Perhaps to dishonor Labor Day, over the weekend Bloomberg Finance broadcast an article bemoaning the fact that the U.S. labor force may be shrinking. What they are talking about is not the number of jobs but the number of people with or looking for jobs.
The key fact presented by writers Steve Matthews and Joshua Zumbrun is that over the next 40 years, the labor force is expected to grow by a mere .6% a year, compared to the 2% a year growth rate from 1950 to 2008, at which point the great recession of 2008-20?? hit and the labor force began to shrink.
The article and its several experts and worried corporate leviathans argue that with fewer workers, there will be less income around to purchase stuff, therefore the economy will shrink. The experts present a perfect mirror image to the widely-held belief that an economy can only prosper if it is growing and it can only grow if the population grows. They reduce economic planning to a homily: population increase leads to economic growth; population decrease leads to economic trouble. I would assert, however, that it‘s possible for an economy to thrive in stasis, and in fact imperative that we pursue no-growth and negative-growth strategies to address resource depletion and human-induced global warming.
But we don’t even have to question the much-employed shibboleth of growth to realize what’s behind the worries of the economic experts and corporations: they’re all afraid that wages will go up for the working stiff.
Let’s start by reviewing the reason given in the article for the decline in the workforce (actually the stagnation of the workforce): fewer women in the workforce and the retirement of the enormous baby boom generation.
In other words, people are leaving the labor force but not dying or leaving the country. And is that such a bad thing? Don’t we have an official unemployment rate that’s more than 9% and a real rate of unemployment (which includes those underemployed and those who have stopped looking for work) of more than 16%? If the labor force shrinks, unemployment will shrink, won’t it? (And remember that for years the real estate bubble bloated our job roles with all those unnecessary broker, appraiser, builder, banking, insurance and related jobs that will never return.)
The women and retirees leaving or not entering the workforce aren’t going to disappear. They will still need goods and services that their spouses, families, Social Security or retirement plans will finance. Now unless we have immigration, our population will shrink when baby boomers start to pass away in large numbers, but the Bloomberg article isn’t talking about population shrinkage. It’s talking about the labor force shrinking relative to the population because of retirements and lifestyle changes.
An axiom of all economic theories, be they free market or Marxist, is that when the supply of any good or service decreases, its relative value to purchasers increases and so does its price. And that’s what the large corporations, the economists that do their “big picture” thinking and the journalists who indoctrinate the world with their messages are all afraid of. They are afraid that with fewer workers, they’ll eventually have to start paying more at every level, from burger flippers to physical therapists, from sanitation workers to (heaven forbid) school teachers! It may even be possible to reverse the 30+-year trend of stagnant or lower wages that has plagued virtually everyone employed who doesn’t own or operate a business.