It's Wednesday and I discuss a number of topics today. First, the 'million simulations' that…
We are all entrepreneurs now marching towards a precarious and impoverished future
Some years ago, I was a panel speaker at an event in Sydney covering the topic of wage developments. I shared the podium with a young woman who was something like NSW Youth of the Year. It was at a time that employer groups were lobbying the conservative government to abandon penalty rates for workers in low-wage industries (hospitality, tourism, etc) and strip powers from trade unions. I spoke about how that agenda was designed to advance their class interests and fitted squarely with the neoliberal intent to redistribute real income away from workers towards profits. The young woman followed and announced that class was dead and that there was no such thing as a worker anymore – she said “we are all entrepreneurs now!”. Prior to that, as our national government was privatising our public companies such as Qantas and Telstra, our prime minister announced “we are all capitalists now” referring to the idiocy of people buying shares in the companies that we collectively ‘owned’ anyway while they were in public hands. The more recent manifestation of this delusion that class is dead and we are all entrepreneurs is the so-called ‘gig economy’. It seems that we now have millions of people (first young but increasingly older) who think that entrepreneurship is about buying a cheap scooter and tearing around streets delivering pizzas in all weather to earn a few dollars while the companies that ’employ’ them (or rather contract them) walk away with millions. These workers, sorry, entrepreneurs, face a bleak future. When there are no pizzas being ordered they have no shifts. When they are sick they have no pay. When they go on holidays they have no pay. And when they get old they will have no superannuation. Sounds like a plan to make someone rich.
Regular readers will know that I will not use services such as ‘Uber’.
I wrote about that choice in this blog post – Why Uber is not a progressive development (August 16, 2016).
But the spread of these ‘gig economy’ services is clearly increasing.
I often wonder when I am walking through city streets and a wave of cheap scooters buzz by with big boxes on the back whether these ‘workers’ have any thought to their future – when they get old or if they get sick.
There was a recent UK Guardian article about Uber drivers – The Uber drivers forced to sleep in parking lots to make a decent living (May 8, 2019).
It was in the context of Uber opening its shares to the public which the article noted would “turn some millionaires on the board into billionaires”.
The median wage of drivers is “$US8.55 an hour before taxes” while, for example, the Californian minimum wage is $US11 per hour and the New York minimum wage is $US15 per hour.
The article noted that some drivers “have to drive 70 or 80 hours per week” to make a bare living.
And Uber has been increasing “its cuts on trips”.
A study from the University of Chicago and Rice University of the link found that “its … [Uber] … introduction in a metropolitan area leads to an economically meaningful increase in overall motor vehicle fatalities” as drivers manically try to earn more while Uber takes more.
A New York Times article covering the Uber IPO – Strike All You Want. Uber Won’t Pay a Living Wage (May 10. 2019) – concluded that:
The problem for Uber – and everyone else – is that its very business model excludes a future of fair labor practices.
A July 2018 Report – An Earnings Standard for New York City’s App-based Drivers: Economic Analysis and Policy Assessment – studied the “critical public policy challenge facing the City of New York-the low pay of app-based drivers”.
It concluded that:
1. “The prevailing app-based business model in New York City relies on drivers bearing responsibility for all vehicle capital and operating costs.”
2. “pay for most drivers does not meet this standard” – a minimum wage of $US15 per hour.
3. App-based drivers in NYC, London, Paris and San Francisco are not supplementing “their pay from another job by using their otherwise idle cars”. Most drivers are working more than full-time and “work hours are not flexible”.
4. “The app business model relies upon very short wait times for passengers requesting rides, which in turn depends on a large supply of available but idle drivers and vehicles” – so there is excess supply which ensures pay and conditions will always be driven down.
5. “Forty percent of drivers have incomes so low they qualify for Medicaid and another 16 percent have no health insurance; 18 percent qualify for federal supplemental nutrition assistance (nearly twice the rate for New York City workers overall).”
And, while the ‘entrepreneurial’ dream might give succour to these workers striving to stay poor, the reality is that Uber is just using these people to establish a network and identity while they work on the technology (robots) to allow them to run their business using self-driving cars.
Whether it succeeds is another matter. But for now the workers, sorry, entrepreneur drivers, are the losers.
It is not just Uber though.
A recent New York Times article – Google’s Shadow Work Force: Temps Who Outnumber Full-Time Employees (May 28, 2019) – gave us some insights into the Google labour market.
It tells us that “Google’s many temps and contractors – a shadow work force … now outnumbers the company’s full-time employees.
The data shows that as at March 2019:
Google worked with roughly 121,000 temps and contractors around the world, compared with 102,000 full-time employees … Google temps are usually employed by outside agencies. They make less money, have different benefits plans and have no paid vacation time …
Economists claim they are puzzled by the flat wages growth in advanced nations given how low in some countries the unemployment rate has dropped (for example, Germany, the US and the UK).
