Households struggle to afford medical care and food, with figure rising to 59% for those with income under $50,000 a year
Nearly 40% of US households have faced serious financial problems, including struggling to afford medical care and food, in the last few months, according to a survey published on Tuesday.
The survey by NPR, the Robert Wood Johnson Foundation and the Harvard TH Chan School of Public Health also showed that in those last few months, as the US struggled to contain the infectious Delta coronavirus variant, the percentage of households reporting serious financial problems rose to 59% when they had an income under $50,000 a year.
We are witnessing the ‘Great Strike of 2021’ and it’s composed mostly of millions low paid non-unionized workers
A lot of those now out of work simply don’t want to return to backbreaking, low-wage shit jobs. Why should they?
ILA President Warns Shipping Lines and Developers of Fully Automated Container Vessels That ILA Members Will Not Work Ships Without Crews Aboard Kurt Stand Tue, 09/28/2021 – 22:46
An IWW member argues against trying to remake the IWW in the image of mainstream unions
The number of gig workers in the US grew an unprecedented 34 percent this year. | Getty Images
An astonishing one in three US workers does gig work now.
More people are turning to gig work than ever before, but since these jobs usually don’t come with employer benefits, their proliferation could worsen inequality for millions of Americans.
The number of people employed in nontraditional ways in the US rose to a record 51 million this year, an unprecedented 34 percent jump compared to 2020, according to new data from MBO Partners, a company that provides business solutions to the independent workforce and has conducted a long-running study of the group. These types of workers — which include contract workers, people who are self-employed, temporary and on-call workers, and those who get short-term jobs through online apps or marketplaces — are now equivalent to a third of US employment.
Gig work shifts the risk from employers to employees and can lead to financial volatility for those who do it, resulting in more economic and psychological stress than regular work. Most obviously, independent work doesn’t include many of the protections afforded by traditional employment. That includes things like minimum wage, overtime, paid parental leave, and employer-subsidized health care. If people’s gig work doesn’t compensate enough to pay for those extras independently, it can put people at a severe economic disadvantage compared to regular employees.
Independent work, though, has its perks. It offers workers the flexibility of being able to choose, to some extent, what, when, and where their work is.
While advocates and some policymakers are actively trying to secure the benefits of full-time employment for independent workers, progress has been piecemeal and nonlinear. California’s landmark bill AB 5 made many contractors into employees and afforded them the same benefits — but soon after it was signed into law, Proposition 22, a ballot measure sponsored by gig companies, passed and exempted many gig companies from having to consider their workers employees. The battle in California isn’t over; in August, California’s Superior Court invalidated Prop 22 and made it unenforceable, but gig companies say they are going to appeal.
In the meantime, the march toward independent work is happening nonetheless.
Growth in business registrations for companies without employees (say, an individual selling products on eBay or freelancers finding graphic design work through Upwork) has outpaced wage employment. Average weekly signups to the Freelance Union, a nonprofit that advocates for and provides resources to the growing independent workforce, grew 300 percent since the pandemic began.
While independent work grew among all employment situations, it grew fastest for people performing occasional (regularly, but without set hours per week) independent work. Those ranks grew 51 percent, to 24 million people. Many of them are doing what is commonly thought of as gig work: on-demand jobs from platforms like Uber Eats or freelance job sites.
Work found through online marketplaces was important for part-timers and full-timers as well. Some 40 percent of all independent workers reported finding jobs using online marketplaces, up from 27 percent in 2020.
The rise of independent work has been happening for decades and for a variety of reasons, from the dissolution of traditional employment to the proliferation of online platforms that connect people with this kind of work. Like many trends, it was accelerated by the pandemic — economic instability historically increases independent work — but it shows no signs of going away when the pandemic is over. And so the jump in gig workers in the US is something we should all be paying attention to.
Why are people choosing gig work?
Despite a rapid economic recovery, there are still 6 million fewer employed Americans than there were pre-pandemic, according to Bureau of Labor Statistics data. Many of those have had to turn to independent work — which often gets missed by the BLS data — to compensate.
Other independent workers do have regular jobs, but those jobs just don’t provide enough money. Nearly three-quarters of new part-time independents in the MBO survey said they took on independent work to supplement their incomes.
“Making ends meet has just gotten harder and harder,” Steve King, a board member at MBO and a future of work expert, told Recode. “In our world, it’s very challenging for a lot of people to hit their monthly target.”
