Truth Killer

"Obamacare is the #1 job killer in America" according to Senator Ted Cruz R-TX. 

His comments show he either isn't aware of the labor market trend that preceded Obamacare, or believes its unreliable or superfluous. Cruz's view that labor market weakness is reducible to Obamacare shows a microcosm of politicians' neglect to focus on systemic and structural problems, exacerbating them further. Labor market weakness is a critical problem that deserves more analysis instead of it being seen as that which will resume it's implied healthy functioning without Obamacare hanging over it. But this debate will not occur among the elites. That is why the masses should review the trends in the labor market and the factors affecting it's continued weakness.

The U.S. labor participation rate peaked in 2000. The U.S. Bureau of Labor Statistics (BLS) published this statistic which is cited frequently enough in both mainstream and alternative media outlets. The BLS data shows that labor participation rate (i.e. the number of people either employed or looking for work) peaked in 2000 and has declined steadily since then. Like any statistic its explanatory power is subject to debate. An aging population will reduce this number. But an increase in the age at which larger numbers of Americans remain working should dampen myopia that our decrease in the labor participation rate is simply a reflection of a higher ratio of retirees to workers. Regardless, the issue of job creation deserves more analysis than Cruz's singular focus on Obamacare. Too many other dynamics affect labor market prospects.  

Technological inputs now show a small but noteworthy sign of having a future disruptive effect on employees ranging across the spectrum of compensation and skill.  Such examples maybe just exceptions.  Data compiled showing labor productivity and capital investments in software and information equipment increased from 1995-2002 but declined during 2002-2007 and declined further during 2007-2014. [1]. The decade long decline in capital spending in such industries would cause less worry if it didn't occur concurrently with the aforementioned decline in the employment rate. Nonetheless, such trends show that automation's initial penetration into various jobs across the compensation spectrum suggests it deserves more attention from public policymakers.

Technological inputs have also created a common claim that rather than new technologies rather than replacing human labor they shift demand further up the skill chain. Thus, this establishes the firmly held convention that unemployment in the U.S.  is mostly the result of a shortage of workers possessing the necessary technical skills. Economists describe this phenomenon with their technical term "skills biased technological change." Once economists coin a technical term to describe an observed trend then it enters the lexicon of the elites, rendering it a universal "truth." Those persons questions such universal truths are often exiled from public discourse about public policy. Just remember how the mainstream media ridiculed opponents of NAFTA. Politicians accept the validity of "skills biased technological change" and therefore predictably advocate retraining workers as the most logical solution. Current trends though don't support claims that their simply focusing on worker retraining will significantly improve prospects for the U.S. labor market.

Most sectors across the economy show more unemployed workers than job openings. One exception to this trend is health care and social assistance that show a current ratio of job openings to unemployed workers to be nearly 1:1. [2] Across most sectors though there are more unemployed workers than job openings. This claim should be tested against empirical evidence rather than being accepted as true because anecdotal experience can easily support a similar conclusion and because the mainstream media and business press report it as an established fact. Analysis of a skills mismatch being a primary cause of structural unemployment does cast doubt on such claims.

Technologies can harness and augment existing modes of production for decades, even centuries then suddenly new inventions, resulting in the emergence of a new paradigm:

For many centuries, people created technologies that made the horse more productive and more valuable—like plows for agriculture and swords for battle. One might have assumed that the continuing advance of complementary technologies would make the animal ever more essential to farming and fighting, historically perhaps the two most consequential human activities. Instead came inventions that made the horse obsolete—the tractor, the car, and the tank. After tractors rolled onto American farms in the early 20th century, the population of horses and mules began to decline steeply, falling nearly 50 percent by the 1930s and 90 percent by the 1950s. [3]

No I'm not comparing horses to humans, but this example illustrates that technological changes can have a gradual impact for centuries then suddenly a new paradigm emerges. And, the technological inputs today are often based on increasing scale and applicability of algorithms that compete favorably with humans. Yes this trend is still in its infancy and much data still show that automation is not the primary cause of weakness in the labor market.

Yes it's easy to cite historical trends of technology disrupting livelihoods that eventually smoothed out, leading to broad based increases in prosperity. The current trends in automation though show it isn't freeing humans from drudgery enabling their to pursue more godly and aesthetic pursuits.

In fact, the Economic Policy Institute reports that employees overall have worked more hours per year from 1979-2013. What this report reveals which is equally important to understanding the state of the working class in the U.S. is that "increasing hours contributed 74 percent to annual middle-earning [sic 20 to 80 percentiles] household earnings, while hourly earnings only contributed the remaining 20%". [4]. This trend is obviously not attributable to Obamacare. But other data -compiled by the U.S. Bureau of Labor Statistics-shows that workers' hours have not increased during the last 15 hours while productivity has increased. This trend insofar as it continues further complicates identifying what policies if any can improve the structural deficiencies of the labor market.

Over the last several decades structural changes emerged effecting the U.S. labor market. Politicians and policymakers though ignore these structural changes, arguing instead that labor market weakness results from Obamacare or some other equally unlikely in order to pander to elites.  Different data showing causes of continued weakness in the U.S. labor market and wage growth is sometimes contradictory. These contradictions though show our evaluating what factors will improve labor market prospects is too complex to be reduced to simplistic criticisms uttered in soundbites by U.S. Presidential hopefuls. The labor force deserves better so it should demand it. Laborers should make stronger efforts to define the terms of this debate instead of entrusting that responsibility to political stooges articulating empirically challenged claims that only serve their billionaire benefactors. 

[1]. Mishel, Lawrence. "The Missing Footprint of the Robots." Economic Policy Institute. May 13, 2015. http://www.epi.org/publication/the-missing-footprint-of-the-robots/

[2]. Gould, Elise. "Still No Skills Mismatch in the Economy: The Number of Unemployed Exceeds the Number of Available Jobs Across All Sectors." December 09, 2014. Economic Policy Institute. http://www.epi.org/blog/still-no-skills-mismatch-in-the-economy-the-number-of-unemployed-exceeds-the-number-of-available-jobs-across-all-sectors/

[3]. Thompson, Derek. "A World Without Work." The Atlantic. July/August 2015 issue. http://www.theatlantic.com/magazine/archive/2015/07/world-without-work/395294/

[4]. Gould, Elise. "Longer Hours, Not Higher Wages, Have Driven Modest Earnings Growth for Most American Households." Economic Policy Institute. July 23, 2015. http://www.epi.org/publication/longer-hours-not-higher-wages-have-driven-modest-earnings-growth-for-most-american-households/#.VbVhopmmIAs.mailto

***For a more detailed analysis on the statistical methods used to measure the impact of automation of the labor market see http://www.epi.org/publication/technology-inequality-dont-blame-the-robots/

***For a detailed analysis of the relative increase of Americans age 65 and older who are part of the labor force, see http://www.bls.gov/spotlight/2008/older_workers/  This analysis shows that the percentage of Americans age 65 and older who were part of the labor force reached historic lows during the 1980s and most of the 1990s. Then this percentage started increasing in the late 1990s and then significantly increased from 2000 and thereafter.