But in Germany, the rise of the minijob has eroded the living standards of workers and created a pool of desperate workers.
In the UK, the app-based jobs and the zero-hour jobs have been on the increase.
And in the US, the same trend.
And all over really. This is neoliberalism at its most advanced – a myopic strategy to get as much real income into the hands of the few while the party lasts.
But there is also a storm brewing.
The mainstream economists keep claiming that fiscal deficits are undermining the future standards of living of workers – an erroneous claim at best.
What is really going to undermine future material living standards is the degradation of work – the lack of skill development, the short-term push for higher profits at the expense of workers rather than via significant capital investment, the low household saving rates combined with high debt exposures.
And has populations age and dependency ratios rise, what sort of old age will these ‘gig economy’ workers face – oh, sorry, I forgot, they will be have a UBI!
The UBI myth is part of the whole neoliberal charade that we are talking about here.
Like all these Uber drivers are being free and creative while the the corporations or their owners pocket huge returns.
The rise of the ‘gig economy’ is not about workers becoming freer within capitalism. It is being driven by the fact that profits are higher when you can get workers to supply their own capital, work for a pittance, fund their own vacation period, have no job security, and have no pension and other entitlements.
And somehow we have bought the nonsense that these workers are not ‘workers’. The companies engage them as independent contractors, and, despite the workers looking like workers (operate under direction, etc), regulative authorities have been reluctant to prosecute and force the companies to recognise the true status of their labour forces.
A perfect storm is brewing – again – and this one is probably more endemic and structural than the problems that created the GFC.
There was a reason in the late C19th that trade unions formed and demands for the welfare state and job protections became a dominant voice.
We are heading back to that sort of massive exploitation of workers.
The wheel will turn again.
The other problem for a researcher is that there is a fairly poor data availability on this growing segment in the labour market.
The US Bureau of Labor Statistics (BLS) published an interesting article in May 2006 – Working in a gig economy – which gave some sources of available data.
BLS data blurs the gig workers with others.
We read that “gig workers may be included in counts of workers who are part-time, self-employed, or hold multiple jobs. But these counts also include workers who are not part of the gig workforce.”
Gig workers in the US “could be in contingent or alternative employment arrangements, or both, as measured by BLS”.
The most recent BLS data release for these categories was on June 7, 2018 – Contingent and Alternative Employment Arrangements Summary. It was accompanied by ‘Spotlight on Statistics’ publication (September 2018) – A Look At Contingent Workers.
We learn that in May 2017:
1. “3.8 percent of workers–5.9 million persons–held contingent jobs” (that is those “who do not expect their jobs to last or who report that their jobs are temporary”).
2. In February 2005 (the “last time the survey was conducted”) there were 4.1 per cent of workers in contingent work.
3. As to the ‘alternative employment arrangements’, the survey found that in May 2017, there were “there were 10.6 million independent contractors (6.9 percent of total employment), 2.6 million on-call workers (1.7 percent of total employment), 1.4 million temporary help agency workers (0.9 percent of total employment), and 933,000 workers provided by contract firms (0.6 percent of total employment).”
Has the ‘gig economy’ taken over?
Although the data is less than convincing, I examined the trends since 2005.
The first list shows the changing proportion of the different types of contingent and alternative arrangement workers over the period of the two surveys.
The proportions have barely altered as the size of the employed labour force has expanded.
On the face of it though, using this data, it is not correct to claim that a higher proportion of jobs are becoming contingent or subject to alternative working arrangements in the US.
- Contingent: 2005 4.1 per cent, 2017 3.8 per cent.
- Independent Contractors: 2005 7.4 per cent, 6.9 per cent.
- On-call workers: 2005 1.76 per cent, 1.68 per cent.
- Temporary help agency workers: 2005 0.87 per cent, 0.88 per cent.
- Workers provided by contract firms: 2005 0.58 per cent, 0.61 per cent.
- Workers with traditional arrangements: 2005 89.1 per cent, 89.9 per cent.
The next list shows the growth in real median weekly earnings for the two categories between February 2005 and May 2017.
The evidence is mixed. Full-time independent contractors, where the ‘gig’ economy is likely to be concentrated as fallen sharply over this period (-6.8 per cent).
That group stands out in this dataset.
- Contingent: Full-time 10.1 per cent, Part-time 11.1 per cent.
- Independent Contractors: Full-time -6.7 per cent, Part-time 3.2 per cent.
- On-call workers: Full-time 20.4 per cent, Part-time 3.8 per cent.
- Temporary help agency workers: Full-time -1.28 per cent, Part-time -7.9 per cent.
- Workers provided by contract firms: Full-time 11.7 per cent, Part-time 23.8 per cent.
- All workers: Full-time 7.2 per cent, Part-time 1.5 per cent.
What about workers’ preferences?
The data shows that:
1. 55.1 per cent of contingent workers in 2017 wanted non-contingent work (32.8 per cent were happy as they were).