Low wages aren’t the only shortcomings of traditional employment.
“By and large, what we’ve seen over the last four and a half decades is just huge erosion of worker leverage in a way that’s led to just incredibly low job quality for huge swaths of our labor market: low wages, low benefits, bad hours, bad working conditions,” Heidi Shierholz, director of policy at Economic Policy Institute think tank and former chief economist at the US Labor Department, told Recode.
Most independent workers (63 percent) consider working independently to be their own choice completely. But Shierholz says the choice isn’t because independent work is especially good.
“We know that the quality of these [independent] jobs they say they’re choosing are often just incredibly bad,” Shierholz said. “And that means their other choices are also really, really bad.”
The quality of these [independent] jobs … are often just incredibly bad. And that means their other [traditional] choices are also really, really bad.
Still, some 77 percent of independent workers in the MBO study said they were highly satisfied with their arrangements, 10 percentage points higher than traditional jobholders.
Gig work is a way for people to have more control over what their jobs entail, more flexibility in when and where they work, and a better work-life balance. Perks like the ability to work remotely have become increasingly in-demand during the pandemic, which jarred people into rethinking the primacy of work in general in their lives. Such work is especially important to people with child care or elder care responsibilities, or for people with disabilities where regular employment is difficult.
“I think one of the big things is that online platform work is really enabling people who are looking for greater flexibility,” Adam Ozimek, chief economist at freelancing platform Upwork, told Recode. “A lot of people had a taste of working remotely this year and they see the flexibility that comes with that, and they want even more.”
An increasing share of traditional employees (29 percent) even views independent work as less risky than theirs, according to MBO. Two-thirds of independent workers think so.
Independent work is also sometimes just easier to get. The rise of apps or platforms like TaskRabbit and Fiverr has made the process of finding independent work a lot less arduous by centralizing and simplifying the process of attaining it.
Then there’s the issue of misclassification driving the growth in independent workers. Industries as far afield as construction and ride-hailing are increasingly calling their workers contractors rather than employees. The distinction, while sometimes legally dubious, is economically advantageous. Employers can save about 25 percent by switching employees to contract workers, according to estimates from the Economic Policy Institute. The savings come from employers not having to pay things like unemployment insurance, workers’ compensation, and paid leave.
How do you protect the growing ranks of independent workers?
Not having protections like unemployment insurance or employer-subsidized health care means events like an accident, a new child, or a global pandemic could negatively affect independent workers more than traditional ones.
“Freelancers don’t have the social safety net to rely on to get them through the weeks or months that they’re out of work,” Rafael Espinal, executive director of the Freelancers Union, told Recode.
The union is one of many advocates working to create something called portable benefits so that independent workers get things like paid leave, unemployment insurance, retirement plans, and affordable health care, regardless of their employment status.
So far, fewer than 10 states have guaranteed paid employment leave for new parents that would include gig workers. Biden’s proposed American Families Plan would create a “national comprehensive” paid family leave plan that the Freelancers Union is hoping will include freelancers. The proposal is still being fought out in Congress, so even if it passes, what it will ultimately include is up in the air. Independent workers are not included in the Family and Medical Leave Act, which gives workers job protection during unpaid leave.
“When the budget passes, we will have to ensure independent workers are included in the implementation of the program,” Espinal said. “It shouldn’t be a hard lift given that a handful of states were able to successfully implement a similar program.”
And paid leave is just the tip of the iceberg when it comes to benefits. It’s not enough to deal with all the needs of the rapidly growing number of freelance and independent workers, who represent a substantial share of the US workforce.
Espinal believes the onus lies with the government to protect independent workers.
“If it becomes unsustainable, it’s because the federal government failed to react,” Espinal said. “I do believe that the silver lining to this pandemic is that it shocks the federal and state governments to the point where they have to react and look at how they create a safety net for millions of people who traditionally have gone without one.”
More than a third of labour force unemployed as economists warn unrest could fuel further rise
LabourStart headline – Source: CLB
It has been the historic mission of the capitalist mode of production to develop the “productive forces” (namely the technology and labour necessary to increase the output of things and services that human society needs or wants). Indeed, it is the main claim of supporters of capitalism that it is the best (even only) system of social organisation able to develop scientific knowledge, technology and human ‘capital’, all through ‘the market’.
