Monday, September 6, 2010

Unemployment when jobs go unfilled

Today is "Labor Day" so perhaps this posting is particularly relevant.

UPDATE 2021: same shit, different year. Just as we extended unemployment benefits back in 2008 to the point where no one wanted to work, we're doing the same this year, only making things worse by paying an extra $300 per week so that many people are making more on unemployment than they were working.  But there are Help Wanted signs everywhere, we shouldn't be paying people not to work.

From 2010:

One of the more bizarre features of the American Economy is the prospect of "unemployment" at a time when you can't find anyone to do basic work.

If you want your house painted, some sheetrock work done, the lawn mowed, basic gardening, well, forget it. No one is available to do the work, and the few who do are "booked" until next year.

When we bought our summer home in NY, we tried to find someone to mow the lawn. One fellow we called, who had a business doing this, said "No way, too much work". We said "No problem, we'll pay more!" But it was to no avail. And in the years we have been here it has been the same deal over and over again. If you want something done, chances are, no one is available to do it, even as "unemployment" remains high in the region.

Want your road plowed? Buy a truck - because no one feels it is "worthwhile" anymore to run a snow plowing business.

And so on down the line. A friend of mine wanted some earth moving work done and hired a local fellow to do it. He finally started the job - five years after he was contracted to do it. Got kind of busy in the interim, what with deer season, fishing season, snowmobiling season, and all.

People are not "desperate" for work in this country - not by a long shot.

The problem with "employment" in the USA is that people want "jobs" and not work. They want to show up at a factory or office building (preferably the latter) and be given an explicit set of instructions on what to do, when their break times are, and what their limits are. They also expect a title and position as part of the deal - and of course a huge salary and benefits.

Which of course is not an unrealistic expectation if you have some education and talent. But people with no marketable job skills - even the ability to read - expect this sort of employment, and then whine when "jobs" are not available.

And yet work exists that goes undone, because no one is available to do the work. Granted, many jobs out there are menial. But others, such as carpentry, etc. involve some modicum of skill. So why is there more demand than supply?

Simply put, we've made it nearly impossible for people to work in this country. Consider my neighbor, who is a carpenter. His skills are in high demand. So he hires two assistants to work for him. Naturally, as "workers" they expect to have their hands held, told what to do, when to do it, etc. And not surprisingly, the moment you turn your back, they are showing up an hour late for work, or not showing up at all - it is "hunting season" after all, and bagging $300 worth of deer meat is more important than $300 of labor working.

But worse yet, as an "employer" now, he has to pay workman's comp insurance, unemployment insurance, pay a payroll company to do withholding and taxes, and hire a bookkeeper to keep track of it all. Suddenly, being a carpenter is no fun anymore. He spends more time managing jobs and chasing papers and government regulations than he does driving nails or doing the fine finish work he enjoys. His workers have more fun than he does - and make about as much money, perhaps more. In the off season, they collect the "unenjoyment" insurance and then work side jobs to make under-the-table cash. No wonder the unemployment insurance premiums are so high!

So, like me, he scales back, lays off the "workers" and goes back to doing small jobs by himself. He makes about as much money, with far less overhead and hassle. And there is plenty of work out there to do, so he can afford to turn down projects that seem too much hassle.

Of course, this means less labor in the marketplace. His workers don't have the initiative to start their own businesses, court clients, and design jobs. The number of people with the balls to start and run a business is very, very small in this country - and getting smaller all the time.

And the reason is not hard to fathom. We've made it harder and harder to work, and easier and easier to get free money from the Government. And the few people who try to start a small business get easily discouraged by the mountain of paperwork, regulations, taxes, and other obstacles we place in their way. And since many small business owners make very little money at their ventures, they are quick to throw in the towel when a "job offer" comes along. Hey, why should their employees be the only ones to shirk responsibility and have a good time?

Budget shortfall? Easy fix, just charge a "gross receipts tax" on all your local small businessmen. The plebes won't realize they are really being taxed, because the businessmen will simply add the 4.5% to the bottom line pricing. It does mean, however, that your local businessman is now less competitive with his untaxed neighbors in the next State. And the plebes will swallow any tax on "businesses" because they think that someone else is paying it.

And unfortunately, the situation won't change any time soon. Politicians get elected by bashing the "evil businessman" who making huge profits (hardly) and abusing his employees. He needs to be taxed, regulated, sued, persecuted - put him in chains, tar and feather him and drag him out of town!

You know how evil those businessmen are? They are so evil that when their lazy employees drive the company into bankruptcy, they have the balls to lay everyone off! Imagine that!

It is a good story and the plebes buy into it, aided by sensationalized stories in the press about how much the CEO of a large corporation makes with his "golden parachute". But such stories are plants, basically. The media outlets like sensationalism. It is like the "skyrocketing cost of college education" stories they run on slow news days, where they use data from Harvard and Yale as an indicia of how much the rest of us pay at State Schools.

The reality is, most new jobs are created by small businesses, and the failure rate of small businesses is staggering. Very few small businesses "succeed" past the first few years, which means that many small businessmen are losing their shirts - going bankrupt, losing their life savings, etc. - often while working long hours for free. Their employees, however get a steady paycheck.

And even for those small businesspeople who succeed, often the "reward" is an income that is not much above their highest paid employees, or much above a middle-class or upper-middle-class lifestyle. In other words, they are taking a huge risk by running a business and reaping a paltry reward - if they succeed at all.

So it is not hard to understand why work remains undone in this day and age - or that people are forced to "do it themselves". No one is available to do the work, as very few people want to take the risk of starting a small business and going broke, if the only reward is less than what they'd make working for someone else.

So, I have to get up on a ladder and sheetrock my own ceiling, because the local guy (and there is only one guy) can't get to it until next year. Meanwhile, a laid-off carpenter sits at home in his barca-lounger, sipping a beer at 10:00 AM, watching Oprah, and collecting unemployment, food stamps, and welfare, because there are "no jobs out there."

What an odd system we have created!