2. Only 8.8 per cent of independent contractors preferred traditional arrangements (79.1 per cent were happy as they were).
3. 44 per cent of On-call workers wanted traditional arrangements (43.8 per cent were happy as they were).
4. 46.4 per cent of Temporary help agency workers wanted traditional arrangements (38.5 per cent were happy as they were).
It may be true that since the last survey (May 2017) there has been rapid growth in ‘gig economy’ jobs. We will have to wait until the next data release and hopefully for some better (more comprehensive) data before we really know.
A Job Guarantee would alter the scene dramatically
There have been progressives calls for a guaranteed minimum income to be paid to help these precarious workers.
For example, in the UK Guardian article (June 2, 2019) – The gig is up: America’s booming economy is built on hollow promises – Robert Reich writes that gig economy workers will “need a guaranteed minimum basic income – a subsistence-level cushion against earnings downturns.”
He also notes they will need a range of other insurance protections against the precarious nature of their work.
And, he plays the ‘tax the rich’ (or variant) card – “All of this should be financed by higher corporate taxes, ideally in proportion to a corporation’s use of gig workers.”
Whether we want these corporations to pay higher taxes is one thing. But such a decision should never be justified or based on some erroneous notion that the government cannot provide services to precarious workers unless the ‘rich’ pay more taxes.
That is a baseless conflation and very damaging to the progressive argument.
Just as I oppose Robin Hood taxes, which progressives wheel out because they want the evil global financial markets they hate to pay for their evil in some way, I also oppose guaranteed minimum incomes as a solution to precarious conditions in the labour market.
If we do not like the labour market behaviour – low pay, low investment in training and skills, outsourcing of responsibility for tools provision (‘Uber cars’), lack of security, dangerous working conditions, lack of entitlements such as sick pay, holiday pay, and pension provisions etc- then as progressives we should not demand the government provide a pittance of UBI and leave the labour market to do its thing.
We should be working on policy interventions that wipe out the practices we dislike and consider damaging to well-being.
So, for example, New York has brought in regulations forcing Uber to pay workers a living minimum wage. Uber has stopped recruiting drivers there!
We should force gig economy employers that hide behind the independent contractor myth to bring all their workers into their employed workforce and subject them to standard entitlements. If they don’t like it, then they can cease to trade.
We lived just fine before Uber came along!
And we should demand the government introduce a Job Guarantee which would set all the minimum wage and non-wage benefits and wipe out employers who only provided precarious jobs which workers had no choice but to accept.
If there was a Job Guarantee that provided meaningful work contributing to society then the workers in contingent or alternative arrangements who were unhappy with their situation could just leave and take a full-time (or whatever fraction they chose) Job Guarantee job with a socially-inclusive wage and other non-wage benefits.
They would know it was secure and provided for their future via superannuation provisions etc.
Conclusion
It is hard to get a clear picture on the ‘gig economy’ from a data perspective. There are a lot of anecdotal horror stories but so far the data agencies have not yet caught up with the trends.
What appears to be the case is that a growing number of workers are becoming trapped in these go nowhere jobs which provide nothing for their future.
And, many of these jobs can be provided (and have been) by traditional arrangements. It is just that the employers don’t grab as much profit under these arrangements.
That is enough for today!
(c) Copyright 2019 William Mitchell. All Rights Reserved.
hello bill is that fine to translate the article into a different language and post it in facebook? or in websites?
Bill, correct me if I’m wrong.
This what I see is your final plan for how every person in the nation (US, UK, Aust, etc.) gets an income or is supported.
1] Children are supported by their parents, perhaps with some help from the Gov.
2] The blind and disabled get an income from the Gov.
3] The old get Soc. Sec. from the Gov. like the US system or some other system.
4] The rest of the population —
. . a] The top 1% take care of themselves.
. . b] The next 19% have good jobs with many benefits or are small business people. The ones with jobs might have a Gov. sponsored unemployment insurance plan.
. . c] The next 30% would have jobs with private employers and would need more than a JG job to meet their mortgage payments if they lost their job. What are you thinking they will have, Bill?
. . d] The next 30% would have jobs with private employers and would use the JG as their fall back plan.
. . e] The bottom 20% would mostly have JG jobs for about $15/hr. and good benefits.
. . f] The rest. These would mostly be people who can’t meet the minimum requirements to keep a JG job. How do they get support?
. . . . And, I said before and still think that the JG system would benefit from a small UBI. It would cover those who somehow fell through a crack. Some like mentally ill homeless people would get a card that would have more $$ added every day or weekly or twice a week. This way they would always have money to buy food. The card might have 2 accounts, one for food and shelter and the other for all else [cloths and wine, etc.].
Bill, I have never seen your plan for women. Like mothers with young children. Are they supposed to support themselves with a JG job with their kids in childcare provided at low cost by local workers working at a JG job, or be supported by their husband, or what?
