New Deal democrat -> John San Vant... , -1
I hope I am wrong and you are right.

But ... If you check out YoY growth in payrolls, it tends to be very regular and in-noisy, peaking in roughly mid-cycle. The only exceptions have been where we managed to avoid a recession during a Fed tightening cycle.

YoY employment peaked at the end of 2014, and has been decelerating ever since. So unfortunately I disagree with you.

[Jan 08, 2017] Contingent labor as in being on call for positions such as retail clerk. A person who must be available for uncertain hours loses the opportunity to find a second job.

Jan 08, 2017 | economistsview.typepad.com
point -> pgl... , January 07, 2017 at 05:37 AM
It seems the lightning speed spread of contingent labor in the 2010s should be evidence of this. Contingent labor as in being "on call" for positions such as retail clerk. A person who must be available for uncertain hours loses the opportunity to find a second job. The employer demanding contingent labor is essentially demanding uncompensated work hours.

In any event, the practice seems to have become near universal by a couple years ago, suggesting a level of employer market power far in excess of what one would think by looking at numbers like the official unemployment rate. It may also suggest that labor market monopsony may exist at quite small employer size.

cm -> point... , January 07, 2017 at 08:39 AM
What you describe is in general not due to monopsony. There is still a substantial number of independent retail and other companies that are not (explicitly) coordinating their actions and job function designs.

It is just regular supply and demand dynamics, in combination with social feedback (actors observing what "peers" are getting away with and trying the same, and after a while it works its ways into a new normal).

In corporate lingo it is known as "best practices" - don't innovate process, just copy what has worked elsewhere.

RC AKA Darryl, Ron -> cm... , January 07, 2017 at 09:46 AM
Unfortunately, in the contemporary corporate Zeitgeist "best" usually means "worst", at least from the POV of employees.
Zeppelin Hindenburg Delivery -> cm... , January 07, 2017 at 09:58 AM

retail and other companies that are not (explicitly) coordinating
"

Although they have an app for coordinating plus incentive to coordinate, they fully understand that by the time they begin coordinating the game is over. The game for brick and mortar retail is now hanging by a tread.

16% of retail is now intertube orders being shipped out by USPS, Fedex, Amazon airship drone & UPS. For the next 2 years the 16% will double each year then slowly expand toward the 99% asymptote. Sure!

When you ski at Aspen you will see old-time-y shops for retail, shops that only the wealthy will use for more than window-shop. Plenty time for best practices but

no time to
innovate --

Libezkova -> cm... , January 07, 2017 at 10:53 AM
cm,
"companies that are not (explicitly) coordinating their actions and job function designs."

That happens by default.

Wall-Mart dominates retail (5K stores I think out of over 11,593 stores and clubs in 28 countries) and it is a very cruel company. Other companies copy Wall-Mart practices.

They have no "social conscience" at all and try to drive their labor as hard as possible paying as little as possible. In other words, they can be viewed as a corporate psychopath.

[Jan 07, 2017] Contingent labor as in being on call for positions such as retail clerk. A person who must be available for uncertain hours loses the opportunity to find a second job.

Jan 07, 2017 | economistsview.typepad.com
point -> pgl... , January 07, 2017 at 05:37 AM
It seems the lightning speed spread of contingent labor in the 2010s should be evidence of this. Contingent labor as in being "on call" for positions such as retail clerk. A person who must be available for uncertain hours loses the opportunity to find a second job. The employer demanding contingent labor is essentially demanding uncompensated work hours.

In any event, the practice seems to have become near universal by a couple years ago, suggesting a level of employer market power far in excess of what one would think by looking at numbers like the official unemployment rate. It may also suggest that labor market monopsony may exist at quite small employer size.

cm -> point... , January 07, 2017 at 08:39 AM
What you describe is in general not due to monopsony. There is still a substantial number of independent retail and other companies that are not (explicitly) coordinating their actions and job function designs.

It is just regular supply and demand dynamics, in combination with social feedback (actors observing what "peers" are getting away with and trying the same, and after a while it works its ways into a new normal).

