UNEMPLOYMENT.

1. The question.

Unemployment is where there are some people who are willing and able to work but there is no work for them to do. And it seems that, in modern economies, there’s always a small but persistent percentage of people who fall into this category. When there’s a recession, or similar incident, then it becomes a larger percentage.

(The small percentage often gets as low as about 3% and you might think that that’s not very much. But you probably wouldn’t think that if you were one of the 3%.)

But what is unemployment? By which I mean what constitutes an unemployed person being unemployed? Unemployment is often casually described as “not enough jobs for everyone”. Meaning that unemployed people are ones for whom it is true that “there is no work for them to do”. But what does that mean exactly?

My question isn’t exactly the same as: “what causes unemployment”. It’s more like that I want an explanation of what unemployment is.

2. Unemployment is impossible.

Part of the context of my question is that, at first glance, it seems to me that unemployment is impossible because surely there is always work for the unemployed to do. Namely the work required to produce the stuff that they want and need.

If you think about it in terms of numbers. If you have 4% unemployed from a population of 50 million people then that’s 2 million people unemployed. And they have a reduced standard of living as a consequence. But couldn’t they just be doing whatever the other 48 million people are doing. And so have the same standard of living as them?

Any explanation I get of what unemployment is must deal with this idea of why unemployment should be impossible.

3. Explanation in terms of worker skills.

Maybe unemployed people are ones who don’t have sufficient useful skills to be employed.

What if, in a population of 1,000 people you had 100 really brilliantly clever people designed and built a system which would satisfy the material needs of the entire population? (Say they built and maintained robots and that sort of thing.) The remaining 900 people would be unemployed and also the consumers. The clever 100 want to be paid for their efforts? But the 900 have got nothing to pay with. The system built by the 100 is so good that the 900 people don’t need to do anything. And they aren’t clever enough to contribute anyway.

But if this is what unemployment is then the “not having any work to do” is meant in the sense where you have done all the work to meet your requirements and so there is nothing left to do. The only problem is that the people who have done all the work aren’t the same as the ones whose requirements are being met. So the clever people are reluctant to just hand over the fruits of their efforts to all the other people. It seems wrong to them.

But I don’t think this is what unemployment is. Although I guess it might be.

4. Explanation in terms of distribution.

Sometimes it seems as if what is happening is that the unemployed have “no work to do” because someone else is doing the work that they could be doing. For example Mary is working 40 hours a week. And Jack is not working at all. So it’s because Mary is doing 40 hours that Jack is doing none. Sure this might be because Mary is better than Jack at the job. (See previous.) But in this case the solution is surely to redistribute work to Jack. My point being that maybe unemployment isn’t so much a shortage of work as an unequal distribution of work. Even though this might result in a reduction of productivity. What Mary can produce in 40 hours might be more than what Jack and Mary can produce working 20 hours each. Having said that, it must be the case that what Mary produces in her second 20 hours isn’t as much as she produces in her first. I mean what she produces in the first half of the week won’t be as much as the second half. In the first half she is fresh from her weekend break.

5. Explanation based on the idea of raw materials.

Imagine there’s a population of 1,000 people fit and able to work. But there’s only enough raw materials to produce stuff for 900. Given that work depends on there being raw materials on which people can do work that means there’s only enough work for 900 people. So that’s 10% unemployment. This is only a good explanation if the standard of living that the 900 have is the minimum. If it was more than that then we are back to the point about how the work (ie the raw materials) could be redistributed.

Also a shortage of raw materials is more like an overpopulation and/or famine situation. Imagine a situation where the quantity of land is not enough to produce enough food for everyone. The excess people would suffer with lack of food. But you wouldn’t really describe them as ‘unemployed’ would you?

6. Explanation in terms of worker skills. (This section needs merging with 3 above?)

This says that there’s no work for unemployed people to do because there is a mismatch between what the Economy (in particular its consumers) wants (‘demands’) and what the Economy (its workers) produce (‘supplies’). This mismatch gets sorted when the “workers without jobs learn how to do the jobs without workers”. This explanation that all unemployment is temporary on the level of the individual and that it is only people who are “in between jobs”. When I say “at the level of the individual” I mean that it’s not always the same people. So if there’s 7% unemployment in a population for a period of 5 years then the it’s not the same people who are unemployed for the whole of those 5 years. This could be a permanent 7% unemployment at the level of the population as a whole.