Bill, when would students stop being supported by their parents and start getting some help from a Gov. program? Would college count as a JG job?
So, clearly, I don’t know your final plan.
@Steve_American
Tuesday, June 4, 2019 at 17:34
You’re making static assumptions about the class distribution and then self-assigned what you think are realistic constraints to a JG?
eg:
“c] The next 30% would have jobs with private employers and would need more than a JG job to meet their mortgage payments if they lost their job. ”
Do some reading about private debt, public option for banks, credit write-downs. The point is these are policy options that can be used to invalidate the predicate you made that they will need ‘more than’ a JG to meet mortgage payments.
“Bill, I have never seen your plan for women. Like mothers with young children. Are they supposed to support themselves with a JG job with their kids in childcare provided at low cost by local workers working at a JG job, or be supported by their husband, or what?”
Answer: do more research:
https://billmitchell.org/blog/?p=36071
https://billmitchell.org/blog/?p=23719
http://www.levyinstitute.org/topics/job-guarantee
Dear Daniel (at 2019/06/04 at 4:48 pm)
No it is not fine. You have to ask for my permission and I then investigate whether I am happy with the site, the credits etc.
In general, I want people to read my work here.
best wishes
bill
Dear Bill,
A minor gripe here on your otherwise (as ever) excellent blog here…
You talk about the lack of pension savings or contributions in this para:-
“.. The rise of the ‘gig economy’ is not about workers becoming freer within capitalism. It is being driven by the fact that profits are higher when you can get workers to supply their own capital, work for a pittance, fund their own vacation period, have no job security, and have no pension and other entitlements…”
The clear implication being that the lack of pensions savings is somehow detrimental and/or that these are a ‘benefit’ of some kind that workers should aspire to.
This makes no sense whatever at the mass, or ‘fallacy of composition’ (Paradox of Thrift) scale, does it?
It makes even less sense when we know that the only source of net savings going into (private) pension funds is by defn. the federal Gov. Providing both corporate welfare for an otherwise worthless, unproductive pensions ‘industry’, and a nice losing punter sector for the financial sector casino.
Why do this? We know Gov can simply provide senior citizens with a basic living pension as and when required, commensurate with the real resources availability of the time.
Further, surely it is clear to you that the whole narrative of personal pension responsibility also feeds into the fallacy (of composition) that it is reasonable or sensible to pretend that the labour can and should participate as capital owner class citizens, deriving an income from ownership of capital?
I’m puzzled you still talk about ‘pension entitlements’ in terms of earned income contributions to savings, because I learnt about the monetary system basis of this fallacy years ago in a talk you and Randy gave on how ‘Buckaroos’ worked at UMKC, incl. the implications for pensions or other mass savings!
@Steve American
Steve, I don’t thnk the JG is meant as a substitution for other social insurance programms. It’s sole purpose is to allow the government to use fiscal stimulus in order mobilize idle workforce and set a floor for compensation for (mainly) low skilled work (sector specific minimum wage standards would probably be required, too, e.g. “Tarifverträge” in production in Germany).
Indeed, one thought that has also occurred to me is how to properly compensate all the unpaid work done around the house and in childcare by (mostly) women. While I don’t think a woman should be forced into full-time motherhood, I certainly believe it should at least be viable to take care of your offspring in their early years if you would prefer so. Having to go to work in order to barely make more than you need to pay for the child care you need in order to go to work is a bizarre, dickensian nightmare. Also, not everyone has the luck to have a family support network to help one out.
One could argue that better wages for sole-earner families might do the trick, but that puts the non-working spouse in a position of dependence. In a certain way, some of the more authoritarian and conservative men today miss exactly this arrangement, which saw them as sole providers and guaranteed them the upper hand in their relationships. I’d rather cater to the needs of the women than the insecurities of the men in this scenario.
I think that proper housekeeping and child raising are works that are both hard and beneficial for society as a whole, but it is difficult to measure who does what in a household and to adequately compensate it without unleashing an invasive bureaucratic monster on the task.
Ultimately, the JG is not the final solution to all of the injustices of society but a powerful and essential tool in order to restore some bargaining power to the “little people” in society, instead of turning them into “capitalless” capitalists in a “gig economy”.
@Mike
“Why do this? We know Gov can simply provide senior citizens with a basic living pension as and when required, commensurate with the real resources availability of the time.”
Mike, while this is true, I believe the problem is that the companies are pocketing what would be the costs of paying those services. and not the the part about those pension benefits being payable at any time in the future.
In my rudimentary informed understanding of MMT, the companies pay those benefits as taxes, thus those fiscal assets are eliminated anyway and the government spends them back into existance when it credits the retiree’s account in the future. In your scenario the spending in future remains unchanged but the fiscal assets as a whole increase since the “destruction” didn’t take place in the past.
That sounded really confusing when I read it back to myself, so hopefully Bill or someone else can correct me if I’m wrong.