In corporate lingo it is known as "best practices" - don't innovate process, just copy what has worked elsewhere.

RC AKA Darryl, Ron -> cm... , January 07, 2017 at 09:46 AM
Unfortunately, in the contemporary corporate Zeitgeist "best" usually means "worst", at least from the POV of employees.
Zeppelin Hindenburg Delivery -> cm... , January 07, 2017 at 09:58 AM

retail and other companies that are not (explicitly) coordinating
"

Although they have an app for coordinating plus incentive to coordinate, they fully understand that by the time they begin coordinating the game is over. The game for brick and mortar retail is now hanging by a tread.

16% of retail is now intertube orders being shipped out by USPS, Fedex, Amazon airship drone & UPS. For the next 2 years the 16% will double each year then slowly expand toward the 99% asymptote. Sure!

When you ski at Aspen you will see old-time-y shops for retail, shops that only the wealthy will use for more than window-shop. Plenty time for best practices but

no time to
innovate --

Libezkova -> cm... , January 07, 2017 at 10:53 AM
cm,
"companies that are not (explicitly) coordinating their actions and job function designs."

That happens by default.

Wall-Mart dominates retail (5K stores I think out of over 11,593 stores and clubs in 28 countries) and it is a very cruel company. Other companies copy Wall-Mart practices.

They have no "social conscience" at all and try to drive their labor as hard as possible paying as little as possible. In other words, they can be viewed as a corporate psychopath.

[Dec 23, 2016] Top Ex-White House Economist Admits 94% Of All New Jobs Under Obama Were Part-Time

Growing inequality. We are already at Gini coefficients normally only found in banana republics.
Notable quotes:
"... from 2005 to 2015, the proportion of Americans workers engaged in what they refer to as "alternative work" soared during the Obama era, from 10.7% in 2005 to 15.8% in 2015. Alternative, or "gig" work is defined as "temporary help agency workers, on-call workers, contract company workers, independent contractors or freelancers", and is generally unsteady, without a fixed paycheck and with virtually no benefits. ..."
"... The two economists also found that each of the common types of alternative work increased from 2005 to 2015-with the largest changes in the number of independent contractors and workers provided by contract firms, such as janitors that work full-time at a particular office, but are paid by a janitorial services firm. ..."
Dec 23, 2016 | www.zerohedge.com
Just over six years ago, in December of 2010, we wrote " Charting America's Transformation To A Part-Time Worker Society ", in which we predicted - and showed - that in light of the underlying changes resulting from the second great depression, whose full impacts remain masked by trillions in monetary stimulus and soon, perhaps fiscal, America is shifting from a traditional work force, one where the majority of new employment is retained on a full-time basis, to a "gig" economy, where workers are severely disenfranchised, and enjoy far less employment leverage, job stability and perks than their pre-crash peers. It also explains why despite the 4.5% unemployment rate, which the Fed has erroneously assumed is indicative of job market at "capacity", wage growth not only refuses to materialize, but as we showed yesterday, the growth in real disposable personal income was the lowest since 2014 .

When we first penned our article, it was dubbed "fringe" tinfoil hattery, or in the latest vernacular, "fake news."

Fast forward 6 years, when a report by Harvard and Princeton economists Lawrence Katz and Alan Krueger , confirms exactly what we warned. In their study, the duo show that from 2005 to 2015, the proportion of Americans workers engaged in what they refer to as "alternative work" soared during the Obama era, from 10.7% in 2005 to 15.8% in 2015. Alternative, or "gig" work is defined as "temporary help agency workers, on-call workers, contract company workers, independent contractors or freelancers", and is generally unsteady, without a fixed paycheck and with virtually no benefits.

The two economists also found that each of the common types of alternative work increased from 2005 to 2015-with the largest changes in the number of independent contractors and workers provided by contract firms, such as janitors that work full-time at a particular office, but are paid by a janitorial services firm.

Krueger, who until 2013 was also the top White House economist serving as chairman of the Council of Economic Advisers under Obama, was "surprised" by the finding.

