31 May 2017

Cycles, Creative Destruction, Careers and Charity

The kind of work that needs to be done in the economy changes over time.


Some of the changes are cyclical and predictable.

One cycle involves annual seasonal employment.

Ski resorts need more workers, some of whom must have specialized skills, in the winter. Retail stores need extra winter workers. There is extra work for Santa impersonators in the winter. There is extra work for snow plough operators and Christmas light hangers in the winter. Once or twice a year, farmers need extra workers to bring in their harvests. Demand for life guards and employees in beach resorts goes up in the summer. There is more of a demand for teachers and tutors at all levels during the nine months or so a year of the school year. Hail repair work, fireworks sales work, fireworks show designers, lawn mowing work, swamp cooler set up work, pot hole repair work, and gutter cleaning work is all seasonal.

Certain combinations of seasonal work are particularly common. A large share of farmers find seasons work in the skilled trades or as tax preparers or teachers or coaches during slow periods of the farm calendar, that the balancing with farming in season. Lots of ski industry employees work as tour guides or rafting expedition leaders or summer resort workers in the summer. Lots of "handymen" work a regular seasonal cycle of landscaping and building maintenance work over the course of a year - each with its own little subset of skills.

Another cycle involves the business cycle. 

For example, there is more work for foreclosure counselors and bankruptcy form preparers during economic busts. There is more work in building construction during booms. Purveyors of luxury goods and services thrive in booms. Purveyors of discount priced goods and services thrive in busts.

Another cycle involves demographic waves.

For example, our economy has disproportionately needed goods and services for baby boomer aged individuals as they have moved through the life cycle. When they were in school, we needed more teachers and coaches. When they were in college, we needed more professors and dorms. As they age, we need more health care and nursing home work.

Creative Destruction

The economy also makes "structural changes" over time, often as a result of what economist Joseph Schumpeter called a process of "creative destruction." When technology and resource supplies or climate change or wars, our economy needs different kinds of work to be done. 

Women who might have otherwise served as homemakers or maids or nannies end up working in war factories instead. Coal mining jobs disappear and jobs installing solar panels and building wind turbines come into being. The work that is no longer required, for example, telephone operators, rarely corresponds neatly and smoothly to the new kinds of work that need to be done to replace the old technologies, for example, setting up and maintaining cell phone towers. If self-driving semi-trucks become a thing, truck driving work that now employs millions of people may become obsolete, but there were be a greater need for people in a particular location to load and unload those trucks. 


All of the observations I have made so far in this post are common place. But, other than a few platitudes in matriculation and commencement speeches at liberal arts colleges about how education needs to teach people not specific skills that may be outdated in time, but instead needs to teach people who to learn to learn throughout their lives, not much thoughtful reflection goes into the implications of these common place facts.

Certainly, there are some people who do basically the same thing for their entire careers, all year around. But, there are tens of millions of people who ride those cycles and trends, regularly changing the kind of work that they do to meet the ever changing needs of the economy.

The Gig Economy

At the low end of this group of people are participants in the "gig economy" - Uber drivers, brand ambassadors, actors who find work in supporting roles and short term performances, and more.

New Work Within The Same Job Description

I'm in another layer of this group of people. While my job title, "attorney" and my credentials have remained essentially unchanged for all of my adult life, the actual work that I do has shifted with business cycles, with demographic shifts and with structural changes in our economy.

When the economy was thriving and estate taxes were high, a did a lot of estate tax planning work for middle class families that gradually and then more momentously dissipated as the bite of the estate tax and need for trusts to minimize estate taxation declined. In boom times, I did a lot of business transactions.

When the financial crisis hit, almost all of my transactional work dried up, and I turned to legal work for a lot of "formerly rich people" who needed to deal with creditors in the face of business transactions gone bad, and divorces made more difficult by declining family fortunes. But, when the economy recovered, lots of this work faded away or ran its course.

As more and more same sex couples came out, before same sex marriage was legalized, I helped couples put in place domestic partnership agreements with exhaustive documentation designed to accomplish more or less what the national legalization of same sex marriage would eventually make unnecessary leaving most same sex couples with only very simple estate planning needs. There work is still there (for example, it is necessary for polygamous families), but there is a lot less of it.

But, as the financial crisis started to run its course and the marriage substitute of civil unions was already starting to dry up demand for domestic partnership agreements, the legalized marijuana industry came into being and created a new boom that continues to occupy a significant share of my practice.

I've oversimplified the trends, but the core lesson remains sound. While my credentials and job title have remained basically unchanged for the last twenty-two years, the kind of work that I actually do in that career has dramatically shifted several times over that time period to the point where it would not be obvious to someone unfamiliar with the professional structure of the American economy that I was still engaged in the same profession. 

I have little doubt that the kind of work that I do on a day to day basis will undergo similar transformation several more times before I die or retire, even if I continue to have the job title of "attorney" and to hold the same credential.

