Work Sharing: A Really Bad Idea That Just Won't Die
The U.S. would be quite a bit more prosperous if policymakers understood a few basic things. Up top would be a grasping of the simple truth that money isn’t wealth; rather it’s a measure that serves no purpose other than as a medium to facilitate the exchange of actual wealth, and also store it. Progress springs from this. Major progress.
When we can easily exchange the fruits of our labor, we can logically specialize. And when we’re specialized in our work, we’re much more productive. Our productivity means we don’t have to consume all the fruits of work such that we can store wealth with the medium that is money, and in saving we can shift resource access to entrepreneurs aiming to bring the future into the present. While money isn’t wealth, when it’s a trusted medium all sorts of wealth is subsequently created.
Almost as important would be for policymakers to understand that “jobs” and “job creation” are most plentiful in locales where they’re most rapidly being destroyed. On the flipside, jobs are most scarce where policy types are most aggressively trying to “save” them.
The above will start to make sense once those improperly focused on “jobs” realize that they’re not finite. In truth, the only limit to “job creation” is investment. Where those allocating savings are aggressively committing capital, jobs of all kinds that elevate all manner of unique skill sets are quite a bit more than abundant. No one “takes” finite jobs as dopey policymakers believe. If so, opportunity would be greatest in people-scarce Flint, while highly limited in people-dense Palo Alto. The reverse is true. Palo Alto is inundated with investment. It doesn’t have enough people for all the work being created by intrepid investors.
Which brings us to the latest “job creating” craze embraced by a policy set long on book smarts, but very limited in the area of common sense. It’s called “work sharing.” The view among the chin scratchers is that with job opportunities rather limited at the moment, government must step in. It would encourage companies to avoid layoffs, and instead pay workers an hourly wage that’s less than what they earned before the economy dived. Government’s role would be to make up for the difference in wages lost. Workers would remain employed, though they would share their reduced hours with others.
It seems bad ideas never die.
Indeed, this one’s been around for a while. And before conservative readers shake their heads about those braindead lefties, keep in mind that it’s not just self-serious lefties who support this laughable policy idea. No less than former Trump CEA head Kevin Hassett has long promoted what he deems the virtues of “work sharing.” In a 2010 opinion piece he co-wrote with lefty economist Dean Baker, it was suggested with quite a lot of enthusiasm that "Under a work-sharing program, firms are encouraged by government policy to spread a small amount of the pain across many workers. In a typical arrangement, a worker might see his weekly hours go down by 20%, and his salary go down by about 4%."
Again, bad ideas never die. They just disappear for a time, only to be revived. What’s ludicrous generally has surface appeal. Thus the excitement about work sharing. What’s not to like about an idea that would keep people employed? Do you hate workers?
Back to reality, it should first be said that what the New York Times describes as an “unsung salve,” and that Hassett is still enthused about, is quite the non sequitur. There’s not a jobs problem right now; rather there’s an investment problem. In particular, those with capital to commit are understandably a bit gun shy about putting wealth to work when it’s remembered how quickly alarmist politicians can erase it.
To offer up but one example, Austin, TX was, until March, the world’s “live music capitol.” But according to a Wall Street Journal story from August 23rd, two thirds of those venues are expected to close. Margins were tight enough before all the nail-biting about the coronavirus began. And now? The broad view within an increasingly authoritarian political class is that the very people who drive all progress, including all progress against diseases that can kill us, are now a lethal menace to one another. Packed crowds are no longer cool to political types.
Ok, but tens of millions of Americans were employed before our national lapse of reason in businesses that were reliant on large crowds. Is it any wonder jobs are scarce? Why invest in (or lend to) that which politicians have proven they’ll quickly shut down?
After which, it cannot be stressed enough that jobs are most plentiful where they’re most rapidly being destroyed. Technology, by its very name, is indicative of advances that enable the doing of exponentially more with exponentially fewer hands. Technology is about shrinking the amount of human capital required to produce things, while “work sharing” is all about expanding the number of human hands in any business without regard to need.
Which leads to a simple question: Silicon Valley is the personification of technological advance. Is everyone unemployed there as a consequence? Are potential workers studiously avoiding Menlo Park, Austin, and Boston’s Route 128 given the prevalence of technology in all three? Quite the opposite, really. Implicit in what’s absurd is that workers rush to the most primitive of locales for opportunity. Actually, they rush away. They follow investment that aims to mothball yesterday and today's work.
And investment is relentlessly in search of efficiency. Of the production of plenty as inexpensively as possible. “Work sharing” is all about maintaining big employment rosters for the sake of it, while tying the sharing business to the state. “Work sharing” is as a consequence anti-investment. Which is why embrace of what’s ludicrous should avoided until a few decades from now, when what never made sense now rears its silly head again. Indeed, while progress is yet again about job destruction, it has yet to rid the economy of “policymakers."
