On most accounts, George Osborne’s greatest success as British Chancellor has been overseeing a dramatic decline in unemployment, while his greatest failure has been the stagnation of productivity. Many have argued that these two phenomena are linked, with Osborne himself suggesting there is a trade-off:
Mr Osborne said one of the side-effects of Britain’s stellar jobs growth is poor productivity growth but called it the lesser of evils than can be tackled over time with infrastructure investment. “I would rather have a productivity challenge than a massive unemployment challenge,” he said.
A vivid illustration of how this trade-off plays out in practice comes from Mike Haynes’ discussion of resurgence of hand car washes:
As the economies of wealthier nations evolved, the machine car wash was one of many technical changes that accompanied capital deepening. Major garages and petrol stations are equipped with expensive machines that now stand idle, while people queue for the hand car wash. This, despite the machines being good at what they do. They are unlikely to scratch your car. They wash it cleaner, use less water and the detergents are more safely taken away. Some countries even ban hand car washing because of the waste and pollution involved.
The return to an inefficient, labour-intensive model – as with the hand car wash – is therefore an odd regression. It is only possible in a rich economy like the UK’s because labour is relatively cheap – and those working in hand car washes tend to be paid at the minimum wage or below it. They experience long periods of under-employment as they wait for customers and few have proper contracts or conditions. People working these kinds of jobs, in part, explains the UK’s productivity problem.
These sorts of jobs – poorly paid, easily automated, and under utilised – sound pretty close to the phenomenon David Graeber terms “bullshit jobs” – jobs that are unnecessary and unfulfilling, but which exist because of the view that “work is a moral value in itself, and that anyone not willing to submit themselves to some kind of intense work discipline for most of their waking hours deserves nothing”. It would be an unwarranted assumption to say that everybody on a low productivity job is unhappy and unfulfilled at work, but I strongly suspect that many, perhaps most, are.*
Yet having previously opted for bullshit jobs over productivity, George Osborne’s 2015 summer budget has sought to shift the balance back in the other direction. His increase of the national minimum wage is forecast to price 60,000 of the least productive workers out of jobs by 2020. Moreover, the cutting of tax credits could have a similar effect, with some arguing that they were critical to supporting low paid employment.
All this suggests that the budget will have liberated a number of people from bullshit jobs and improved the productivity of the economy (alongside, of course, increasing wages). We will return to the more effective mechanical car washes and the poor bored attendants don’t need to bother anymore. But of course it’s unlikely that the car washers will see it as such sunny news. The hideous ideology of bullshit jobs means that they will be stigmatised and impoverished, for no longer doing work they didn’t like and that nobody needed them to do.
Ryan Bourne summarises this as a shift towards the French system – higher unemployment and higher productivity. His argument implies that ending bullshit jobs means accepting a hopeless and despairing underclass.
Surely there are other answers? Orthodox economists are likely to suggest that investment, particularly in education, can deliver higher employment and productivity. But it is not clear that this can be a solution for the whole labour force – that there will be high skilled jobs for everybody. Perhaps, therefore, we need to consider more unorthodox solutions. A basic income is one option often cited as a transitional policy to a low-employment world. An even more provocative proposal comes from Bert Hamminga in an article entitled ‘Demoralizing the Labour Market: Could Jobs be like Cars and Concerts?’. Hamminga suggests that the right to work should be allocated according to ‘Labour Rights’, which can be bought or sold on an open market. Consequently, those who want to work will have to compensate the unemployed, with more productive workers more likely to enter the workforce because they can command higher incomes and so will pay more for labour rights.
Of course, such radical alternatives are unlikely to be politically feasible any time soon. But George Osborne’s dilemma hints at a deeper economic challenge facing all rich societies.
* I acknowledge that the more people in low productivity jobs are happy and fulfilled in them, the weaker the following argument becomes.