New Medium Term Job Descriptions

Plenty of people in the economy experience the shifts in the kind of work that they do on a day to day basis without the continuity that I have enjoyed in my generalist profession. Shifting job titles and often needing new professional credentials, as well as changing the kind of work that they do.

I previously mentioned the demise of telephone operators. Add to the declining ranks coal miners, steel workers, assembly line factory workers of all stripes, newspaper reporters, gas station attendants, law office photocopier/courier positions, postal workers, conventional farmers, classical language (i.e. Greek and Latin) instructors, court reporters, psychiatric hospital workers, and proprietors of video rental businesses, record store businesses and brick and mortar book stores.

On the other hand new job types have come into being. When I was in high school, almost no one had a job title of barista. There were no "bud tenders" (i.e. skilled retail salespersons in marijuana dispensaries) and no one was legally employed in marijuana "grows". There were no "web designers", no Uber or Lyft drivers, no one who made a living managing AirBnB properties, and no "app developers". Few business offices had an IT contractor. Organic farmers were scarce. Very few people installed solar panels or windmills. The certified financial planning profession and veterinary technician professions were in their infancy. Online journalism (let alone "blogging") didn't exist, let alone search engine optimization specialists and paraprofessionals manually training search engine neural networks. There were no EBay brokers and were very few life coaches.

Tenders: From Job Titles To Redefined Career Identities

At some point, it is likely that people will come to recognize that a commitment to a line of work for the season, for this part of the business cycle, or until the next round of demographic change or creative destruction sweeps through, is not as much of a part of a person's identity as it was in the day when Smiths and tailors and masons took their professions as their surnames, or even a recently as a generation or two ago, when holding a single job title and even a single kind of daily work for a lifetime was the perceived norm.

There may come to be a class of people who identify first as "trenders" doing whatever kind of semi-skilled work is currently, but probably not permanently, in demand in the economy, and only secondarily with the particular kind of work that they happen to be doing at the moment, just as I identify professionally primarily as an "attorney", and not in a permanent sense as a "marijuana business attorney".

Some of these people may do this by generalizing how the view the kind of work they do. Instead of seeing themselves as video renters, they may identify as "entrepreneurs" or "consultants" (something a high school friend who was the best man at my wedding did). Or, they may see their many gig jobs under a larger umbrella - my wife often describes her industry in which she is hired for several dozen distinct gig jobs a year as "promotions".

Trenders may develop their own meta-skills at identifying growth sectors in the economy and obtaining the certification or training necessary to be competitive in these growth sectors. And, with this constant "hustle" to move onto new kinds of moderately skilled work, trenders may also also develop a professional and class identity that extend beyond their medium term occupation.

Perhaps, in the educational world, we can find a happy medium between hyper-specialized skill training that is at risk of becoming obsolete almost as soon as it becomes useful (how many former factory workers in the 1980s were encouraged to learn the BASIC programming language at some community college or technical school only to never put it to any practical use), and a liberal arts education that consciously makes an effort to have students study fields that have no direct vocational application whatsoever (English literature, art history and anthropology majors who aren't bound for graduate school, here's looking at you.) Maybe that happy medium can be built around preparing people to be "trenders" performing "middle skilled" jobs and those that require only an undergraduate degree without a particular specialized college major in a specialized subject area.

Charity And The Inflexible Class

Of course, this also begs the question of what is to be done about the many people who may be resilient enough to master a single trade or career that isn't very skilled when they are adolescents or young adults, but simple aren't nimble enough mentally or psychologically to be trenders.

If you want to identify an important subset of frustrated Trump supporters who are willing to accept what deep down they know to be lies and poor character, it is members of this "inflexible class" because all they really want is to turn back time to the good old days of how it was for people in their shoes in their youth or in their father or uncle's days. For whatever reason, members of the "inflexible class" are disproportionately blue collar men without college educations - a class of people that is at a lower percentile on the socio-economic ladder and many people who would have lacked college education in a previous generation have gone to school for at least a few years to obtain a certificate, an associate's degree, or just "some college" that sets them apart from members of the "inflexible class" who found high school to be such a frustrating experience that they are loath to return to the classroom and fail again.

They yearn for a return of low skilled, good paying jobs on assembly lines or medium skilled jobs in coal mines that simply will never come back. Automation, irreversible offshoring, are the like have eliminated those jobs in a manner that can never be reversed.

In another decade, members of the inflexible class will be bemoaning the disappearance of jobs in department stores, and book stores, and newspaper reporting and truck driving and postal work.

Their counterparts in the Democratic party blame offshoring and corporate efforts to break the union movement. But, mass membership in private sector unions and mass repatriation of offshored jobs isn't happening either.