Dear Mike Hall (at 2019/06/04 at 8:22 pm)
While we may understand the source of currency savings in the non-government sector there is a political reality to deal with.
I clearly prefer a national superannuation scheme based on rights of citizenship run by the national government.
But that is not a reality for many nations. So for most workers the path to a secure retirement will come from them saving during their working lives. That is the reality.
And my generation has generally done that yet we are forcing our children into situations where they cannot do that.
You can have all sorts of arguments about casino capitalism and the rest of it. But that doesn’t help a worker who is forced into old age with little income from past saving.
best wishes
bill
@sam w
You can argue with my percentages. But, there will be people in that range from 50% up to 80% of incomes who will have obligations or desires to live better than a $15/hr. JG job. would pay. If they lose their job and can’t quickly find another in some sort of economic crash then what are they to do?
I think this is so because — what is the use of having an income in the top 70% if you can suddenly be earning what the bottom 20% earn. And for a long time. I was asking Bill if he had a plan for those people.
.
@ Herman the German
I said that there would be cheap local daycare being provided by other mothers who would do daycare as their JG job. Because it is a JG job the money paid by the mothers of the children doesn’t need to pay all the bills. It could be in community centers or in the mother’s home/apt., etc. It needs to be very local though.
Giving everyone a very small UBI would help mothers stay home for those early childhood years and take care of their children.
Also, I thought Bill had said that the JG would replace most Gov. assistance programs. But, not for the disabled, blind and elderly, etc.
Here in New Zealand we do have a universal superannuation which has been in existence for such a long time – I think it has been around 70 years. All NZers get it at the age of 65. It is indexed annually to wages and inflation. While I wouldn’t like to just have it to live on it I certainly couldn’t live with out it. Most of my generation lived in a time where were encouraged and helped to own our own home and have them paid off by 65. We are also given an extra weekly amount in the winter to help pay for our now large electricity bills. Once we had one company managing the whole country’s electricity but now it has been privatised we have a myriad of companies clipping the ticket.
@Steve American
“Also, I thought Bill had said that the JG would replace most Gov. assistance programs. But, not for the disabled, blind and elderly, etc.”
I never heard Bill state it like that. It would only replace those programms that are meant to help those who want to work but can’t find employment.
“Giving everyone a very small UBI would help mothers stay home for those early childhood years and take care of their children.”
This would be your regular assistance programm and not a UBI. UBI means everybody gets it, not only mothers. Anyway, I have proposed before, that everybody should get at least enough chips to play in this casino of a world. I just dislike the idea of a one-size-fits-all approach that doesn’t incentivize work or compensates a mother’s effort.
As for the JG daycare, I’d rather have well (publicly) funded and widespread daycare centers than rely solely on (high fluctuation) JG jobs. Nevertheless, assistance in those centers on JG basis shouldn’t be a problem. I’d just like a core of well trained professionals to run the place. When one throws the chains of austherity away, the possibilities are endless 🙂
@ Myself & Mike
Bill says:
“But that is not a reality for many nations. So for most workers the path to a secure retirement will come from them saving during their working lives. That is the reality.”
This, of course, is a reality I left out in my rather technical analysis. As long as the road to a retirement in dignity leads through saving in our working lives, it should at least be possible for every worker to do so without relying on luck are the constant catering of employer’s and capital’s whishes.
Quite a few taxi drivers committed suicide because of ridesharing competition.
I don’t live in new york but I have read that there are so many vehicles on the road there now because there is no regulation of uber, while you have to pay a fortune to get a medallion to operate a cab in NYC.
I work at a university in California. The self-righteous of entrepreneurship is not something that i particularly like, along with people who wear those NASA or Eat-Code-Sleep-Repeat shirts. It seems like a some kind of cult.
As I understand Bill’s work, the JG is meant only to allow society to utilize all currently under-utilized labor and also to set a basic standard which private enterprise must meet in order to attract employees. Bill has never claimed that it was THE solution to our dire socioeconomic/environmental predicament. It’s more like a solid foot in the door, which political will (which the JG may help to summon) can then open wider to make many other necessary changes–what Bill and Tom, in “Reclaiming the State,” allude to as a “socio-ecological transformation of production and society.” Bill’s work as an economist must grapple with current real world constraints (neoliberalism, along with available resources) and seeks to develop a fuller and clearer understanding of the present system SO THAT we can collectively cure its grievous faults (what it has done, for example, to employment via the gig economy). For a sweeping vision of what a viable and humane social order might look like, one must turn to novelists like Edward Bellamy (“Looking Backward” and “Equality,” both free on the net). The reason we must find this mountaintop view in fiction is that genuine democratic socialism, though it presses ever harder to be born, still remains within the womb of history. MMT provides only an accurate assessment of the parameters of the birth canal, which “the baby”–a better, more beautiful world–must navigate if it is to be born.