The development of the productive forces in human history is best measured by the level and pace of change in the productivity of labour. And there is no doubt, as Marx and Engels first argued in the Communist Manifesto, that capitalism has been the most successful system so far in raising the productivity of labour to produce more goods and services for humanity (indeed, see my recent post). In the graph below, we can see the accelerated rise in the productivity of labour from the 1800s onwards.
The rise of productivity under capitalism
But Marx also argued that the underlying contradiction of the capitalist mode of production is between profit and productivity. Rising productivity of labour should lead to improved living standards for humanity including reducing the hours, weeks and years of toil in producing goods and services for all. But under capitalism, even with rising labour productivity, global poverty remains, inequalities of income and wealth are rising and the bulk of humanity has not been freed from daily toil.
Back in 1930, John Maynard Keynes was an esteemed proponent of the benefits of capitalism. He argued that if the capitalist economy was ‘managed’ well (by the likes of wise men like himself), then capitalism could eventually deliver, through science and technology, a world of leisure for the majority and the end of toil. This is what he told an audience of his Cambridge University students in a lecture during the depth of the Great Depression of the 1930s. He said: yes, things look bad for capitalism now in this depression, but don’t be seduced into opting for socialism or communism (as many students were thinking then), because by the time of your grandchildren, thanks to technology and the consequent rise in the productivity of labour, everybody will be working a 15-hour week and the economic problem will not be one of toil but leisure. (Economic Possibilities for Our Grandchildren, in his Essays in Persuasion)
Keynes concluded: “I draw the conclusion that, assuming no important wars and no important increase in population, the ‘economic problem’ may be solved, or be at least within sight of solution, within a hundred years. This means that the economic problem is not – if we look into the future – the permanent problem of the human race.” From this quote alone, we can see the failure of Keynes prognosis: no wars? (speaking just ten years before a second world war). And he never refers to the colonial world in his forecast, just the advanced capitalist economies; and he never refers to the inequalities of income and wealth that have risen sharply since the 1930s. And as we approach the 100 years set by Keynes, there is little sign that the ‘economic problem’ has been solved.
Keynes continued: “for the first time since his creation man will be faced with his real, his permanent problem – how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest (!MR) will have won for him, to live wisely and agreeably and well.” Keynes predicted superabundance and a three-hour day – the socialist dream, but under capitalism. Well, the average working week in the US in 1930 – if you had a job – was about 50 hours. It is still above 40 hours (including overtime) now for full-time permanent employment. Indeed, in 1980, the average hours worked in a year was about 1800 in the advanced economies. Currently, it is still about 1800 hours – so again, no change there.
But even more disastrous for the capitalist mission and Keynes’ forecasts is that in the last 50 years from about the 1970s to now, growth in the productivity of labour has been slowing in all the major capitalist economies. Capitalism is not fulfilling its only claim to fame – expanding the productive forces. Instead it is showing serious signs of exhaustion. Indeed, as inequality rises, productivity growth falls.
Economic growth depends on two factors: 1) the size of employed workforce and 2) the productivity of that workforce. On the first factor, the advanced capitalist economies are running out of more human labour power. But let’s concentrate on the second facto in this post: the productivity of labour. Labour productivity growth globally has been slowing for 50 years and looks like continuing to do so.
For the top eleven economies (this excludes China), productivity growth has dropped to a trend rate of just 0.7% p.a.
Why is productivity growth in the major economies falling? The ‘productivity puzzle’ (as the mainstream economists like to call it) has been debated about for some time now. The ‘demand pull’ Keynesian explanation that capitalism is in secular stagnation due to a lack of effective demand needed to encourage capitalists to invest in productivity-enhancing technology. Then there is the supply-side argument from others that there are not enough effective productivity-enhancing technologies to invest in anyway – the day of the computer, the internet etc, is nearly over and there is nothing new that will have the same impact.
Look at the average growth rates of labour productivity in the most important capitalist economies since the 1890s. Note in every case, the rate of growth between 1890-1910 was higher than 2006-18. Broadly speaking, labour productivity growth peaked in the 1950s and fell back in succeeding decades to reach the lows we see in the last 20 years. The so-called Golden Age of 1950-60s marked the peak of the development of the ‘productive forces’ under global capital. Since then, it has been downhill at an accelerating pace. Annual average productivity growth in France is down 87% since the 1960s; Germany the same; in Japan it is down 90%; the UK down 80% and only the US is a little better, down only 60%.
