Capitalism, economy & financial well-being in America, Government & Law, Jobs

Let’s Rethink the Role and Status of Labor in Our Democracy

March 4, 2019

Think back.  America was founded by people with a very strong work ethic.  There was opportunity and people worked hard to improve their well-being and status and that of their family.  Communities formed and thrived, largely due to a spirit of working to help the community and neighbors as well as oneself.  This work ethic persisted, the Nation grew and thrived (despite setbacks along the way) until the last decade or two.

The last few decades have seen some very disturbing trends, trends that I would argue are a fundamental threat to democracy.  Capitalism, the same capitalism that provides opportunity and incentive for individuals with ideas and ambition to take risks with the potential of huge rewards, is evolving in ways that are harmful to democracy.  The quest for money, wealth and power seems to have taken on the highest priority and in many ways at the expense of the general well being of society and our democracy.  The statistics are stark.  The wealth of the ‘top 1%’ is equal to that of the lower 90%.  Corporation set strategies to grow ever larger to achieve competitive advantage, political power and profit.  To achieve increased profitability they implement low cost labor from foreign sources and more recently technology to eliminate labor.  The profits and wealth created acre to the corporation, its senior management and the shareholders.

Why is this ominous?  For several reasons.  First,  jobs are going away at the same time that the population is growing.  Second, technology is making those jobs that remain lower skill and lower wage.  Look at the data from the Bureau of Labor Statistics.  In 1998, workers in private sector US businesses put in 194 billion hours of labor.  Fifteen years later goods & services produced had grown by 42% (adjusted for inflation), but the total labor hours remained the same, and US population had grown by >40 million people.  The number of jobs is not growing and the quality of jobs is diminishing.  The ‘American Dream’ has disappeared or become a nightmare for many.  The vibrant middle class has been hollowed out.  This is the real threat to democracy.  As we have discussed in other posts, democracy of, for and by the people, needs a robust core of citizenry with common values, status and issues.  It is the commonality that makes discourse, discussion and compromise possible.  A society of ‘elites’ at the top, a minimal middle class, and a large lower, struggling class cannot support a healthy democracy.

So what to do?  First and foremost we must recognize that the stakeholders of corporations are not only management and shareholders.  Labor is also a stakeholder.  Labor makes it all possible and should share in the benefits of increased profitability.  There have been multiple ways discussed to achieve this.  Labor should have representation on corporate boards.  Labor should be offered some level of profit sharing plan.  Government policy should make it harder to replace labor with technology and automation.  Labor cost is a tax deductible expense, maybe it should be deducted at greater than 100%?  The country needs to find a way to create and maintain more jobs.  Some have argued otherwise, saying that it is inevitable that there will not be enough jobs and that we should institute a guaranteed minimum income.  Despite the obvious question of affordability, I would argue that this is the wrong approach.  Most people want to work, to earn a living for themselves and family, take pride in their accomplishments.  A guaranteed minimum income is like being ‘on the dole’, a handout, a disincentive to contribute to a healthy society.  Further, the government has the ability to create public benefit jobs, look at our experience in this regard when recovering from the Great Depression.  A strong labor force is good for the nation and democracy.  Let’s try to build and not substitute.

Photo by jurvetson

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