I just recently read Gulliver’s travels and Oliver twist.
I can’t understand why these books were never required reading back in high school.
To be fair, I don’t know if I could have gone through those with all the distractions and having no sense of belonging to school. So maybe I could have gone through the book without reflecting on it.
We would have learned a lot more by just learning some vocabularies and discussing those books. I only read those after I graduated university.
When Gulliver described England to the houyhnhnms, you realize that you don’t even have to be a socialist of any stripe to think that the system is morally unjustifiable.
Reality sheds an illuminating light on the Rich/Poverty divide.
I don’t know about you, but I always get the impression that Bill, for all his forensic skills, describes in his neoliberal criticisms an enormous gap between the affluent Capitalist and his struggling brethren.
I would be more inclined to accept this painted landscape if it didn’t conflict with my own daily experience.
Now, I know Bill is fond of statistical reference to back up his argument, and I cannot compete with the time and resources he can put to work on economic issues, so I will merely point out some figures that I think shed some light on the issue of wealth distribution and the supposed impact of a gig economy that is denounced as a means of driving an even bigger wedge between those that are raking in the profits and those who struggle to make ends meet.
The batches of figures (from statista.com) relate to average profits of many businesses that I am familiar with:
Average profit made by small and medium enterprises (SME) in the United Kingdom (UK) for year ending June 2018, by sector (in British pounds GBP)
This statistic shows the median profit made by small and medium enterprises (SME) in the United Kingdom (UK) in the year ending June 2018, by sector. As of June 2018, the most profitable sector for SMEs were those in wholesale and retail trade, with an average profit of 12 thousand British pounds.
Wholesale and retail trade: Repairs ÂŁ12,000
Hotels and Restaurants ÂŁ11000
Manufacturing ÂŁ10000
Real Estate, Renting & Bus. Activities ÂŁ10000
Transport, Storage & Communication ÂŁ10000
Construction ÂŁ 9000
Other Community, Social & Personal Serv. ÂŁ 8000
Agriculture, Hunting & Forestry, Fishing ÂŁ 8000
Health & Social Work ÂŁ 6000
Median profit made by small and medium enterprises (SME) in the United Kingdom (UK) in 2018, by enterprise size (in GBP)
0 employees ÂŁ 8000
1-9 employees ÂŁ 14000
10-49 employees ÂŁ 56000
50=249 employees ÂŁ247000
All SME’s ÂŁ 9000
It is necessary to get enterprises of over 500 employees before appreciable profits are earned. So, it seems to me that it is not just the gig economy that is finding things difficult but whole sectors of the economy who are striving to adjust to market developments that range from retailing to IT.
That is a situation that may or may not benefit from a dose of Marxism. But I wonder about Bill’s apparent certainty on the matter.
The more I learn about the JG, the more I like its ability not only to set a floor under the compensation for labour, but also its conditions. There is also the salutary effect of local governance directing this work in socially valuable ways — which over time could lead to redirecting the efforts of many workers away from useless and destructive activity which they currently undertake out of desperation.
Of course, our oligarchs will fight this to their last breath, and they will fight dirty. We can have no illusions that such an arrangement is a direct threat to the power they currently wield over their less fortunate fellow citizens.
I am personally struggling to get enough hours as an independent contractor. In fact I have an interview today – for another casual job. I investigated the world of online ESL teaching recently as I was getting desperate. Basically companies (often from China) employ graduates at around $10-15 US an hour making use of the graduates’ computers and IT connections and pay by the lesson. They are extremely precarious jobs with huge financial penalties for an IT failure or sickness meaning a lesson can’t be taught. Teachers who are sick or want to go on holiday then have classes taken away from them. Teachers are expected to buy all their own props and resources. The companies churn through the teachers giving new teachers all the hours and abandoning old teachers as they feel the new teachers will be more enthusiastic. Contracts are short. Pay rates are changed without any bargaining. Complaints result in quick termination. If students don’t show up often teachers are not paid despite preparing and waiting by computers. The teachers basically have no rights and no ability to unionise as they are “offshore”. Many teachers work for several companies at once trying to juggle and get enough hours. The uberisation of education. Bring on the JG. I could sure use it.
cs,
yeah, I remember the time when i was out of a job. It really sucked.
I am guessing even tribal society is less dysfunctional than many areas we have in present.
That song “All Used up” should fit the teachers in those companies.
IIRC, Bill always says that the JG would “offer” a job to anyone who wants a job and can work.
The JG only does its job if it requires the workers to show up on time almost every day, to call in sick, and the actually do the work. If the all workers don’t meet these requirements then the private sector will not want to hire any of them because their work habits (at least) will not be guaranteed.
IIRC, Bill specifically mentioned that there would still need to be a program for the blind and the disabled. I assume he also wants a program for 90 year olds who can’t work any longer. This is not a part of MMT.