Quoted by quartz , he said " We find that 94% of net job growth in the past decade was in the alternative work category ," said Krueger. "And over 60% was due to the [the rise] of independent contractors, freelancers and contract company workers." In other words, nearly all of the 10 million jobs created between 2005 and 2015 were not traditional nine-to-five employment.

While the finding is good news for some, such as graphic designers and lawyers who hate going to an office, for whom new technology and Obamacare has made it more appealing to become an independent contractor. But for those seeking a steady administrative assistant office job, the market is grim. It also explains why despite an apparent recovery in the labor market, wage growth has been non-existant, due to the lack of career advancement and salary increase options for this vast cohort which was hired over the past decade.

The decline of conventional full-time work has impacted every demographic. Whether this change is good or bad depends on what kinds of jobs people want. " Workers seeking full-time, steady work have lost," said Krueger. He then added, perhaps sarcastically, that "while many of those who value flexibility and have a spouse with a steady job have probably gained."

Yes, well, spousal support aside, it also confirms another troubling finding this website reported first earlier this month, namely that the number of multiple jobholders has recently hit the highest number this century.

My Life as a TaskRabbit - Businessweek

The idea of posting or finding jobs online isn't new. Craigslist, the pioneering Internet bulletin board, allowed the primitive, gentle folk of the 1990s to find day work, not to mention cheap dates. These new services are different, partly because they're focused and carefully supervised, and partly because they take advantage of smartphones. Workers can load one of these companies' apps on their location-aware iPhone or Android device and, if the impulse strikes, take a job near them any time of day. Employers can monitor the whereabouts of their workers, make payments on their phones or over the Web, and evaluate each job after it's accomplished. The most capable workers then rise to the top of the heap, attracting more work and higher pay. Lollygaggers who don't know how to recharge their Roombas fall to the bottom of the barrel.

Slideshow: Odd Jobs: From Space Travel Agents to Professional Mermaids

Distributed workforce entrepreneurs and their investors are thinking big. They compare their startups to fast-growing companies such as Airbnb, which allows people to rent out their homes. In this case, the assets for rent are people's skills and time.

Leah Busque, a former IBM (IBM) software engineer who started and runs TaskRabbit, says thousands of people make a living (up to $60,000 a year) on her site, which operates in San Francisco, Los Angeles, New York, Chicago, and five other cities. "We are enabling micro-entrepreneurs to build their own business on top of TaskRabbit, to set their own schedules, specify how much they want to get paid, say what they are good at, and then incorporate the work into their lifestyle," she says.

Venture capitalists have bet $38 million on TaskRabbit and millions more on similar startups. Other distributed labor companies, with names like IAmExec (be a part-time gopher) and Gigwalk (run errands for companies) are being founded every day. Listening to this entrepreneurial buzz all summer, I got a notion that I couldn't shake-that the only way to take the temperature of this hot new labor pool was to jump into it.

Angela J. Shirley

Since being laid off in 2008 for the third time, I have not been able to find another 9 to 5 job. Finding odd jobs have been helpful, but some people, not all - do take advantage of your desperate need for money. It is like, I know I am being underpaid, but anything is better than zero. Spending last night in the emergency room for an anxiety attack, the first in my life at age 54 - just confirmed what I said. Working too hard, worrying about making ends meet. I hope the recession goes away soon as I so drained.... Career Counseling

cruzyogadude

Sounds like classical times where owners rented out their slaves for odd jobs. That you rent yourself out makes you no less a slave, doing work for people who happily take advantage of your errors in judgment on prices and apparently are quick to understate how hard the job is. Some might find a niche, like Ikea Guy. But he works 6 and 7 days a week with no benes. Is this the future?

egockel > cruzyogadude

oh stop. If the task is not clear, the 'rabbit' should get clarification. Don't presume everyone is out to get you ("happily take advantage")

Jim_Hill

I think this has some serious legal and liability questions that need to be answered besides the criminal background check, especially if you are working in CA. You might be able to claim that each person is operating as an independent contractor, but the first time someone ends up in a ER with a hundred bee stings and tries to bill it to their health insurance instead of WC that will be the end of that start-up and any investment.