Members of the inflexible class may indeed be disabled in the narrow sense that their health is no longer good enough to find work in their original narrowly conceived profession as the number of people employed in it has dwindled and standards for those who remain in that line of work have risen accordingly, even if they are able bodied enough to do some kind of work of a different kind, possibly at lower pay or with less reliable or fewer hours until they build up alternative credentials and skills for new kinds of "middle skilled" work. And, this disability, narrowly conceived, also reduces their incentive to seek alternatives if they can get benefits in this capacity, and undermines their role as a breadwinner upon whom others are economically dependent that wrecks havoc on their families, and also disrupts their social circles, with an end result that is often a resort to opiods and/or alcohol dependency as they drift into untreated depression triggered by the constant anxiety of economic inadequacy.

Republicans tend to want to give members of the inflexible class a motivating kick in the butt by cutting benefits in what is perceived as tough love that will force them to get out of their funk and seek their fortunes in more fruitful lines of work in more prosperous places.

Democrats tend to focus more on the immediate suffering that cutting benefits imposes on people who as a practical matter truly are incapable of finding private sector economic support for themselves, at least in the short term, without more of a helping hand than they are receiving.a

There will always be some people in the United States who simply, as a result of modest IQ, a personality type that isn't very strong in the Big Five traits on conscientiousness and extraversion, or other particular barriers like congenital or acquired physical disabilities, substance abuse issues that they can't overcome without heavy handed assistance, or other mental health conditions like traumatic brain injury or psychosis or an autism syndrome disorder, or some combination of these things are simply never going to be terribly productive workers in any moderately meritocratic job market. Legions of potential workers abroad in offshored facilities and at home in immigrant populations are going to be smarter, have more of a disposition towards a good work ethic, better interpersonal skills, and less congenital and acquired barriers to economic productivity.

In any open, reasonably lassiez-faire economy, a rational firm will prefer to hire a more selectively fit worker to do their work for the same, or even for a somewhat higher price, and if more fit workers can actually be secured at a lower wage than less fit native born domestic workers, a firm is undermining itself by hiring the native born domestic workers. Yet, the fit immigrant hypothesis, which is well supported empirically, and the logic of comparative advantage, strongly suggests that this is exactly what is happening on a daily basis.

What is the just solution for member of our national community who are far below average in productivity, actually have negative productivity in a work environment, or at least have zero or negative marginal productivity when paid a minimum wage?

Economist Milton Friedman argued vigorously that the main problem of most poor people is not that they are overall bad people, but that they don't have enough money. He argued for a universal living wage, and a similar natural experiment, the Social Security and Medicare programs, seem to demonstrate that affording people who for some reason or another should not be required to continue to work to obtain the necessities of life, is an expedient and viable way to drastically reduce the suffering of the tens of millions of people who are categorically eligible for the program without reducing their sense of dignity and self-worth. Some who want to work a little can do so, many more do not and are continent with a modest but sufficient living that these benefits can afford them together with whatever savings they may have and some family support.

On the other hand, Malcolm Gladwell (e.g. in his book "Outliers") and many labor economists have argued equally strenuously that sustained separation of able bodied (even if not very productive) people from the labor force both greatly reduces that person's economic human capital for a sustained period of time going forward and leads to dire psychological and interpersonal harms to that person. In their view "meaningful work" during the time period when someone is able bodied, or perhaps even any regular work or educational activity, even if it isn't terribly meaningful, has intrinsic value and preserves the economic value of that person's human capital, whether or not any compensation is actually paid for doing that work. It prevents that person from becoming unemployable in the way that it has been empirically shown that people who have sustained periods of unemployment (even if for no fault of their own) do, whether or not this work activity is the source of their economic support in this time period. In the words of the Puritans, idle hands do the devil's work.

I'm not convinced that the two positions are totally incompatible from a public policy response perspective. Keeping someone engaged in meaningful work can prevent them from joining the "inflexible class", but just as we've learned that the approach to homelessness that works best is "housing first" before dealing with the root causes of an individual's condition, it seems extremely likely that "money first" is as a practical matter a necessary response to the poverty caused by in ability to work or unavailability of work.

And, less data still tells us how to coax someone out of the inflexible class, or what approaches work best to deal with the not insignificant share of the population which is simply not well equipped to compete on a meritocratic basis in a global economy that is full of other people who can do what they do better and at a lower wage.

Of course, taxes and incentives can be used to avoid all or nothing resolution of these situations and indeed there are a few tax credits in the Internal Revenue Code (mostly little known) with precisely this calculus in mind. How much should be subsidize a business that knowingly hires an inferior employee to keep him off the dole and make him a meaningful part of our society knowing that better potential employees will be able to land on their feet in the economy on a meritocratic basis.

Also, how much of the inflexibility in the behavior of the inflexible class is mostly a result of barriers that other policies have created that can be removed, as opposed to behaviors that reflect lack of personal character or ability.

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