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Tuesday, March 22, 2016

Bernie, Trump Fans: Sorry, Labor is Over With

Bernie and Trump fans, I have bad news.

The one idea you all have in common is really terrible, backward, and misinformed.

It’s the idea that all those jobs we “sent to China” can be imported back to the U.S. and that we can just employ millions of unskilled laborers with profitable production jobs like it’s 1955 again.

Here’s the really tough part for you: the period in history you are nostalgic for was a fleeting moment in time and can never be recreated no matter how badly you want it. And that’s a good thing.

The truth is the U.S. economy has moved on… becoming bigger, better, more productive… and creating far more for less than it did 40 years ago.

This is really the goal of human civilization: making all of our lives easier, cheaper, wealthier by making marginal improvements in productivity over time. And we’ve really knocked it out of the park: Food, clothing and shelter have been steadily declining in cost for more than 80 years.

That kind of productivity helps everyone. The fact that even the poorest in the U.S. have to pay a declining fraction of their income on food and other basic commodities is a triumph of economics.

But there’s always tradeoffs: as we’ve gotten better at producing things, the value of unskilled labor has plummeted. Over the last 35 years the labor share of the workforce has declined significantly.

Those jobs are just no longer valuable. That’s why this chart is a thing:

You can’t magically make unskilled labor “worth more” by mandating a $15 wage or pressuring companies to return their labor force to the U.S. Even if those jobs came back, they’d be automated within a few years to save costs and maintain productivity.

Bernie fans, it’s important that you understand that companies aren’t evil for doing this. To survive in a globalized marketplace they have to compete with companies from around the world with lower labor costs. Everyone has to adjust.

Trump fans, it’s important you understand that China is not evil for using those jobs to lift their population out of unfathomable poverty. As China’s own productivity and standard of living improve, many of those jobs will likely to be turned over to automation as well.

The demand for unskilled labor isn’t what it was 40 years ago… and in 40 years it will probably be worth far, far less as developing economies grow to compete with our own.

But there’s good news: the workers remaining in the productive labor force will probably be making more than $15 an hour… because they’ll all be engineers and technicians.

So please, abandon this “make wage labor great again” idea. It’s objectively terrible. Most economists are against Bernie’s minimum wage plan, and early experiments in cities like Seattle have caused massive spikes in unemployment. Applied nationally, this idea would plunge us back into a recession and boomerang back against the people you’re trying to help.

If you want to find creative ways to make education and job training more affordable, that’s a legitimate policy talk we can have. But a $15 wage for people with no real skills is not a great idea.

I know everyone is nostalgic for the day when America ruled the roost, when all the jobs were here and other countries stuck to subsistence farming and you could support a family even if you had no actual skills. Nostalgic nationalism is the central theme of the malcontent populists who are dominating the narrative this election cycle. Every time Trump talks about “making America great again”, and Bernie longs for the days when the top marginal tax rate was over 90%, they’re asking us to return to 1950’s America.

Those days are over, and you are not entitled to the employment of your choice. But the good news is that if you agree to do work that people value, there will always be money to make for you. Nostalgic populism will never “fix” America. It’s time to move on.

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