SayHi2YourMom4Me

Meh. Sounds better than my current (day) job. Sounds better than Labor Ready (a labor temp company I have also worked for). The commission the companies take sounds reasonable. Still, if these companies end up being successful and a lot of people start getting in on it, then I fail to see what will prevent a lot of downward pressure on wages. Minimum wage is not a living wage in many parts of California, and probably not even close in a city like San Francisco I imagine. I do not doubt that some of the founders of these companies might actually be so lofty minded that they might actually believe their app will create a better labor market in some areas, but what is to stop it from eventually getting to the point where work is scarce and what little you can get pays minimum wage?

SayHi2YourMom4Me > cas127

I agree that some pensions are ridiculous. However I also think that in some cases unions are beneficial to workers, ensuring living wages. I hope the ridiculous examples that are out there haven't caused you to see ALL unions in a bad light.

QTpi8199

Although Taskrabbit's concept is great, the fact of the matter is that they employ "rabbits" to do odd jobs that one may not even be suitable to perform. I would suggest everyone checking out www.bidonmygig.com It's a site where everyone can post the tasks they want to have done, and licensed professionals can bid on those tasks. It's reverse-bidding, so those with large jobs can check vendors' ratings, licensing, etc, and also find the lowest prices to get the job that they want done. You can pretty much post any type of job that you want to have done, and you will find people willing to bid on doing those jobs for you. It's worth a look!

Midwest is overrated

Two words: adverse selection.

Adam Silver

I applied at TaskRabbit 10 months ago, after using them to help me pack for a move.. I was laid off (30 months ago now).. and have a skill set that could be used..

App is still being reviewed, and I am still looking for work!
41 year old, college educated married father of 3.

Dannie Nguyen > Adam Silver

where are you located? Check out http://PinDone.com then. you might have a better luck there

Anand Kulkarni

Should've tried Exec or MobileWorks. They're both platforms that focus on creating positive experiences for workers and customers alike.

JohnnySmith0

I don't really like where TaskRabbit is going. At first I thought it was going to be like employing with a personal touch. Now it's just turning into "anything money CAN buy". But I don't think that you should be able to buy everything with money. Having money now turns into having a sense of entitlement. This is not good.

[Dec 31, 2013] The Task Rabbit Economy by Robert Kuttner

"The move to insecure, irregular jobs represents the most profound economic change of the past four decades... At the rate things are going, tens of millions of us could end up as temps, contract employees, call-center operators, and the like. "
October 10, 2013 | prospect.org

TaskRabbit.com markets itself as a Web service that matches clients seeking someone to do odd jobs with "college students, recent retirees, stay-at-home moms, [and] young professionals" looking for extra income. The company website calls it "a marketplace dedicated to empowering people to do what they love." The name Task Rabbit doesn't exactly suggest the dignity of work, and the love often takes humble forms. Customers hire Task Rabbits to clean garages, haul clothes to the laundry, paint apartments, assemble Ikea products, buy groceries, or do almost anything else that's legal.

The San Francisco–based company, which has raised $38 million in venture capital since it was founded in 2008, makes its money by tacking on a 20 percent surcharge to the fees paid by clients. The firm performs criminal background checks on aspiring Rabbits, who then get access to chore requests posted by customers. Using the familiar metrics of the Internet, the more than 10,000 approved Rabbits are rated by past users. Early this year, Patricia Marx wrote a witty New Yorker piece titled "Outsource Yourself" on her experience hiring a Task Rabbit to purchase and deliver hors d'oeuvres for her book group. When Marx fell behind in her reading, she hired a second Rabbit to summarize the book for her (Proust's Remembrance of Things Past, no less) and to ghostwrite some clever comments. She then retained a third Rabbit to bake madeleines.