I have never seen any MMTer talk about what to do with the homeless mentally ill. They can’t hold a job so the JG doesn’t help them. I’d like to see the Gov.get them off the streets because they suffer out there in the winter and soon in the summer too (ACC heat waves).
It isn’t part of MMT, but I’m sure that Bill, as a leftie, wants to provide for all the children. They need food, shelter, love, education, healthcare, etc. We have tried gov. run orphanages and foster care down through the many many decades and we know that keeping them with their parents is by far a better situation for the children unless their parent are abusive. So, their mothers also need to be supported somehow.
Gogs – I’ll just point out that those figures are profits for the business, i.e. after the bosses have taken home whatever they decided to pay themselves.
Gogs,
Profit is after everyone’s been paid, including the owner, so I don’t think it’s meaningful. Add up the fact that most business’ fail and that it’s a pretty small moving economy and I can’t fathom anything useful there.
Steve,
I’m sure many blind, disabled and even mentally troubled people could have productive work, but when they can’t, there would still be enough resources to take care of them. I’m sure you can agree that it’s better to not have yet another economist wax political about social problems that aren’t part of his skills, even if it’s the kind of the person we wish ruled the world.
The average Australian worker produces $75K in GDP per year.
The average full time welfare recipient (i.e. those on the dole full time) receives just over $15K per year.
The full time dole recipient demonstrates that ‘needs’ cost around $15K per year.
Therefore, the average worker produces 5 times the basic needs level.
Put another way, the average worker only really needs to work one day a week to live the same standard as a full time dole recipient.
A lot of workers however want to live above the basic needs level and to own assets, own luxuries, experience things etc including owning their own home, having credit etc all of which requires more than just $15K a year.
In Australia on average each person has personal debt (debt not including a mortgage) equaling $20,500, or as a ratio to income averaging 25%.
This means that a certain number of working hours each week is devoted purely to the payment of personal debts so people can have more. This is not even factoring in a mortgage.
If every full time worker in Australia reduced his personal debt by half they would free up at a minimum 3 hours a week, which would create in excess of 21 million available working hours per week, which if divided by the unemployment rate would equal nearly 30 hours per week per person currently without a job.
This would reduce unemployment to zero and yet not one new job needed to be created. This would also mean no need for politicians or economists.
(next time any of you berate an unemployed person ask how much of your income is devoted to the payment of your own debts and the accumulation of property)
Now throw in the fact that a majority of workers have a mortgage and then do the math.
Why do most people buy a home even though today most new homes have no yards, you can smell next door having a crap? Because people have been sucked into the hype, but most importantly, because people crave security, and in a competitive and insecure world, the only form of security left is property ownership, which not only includes houses, but also includes stocks (including super).
Today the world is experiencing the highest ratio of property owners to non-property owners in history (and central bankers wonder why we have the lowest rates in history), and because property ownership is not free (i.e. it needs insuring, it needs to fetch a yield, or it must appreciate in value to pay for the interest on borrowings) then the cost of property ownership is being thrown on the consumer, and who is hit the hardest? The non property owners of course!
We can’t all be capitalists. Capitalism was never meant to engulf the whole world. Back in feudal times you only had land owners as one form of capitalist, and travelling merchants as the other form. The rest of us were just minding our own business.
Now we are all forced to try to be merchants and land owners in some market economy purely out of a need to secure ourselves whilst a group of people get to earn a cushy living debating over how to run the economy.
What a crap world.
Our political market economy rests on a sea of contradictions and lies.
I sent to three separate depts of the Aust govt what I discovered as a way to reduce homelessness and unemployment to zero without it costing the tax-payer a single cent, without the need to create any more jobs, and essentially without it coming at any economic loss to anyone. Put another way, this program would lift the lower class out of the whole class struggle completely, whilst leaving the whole capitalist system where it is to continue on as it is. This program would operate on a completely different monetary circuit to the market economy. The govt, the market economy, and the participants on this program would essentially be operating a tri-lateral arrangement, and yet the market economy itself wouldn’t even know it existed because it would have no negative impact on it whatsoever.
So you would think that demonstrating that a problem (such as unemployment) could be solved without it coming at economic loss to anyone, without the need for JG programs, without the need for UBI, without the need for welfare, without the need for charity, and without the need for political debate, would appeal to some – how wrong I was!!! Not only did I send this to the Aust govt, I sent it to the humans rights commission, I sent it to high up economists. The responses blew me away!!!
As far as the responses from govt, the govt believes in the ‘resources are scarce’ rhetoric and use this to justify their claim that everything is best left to the private sector. Considering the size of govt and all those jobs which exist as a result, and how much they stick their noses into just about everything, these responses were insulting and demonstrated a clear and present hypocrisy. I would have much preferred, and would have had more respect for these people, if they just owned up to the fact that their own jobs rely on there being some level of unemployment and poverty, but they do not have the guts to admit this.