There are three factors behind productivity growth: the amount of labour employed; the amount invested in machinery and technology; and the X-factor of the quality and innovatory skill of the workforce. Mainstream growth accounting calls this last factor, total factor productivity (TFP), measured as the ‘unaccounted for’ contribution to productivity growth after capital invested and labour employed. This last factor is in secular decline.
Corresponding to this slowing of labour productivity is the secular fall in the fixed asset investment to GDP in the advanced economies in the last 50 years ie starting from the 1970s.
Investment to GDP has declined in all the major economies and since 2007 (with the exception of China). In 1980, both advanced capitalist economies and ‘emerging’ capitalist ones (ex-China) had investment rates around 25% of GDP. Now the rate averages around 22%, a more than 10% decline. The rate fell below 20% for advanced economies during the Great Recession.
The slowdown in both investment and productivity growth began in the 1970s. And this is no accident. The secular slowing of productivity growth is clearly linked to the secular slowing of more investment in productive value-creating assets. There is new evidence to show this. In a comprehensive study, four mainstream economists have decomposed the causal components of the fall in productivity growth.
For the US, they find that, of a total slowdown of 1.6%pts in average annual productivity growth since the 1970s, 70bp or about 45% was due to slowing investment, either caused by recurring crises or by structural factors. Another 20bp of 13% was due to ‘mismeasurement’ (this is a recent argument trying to claim that there has been no fall in productivity growth). Another 17% was due to the rise of ‘intangibles’ (investment in ‘goodwill’) that does not show an increase in fixed assets (this begs the question of whether ‘intangibles’ like ”goodwill’’ are really value-creating). About 9% is due to the decline in global trade growth since the early 2000s; and finally near 25% is due to investment by capitalists into unproductive sectors like property and finance. The four economists sum up their conclusions: “Comparing the post-2005 period with the preceding decade for 5 advanced economies, we seek to explain a slowdown of 0.8 to 1.8pp. We trace most of this to lower contributions of TFP and capital deepening, with manufacturing accounting for the biggest sectoral share of the slowdown.”
In other words, if we exclude ‘intangibles’, mismeasurement and unproductive investment, the cause of lower productivity growth is lower investment growth in productive assets. The paper also notes that there has been no reduction in scientific research and development, on the contrary. It is just that new technical advances are not being applied by capitalists into investment. Now maybe, the rise of robots and AI is going to give a productivity boost in the major economies in the post-COVID world. But don’t count on it. As the great productivity theorist of the 1980s, Robert Solow, put it in a famous quip ‘you can see the computer age everywhere but in the productivity statistics’ (Solow 1987).
If investment is key to productivity growth, the next question follows: why did investment begin to drop off from the 1970s? Is it really a ‘lack of effective demand’ or a lack of productivity-generating technologies as the mainstream has argued? More likely it is the Marxist explanation. Since the 1960s businesses in the major economies have experienced a secular fall in the profitability of capital and so find it increasingly unprofitable to invest in heaps of new technology to replace labour.
And when you compare the changes in the productivity of labour and the profitability of capital in the US, you find a close correlation.
Source: Penn World Tables 10.0 (IRR series), TED Conference Board output per employee series
I also find a positive correlation of 0.74 between changes in investment and labour productivity in the US from 1968 to 2014 (based on Extended Penn World Tables). And the correlation between changes in the rate of profit and investment is also strongly positive at 0.47, while the correlation between changes in profitability and labour productivity is even higher at 0.67.
And as the new mainstream study also concludes, there is another key factor that has led to a decline in investment in productive labour: the switch by capitalists to speculating in ‘fictitious capital’ in the expectation that gains from buying and selling shares and bonds will deliver better returns than investment in technology to make things or deliver services. As profitability in productive investment fell, investment in financial assets became increasingly attractive and so there was a fall in what the new study calls “allocative efficiency” in investment. This has accelerated during the COVID slump.
There is a basic contradiction in capitalist production. Production is for profit, not social need. And increased investment in technology that replaces value-creating labour leads to a tendency for profitability to fall. And the falling profitability of capital accumulation eventually comes into conflict with developing the productive forces. The long-term decline in the profitability of capital globally has lowered growth in productive investment and thus labour productivity growth. Capitalism is finding it ever more difficult to expand the ‘productive forces’. It is failing in its ‘historic mission’ that Keynes was so confident of 90 years ago.