What about unemployment that is more persistent? Where you have people who are long-term unemployed and they are not “in-between jobs”. (When the unemployment rate is particularly high it’s unlikely to consist only of individuals who are temporarily unemployed.) One explanation of this could be that it is where workers are incapable of learning how to do the “jobs without workers”. But this would be a strange situation. Because surely an economy can only employ people to do what they can do. For example what if we have an economy of a thousand people with 100 people unemployed with 100 vacancies for widget makers. (Which means that the 900 people who are employed want widgets.) But the 100 people who are unemployed just can’t make widgets no matter how hard they try. Not their fault it’s just because they don’t have the talent. So that whole thing about the Economy having a ‘skills shortage’ is wrong isn’t it. Is it a skills shortage or is it a ‘demand excess’?

But what if the nature of the incapable people’s incapability is that they are too unskilled to do anything. Not just what the demand is for but for anything. In other words they are the people who if they worked at something their output would not correspond to the expense required for their upkeep, ie the amount of stuff they would need to consume to maintain even a minimal standard of living. They are unable to contribute their fair share to the Economy and them being part of the Economy brings down the average output per person. So if they just weren’t there then everybody else would have more stuff. The capable clever people will think: why should we be straddled with these people? On the other hand (assuming they’re not being lazy) why should incapable people have to suffer for being so stupid/incapable? As long as they work as hard as anyone else at whatever they are capable of doing.

By the way this latter idea is one that I’ve not heard people express very much. The idea that people are unemployed because they are simple incapable of doing anything. (Short of being medically incapable.)

7. Sorts of unemployment.

But is all unemployment only of this kind? I mean of the kind due to skills shortage/mismatch? Isn’t there some other kind of unemployment where the economy just doesn’t have as many jobs as there are people that could be doing a job of some sort or other? When there’s a recession does that mean the mismatch problem suddenly increases? But why would it do that? I’m pretty sure that there is a sort of unemployment where it’s not that there are jobs with no workers: it’s more that there are just no jobs at all!

8. A different perspective.

Let’s think about unemployment from the point of view of an individual. Let’s say my aim is to be in employment permanently. How do I do that? I learn some skill and then go and find someone in the Economy who needs that skill so that they can then employ me. Immediately there is something wrong with this. Because how do I know that the Economy wants that skill from me? (Or rather: that it is going to want that skill from me after I have finished acquiring it.)

And even if the Economy wants that skill from the population in general it might not want it from me in particular. If it needs 100 people with that skill and I am the 101th person with that skill then I’m going to be out of luck. And that must happen all the time! I mean I’m sure that the number of people who decide to be plumbers isn’t always exactly the number of plumbers that are needed. As if there were some kind of mystical connection between supply and demand. (Adam Smith’s “invisible hand” is something else. That is something that corrects an oversupply but it doesn’t stop an oversupply happening in the first place.)

And it does happen all the time. Every time someone applies for a job which they patently can do and they don’t get accepted. Isn’t that weird? Someone is saying I need a person to (for example) keep my account books. And you know how to do that. So you say to them I’ll do it. And they say no. So all the time you spent saying yes you’ll do it (application forms, interviews) was wasted. And it’s not just your time that’s wasted. It’s the Economy’s time too. The Economy should be thinking: in the time you’ve wasted applying for a job you didn’t get you could have done some productive work!

Given all of which I find it surprising that anyone wastes their time learning to do something which they might not be required to do. It seems incredibly wasteful. Why should individuals have to guess what the Economy wants from them? Isn’t me being a productive member of society too important to be left to chance? At home would you buy and learn how to use a bread making machine just because at some point in the future you might decide to start eating home-made bread? No you’d only do that after having decided that you were not happy with the usual store bought bread. Again: if you are running a business you wouldn’t employ people with particular skills because you might need them in the future. Isn’t this why there is a fuss with student finance. If a student had certainty that they would have a particular level of income after spending money on their education then there would be no reason for them to worry about the debt they were getting into. If you have a debt that you are certain to pay back then that isn’t a problem is it?

9. Solving the problem.

From my point of view I want the chance element eradicating. There are two ways of doing this.

First, imagine I could make some kind of deal with the Economy. I say to the Economy I will learn this skill and in return the Economy will promise to employ me. In real life this doesn’t happen. Because what the Economy wants is unknowable in advance. (If it was a planned Soviet-style Command Economy then it would be knowable.) And even if it was knowable it wouldn’t be possible to extract from the Economy an assurance that it will ask me to give it what it wants rather than anybody else. But this is all really annoying. It’s like Mary wants Jack to do something for her. Maybe make her some soup. But she won’t tell him. She wants him to figure it out himself. Even when he asks her she doesn’t tell him. Even though it will be obviously better for both of them if she just tells him. Jack wastes time doing things she doesn’t want. In fact the situation is often worse than this. People will not only not say what they want. But they will say that they want what they don’t really. Advertising and marketing people complain about this. They will run a survey asking people what sort of soap powder they want. They take the result and make a product accordingly. And then nobody buys it.

