Monday, September 5, 2011

Ideal levels of employment and unemployment

U.S. unemployment exceeds 9%. Over 15% of employed U.S. adults want to work more hours or are underemployed, working at a job for which they are over qualified.

By historical standards, that is a high level of unemployment. Economists believe that a low level of unemployment aids the economy by preventing cost-push inflation in labor markets and aiding the free movement of individuals between jobs for reasons of personal preference, geographic relocation, acquisition of new qualifications, etc. By any reasonable benchmark, 9% unemployment is at least twice that desirable minimum level of unemployment.

Furthermore, the percentage of U.S. adults employed in the labor force has dropped over the last three years from 64% to 58%, returning to its historical average after having been abnormally high for the last ten to twenty years (Allan Sloan, "Relief from Economic Turmoil," Fortune, September 5, 2011, p. 59).

Two factors seem likely explanations for the increased rate of adult employment: (1) in a growing number of couples, both partners want paid employment; (2) in more families, one income no longer purchases the desired standard of living.

The two factors overlap but not entirely, e.g., some individuals who do not need the income choose paid work for reasons of self-esteem, to use acquired skills/knowledge, or for personal satisfaction.

One structural issue the U.S. and other developed nations will increasingly face is how to constructively, productively employ everyone who wants to work at an affordable, attractive, and fulfilling job. Labor markets are increasingly international, as work becomes a commodity that international corporations import and export to their advantage. Labor costs are generally lower in developing nations than in developed nations, which has resulted in widespread offshoring and extensive importing of consumer goods.

A second issue that individuals and families might advantageously address is to choose intentionally the standard and style of life that best suits their situation. Choosing for one adult to stay at home with the children, for example, sharply reduces childcare, work- related, and tax expenses while perhaps increasing the entire family’s quality of life. The abundant life is not necessarily the consumer lifestyle that results in a large home and multi-car garage crammed with possessions that nobody uses or really cares about.

One possible partial solution to this set of difficulties is for people to work fewer hours per week, spreading available employment among more individuals and accepting lower incomes in return for more time off. Some European nations have taken a few tentative steps in this direction but generally found that employees want to preserve their incomes in spite of working fewer hours.

As technology enables us to live better with fewer possessions, the ethical question of how much is enough will become ever more poignant: how many shirts, how many pairs of shoes, how many TVs (perhaps even none – just a tablet!), how many vehicles are questions that we can beneficially rethink.

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