I used to believe that politicians and economists were actually trying to solve problems, but today and all that I have experienced since sharing my discovery with economists and politicians is that no one wants to solve the problems because without problems there is nothing to debate over, and there would be no jobs which rely on this constant debate and class struggle, and this is particularly true for politicians and economists alike. Imagine if in 50 years time we had zero unemployment, zero poverty, zero crime, zero homelessness, then what need will we have for politicians, economists, not to mention all welfare workers and those workers, jobs, industries which rely on class struggle not to mention all the other struggles, conflicts etc humans suffer on a day to day basis. How will we find 38 hours a week to keep us apparently mindless imbeciles who are apparently trouble if they are not kept working for most of the day, busy if there is no problem to be solved out there? How much of the economy is actually based on pure ‘physical’ human needs and how much of the economy is based on emotional needs?
RE –
Matt B
Wednesday, June 5, 2019 at 9:10
Paulo Marques
Wednesday, June 5, 2019 at 9:20
Yes, I am aware of the relevance of your point, and I appreciate your reference to it.
Homeless mentally ill people could participate in a Job Guarantee. Every participant in a JG should start getting paid as soon as they are enrolled. It doesn’t matter if it takes a week or so to organise the job. The worker will start to receive wages on Day 1. If the worker experiences significant mental health challenges, participating in appropriate therapeutic and social activities could itself be a JG job. Listen to the worker. Learn about their interests and aspirations. Collaborate with them to design a job around their interests and aspirations. Participating in appropriate skill building activities could itself be a JG job.
@ Dean
“I sent to three separate depts of the Aust govt what I discovered as a way to reduce homelessness and unemployment to zero without it costing the tax-payer a single cent…”
So will you share your discoveries with the blog?
@Henry
“So will you share your discoveries with the blog?”
Not anymore. I have given up sharing it because people (at least all of those I have shown it to) seem to have a hard time distinguishing between politics and purely established legal principles and so when they read it they look at it from a political viewpoint and therefore subjectively (i.e. I don’t like it, I don’t agree with it, I don’t think it will work, it doesn’t match my view of the world, it doesn’t match my view of how humans should live and work etc etc etc), instead of simply looking at objectively and from a legal viewpoint. I spent years making sure that I could prove the program would have no economic effect on the rest of the private sector (and the irony is that MMT helped me to prove these facts through how it has shown how the monetary system works), but all readers seem to skip that part (conveniently) and only look at it from their emotions. Besides it cannot be adequately explained in a single blog comment or post.
@ Henry and others
I do have a question I would like to pose because I am really struggling to find why I cannot find anyone to embrace my idea.
I have to put my question into some context.
One of the most fundamental principles of our common law is the freedom that every human possesses to do as they please, when they please and how they please ‘provided’ they do not prevent any other from exercising the same freedoms.
Very basic but very important to grasp. This is a legal principle and not a political principle. However, politics can take away this freedom based on some emotion or fear that the majority experiences, i.e. if someone wears a burka and this makes the majority uncomfortable, they can, through politics, have that freedom stripped from the person wanting to wear the burka.
Note however, that the use of the burka by this individual causes no other person economic loss, only some emotional loss, i.e. a heightened sense of insecurity. But this emotional loss is only something that can be rectified through the political process, for if anyone tried to sue the person wearing the burka in court under legal principles they would have to demonstrate that the person wearing the burka was causing the other damage to property or person. As this is impossible to prove it would be thrown out of court.
By the same token, the program or model I discovered, if implemented by one individual, or a thousand, or even 5% of the population, would not cause any of the remaining 95% of the population any economic loss whatsoever, and even to the contrary, it would benefit the other 95% in various ways which I demonstrated to the govt. All that is required by government is to form the necessary trust relations and to introduce a non-market sourced money to fulfill the program and then destroy that money once it has served its purpose.
Now, under legal principles, there are no grounds for anyone to prevent the implementation of this program, including government because as I have demonstrated, it causes no one any economic loss. So the question must become, what emotion is preventing someone from embracing the idea? When I have shown this idea to others, including economists, the responses are always about the emotions of the reader and never about whether my claim ‘that it causes no one economic loss’ are true or not.
Why?
There are only two answers that I can think of.
Either, too many jobs exist as a result of poverty, homelessness, crime and unemployment etc, that to eliminate all these sufferings would create an economic hole that cannot be filled (i.e. what jobs would replace all the jobs that exist because we have police, government, welfare, economists etc?)
The only other reason that I can think of is that too many people do not enjoy their jobs, but due to the cost of living, including housing, being so high, they are forced to work full time jobs, with most households requiring two jobs, and the emotional response from most people is that if I have to work a full time job I don’t like then everyone else must do the same.
Would either of these be correct?
I agree on all except “Job or Wage Guarantee”. I think the western governments should legislate to strengthen the ability for employees to unionize. Employees in this generation are going to have to get the courage to fight for themselves and form labor unions.