So the second option is to let someone else take the burden of the risk. Imagine I say to someone you tell me what skill to learn and what jobs to apply for after I have done that. And if and when I get the job that requires me to exercise those skills then you can have my salary. In exchange for that you undertake to guarantee to pay me a certain minimum. Let’s say 120% of the minimum wage. You have to pay me this regardless of what job I get. You have to pay it to me even while I am learning whatever skill you want me to learn. You have to pay it even if I end up unemployed with no job at all. What this is is me choosing the certainty of a reasonable amount of income over the possibility of a larger amount of income. I’m exchanging the possibility of a well paid job for the certainty of any kind of job/income.

10. Slavery.

This second option here is basically a form of slavery. You’re selling your freedom to exploit your own talents. (I’ve always thought that this was the essence of the 1930s Depression declaration “will work for food”. Sounds to me like this is saying: I’ll do whatever you want me to but just feed me!)

Of course there would have to be other terms and conditions. For example it wouldn’t be allowed to give me work at a different corner of the country each week. Or anything that would conflict with moral principles: eg I wouldn’t work in an abattoir.

Most people would say no to all of this because they’d object to someone telling them what to do and because people don’t want to be slaves. Which is a fair enough objection I suppose. But I’d quite like the freedom to become a slave of this kind. OK so you lose the freedom to do the job you want. But does it matter so much? You can’t always get what you want. Even the Rolling Stones knew that.

11. Guaranteed employment.

Surely the obligation to work implies a right to work. By “the right to work” I mean some actual paid employment.

It’s infuriating being unemployed. The infuriating thing about being unemployed is that they (whoever ‘they’ is) want me to have a job and to be doing something and not just be sat round watching daytime TV and drinking beer. And I agree with them that they are right to want this. But then they make it as difficult as possible for me to do what they want me to do! Ie have a job. (Seriously ‘they’ need to get their act together.)

If I am obliged to do something then there should be a set of things that I can do which will be sufficient for me to discharge my obligation. If I am obliged to be employed it ought to be the case that if I do some certain specified things then I will be employed. But often that’s not the case because I might learn to be a typist and then it might turn out that there are enough typists already. I can type and employer x wants a typist so I apply for their vacancy and they say no they don’t want me. What else can I do I’m thinking to myself? (Surely I have done something sufficient to get me a job as a typist, ie I have learnt how to type!) The answer is to keep on applying for jobs. But that sounds odd: it’s like saying keep on doing what hasn’t worked so far. (Isn’t that a definition of insanity.) Like I said before the whole situation is weird in an almost Kafka-esque sort of way.

In general in a free market economy being able to do some things (some things that people get employed to do) is NOT sufficient, is not a guarantee for you to be employed to do any of those things. Which is strange.

Example. Here’s a quote from the book ‘The Russians’ by Hedrick Smith. (This is a journalist’s account of life in the Soviet Union in the mid-1970s.) “Yanov, like many others ... had discovered the agonies of finding a steady job in America. There was no government to provide work automatically for the qualified specialist ... One woman I knew had trouble really understanding why a typist’s job was so hard to obtain in New York after she had completed a typist’s course. In Moscow a graduation certificate was a guarantee of some job.” (chapter 19, page 652).

I find it strange that the uncertainty of employment is still a serious worry that people have. You would have thought we’d have sorted that out by now given that it’s something that bothers people so much. The conspiracy theory idea would be that the uncertainty persists because it’s a way for employers to control their employees.

12. Coda (some further remarks).

Maybe an employer should provide prospective employees with the skills that the employer is going to want the employees to exercise in their posts. So an engineering company wouldn’t expect a prospective employee to have a degree in engineering. Instead the first three or four years of their employment would consist of them being a student. This would solve the problem of oversupply: people wouldn’t get degrees in engineering if they weren’t going to use them. And it would also mean that employees wouldn’t have to incur the expense of learning (student finance).

Consider this example. What if I have a small business and want to hire someone to do some filing and minor office work. And it took about two days to show them how to do all the jobs. What if I set up a two day training course to cover that and asked all prospective employees to attend that course at their own expense? And then just chose one of those people to hire.

[31 March 2010]

[Last modified May 2021]