Marx's adventure reads like a cross between Woody Allen's famous short story, "The Whore of Mensa" (in which a character hires a young Brandeis graduate to talk pseudo-intellectual to him), and a labor-market fantasy by Friedrich Hayek. But Task Rabbit is more than a hip, Web-based temp agency. It's the reserve army of the unemployed made flesh. What's diabolically brilliant and emblematic about the company is that prospective errand-runners bid against one another for jobs. To get an assignment, an aspiring Rabbit offers to do the chore for less money than he or she thinks other prospective Rabbits are bidding. That's what makes it a metaphor for the new economy, a dystopia where regular careers are vanishing, every worker is a freelancer, every labor transaction is a one-night stand, and we collude with one another to cut our wages.

At the rate things are going, tens of millions of us could end up in the role of Task Rabbits. Not actual Task Rabbits, mind you. But temps, contract employees, casual day laborers, baristas, warehouse pickers at Amazon, fast-food workers, call-center operators, nurse's aides, underemployed "consultants," and adjunct professors all have one core trait in common with freelance errand-runners: They have lost bargaining power. Even people with regular paychecks are less likely than their parents to have decent pay, benefits, and job security. In its technology, the Task Rabbit economy is very 21st-century, but it brings back the 19th, an era when most people who didn't farm or own property were casual labor.

The precarious labor market raises a host of questions. Is this trend economically efficient? Is it technologically inevitable? Must workers lacking advanced skills necessarily be relegated to a virtual hiring hall of low-paid day labor?

Further, in a relentlessly competitive global economy of intensified creative destruction, is job security no longer possible for employers to provide? Is a stable career a foolish aspiration? We hear that with lifetime employment defunct, workers should not only adjust to the need to pursue multiple jobs, skills, and careers but welcome the challenge. Do Task Rabbits love the freelance life, or are they quietly desperate people internalizing the new norms of job insecurity?

Finally comes the political question. To the extent that at least some of this erosion of decent work is optional, what will it take to restore an economy of living-wage jobs?

As we try to figure out why the United States is becoming an economy of ever more casual employment and how to reverse this trend, we had better get the answers to these questions right.

Somehow, despite the claims for efficiency, a hyper-competitive labor market has not yielded superior overall economic performance. On the contrary, the era of more-stable employment in the quarter-century after World War II had almost double the recent rate of economic growth. Even the postwar era had its Task Rabbits, of course. My mother, widowed with a small child, took a temp job selling classified ads from home. Young people baby-sat, delivered newspapers, and fetched groceries for old folks at subprime wages. Minorities were relegated to insecure domestic, janitorial, and farm labor. But the norm for prime-age (white, male) breadwinners was regular payroll employment.

Katherine Stone, a professor of labor law at the University of California, Los Angeles, studies the erosion of what she terms the "standard contract of employment." She doesn't mean a literal contract, though some workers had one, but a set of norms and assumptions. That contract included a regularized workweek and paycheck and the expectation of continued employment assuming satisfactory job performance. The social protections that were added throughout the 20th century-wage and hour laws, unemployment insurance, workers' comp for injuries, apprenticeship programs, regulated fringe benefits, anti-discrimination rules, Social Security, the right to bargain collectively, health and safety standards-were predicated on the assumption of a standard workweek. To use Stone's term, they were "layered" on top of the normal employment contract.

As Stone notes, regular employment promoted solidarity: "By giving workers the actual or potential experience of working together over extended periods of time, the standard employment contract taught them how to organize for industrial and political action." None of this happened spontaneously or was an artifact of a particular stage of capitalism. It took political struggle and victories in Congress and on the shop floor.

As the standard contract of employment has eroded, the added protections of labor regulation have eroded along with it. What economists call "contingent" workers-casual labor-generally don't get unemployment insurance, workers' comp, or fringe benefits; they pay their own Social Security and can't organize unions. The move to insecure, irregular jobs represents the most profound economic change of the past four decades. The $64 trillion question is whether this collapse in what used to be standard reflects a shift in fundamentals-or merely a shift in political power from labor to capital.



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