Welcome to Known Unknowns, a newsletter that doesn’t fight progress in the name of reducing risk. You got to embrace the change.
Lie Flat If You Want
The labor market is weird these days. Unemployment is still high, but quit rates and job vacancies are up, too. Normally, we assume unemployment comes from people who want jobs but can’t find one. These days it seems jobs are there, but some people don’t want to work.
Much is being made of the enhanced unemployment, which paid people more to not work. We are now seeing some fans of the extra payments taking victory laps that it ended, but unemployment did not immediately fall. I believe the permanent income hypothesis is a better way to understand behavior; if people have lots of savings, not only from unemployment benefits but also the stimulus payments and months of nowhere to spend money, this will influence their work choices for months to come. Lots of good economic papers may be written about this, I hope.
Also, the last 18 months were hard and people feel burned out. Each week brings another story of people leaving the labor force. There are many different reasons for this: Some are low-paid service workers who are using the time/money to learn new skills so they can get on a better paid job track. But there also seems to be a significant and vocal contingent of well-educated people in their 20s and 30s who’ve decided high-powered careers aren’t for them.
They are channeling the lie flat movement in China, which started among overworked factory workers and is how Chinese youth are pushing back on the pressure for relentless work and drive for higher social status. Though I am also told it is become something of a joke in China, like, “You say you lie flat, but you actually work 18 hours.”
Anyhow, never one to be left out of the oppression Olympics, some very serious upper-middle-class Americans, who work in jobs like public radio, also want to lie flat because they feel overworked. I get it, work has been hard this last year; isolation made it even worse – but Americans have also never had so much leisure time. We work much less than people in the 1960s.
Work has always been hard, especially early in your career when you are building skills and finding your place. Dropping out now may feel good, but your 20s and 30s are a critical time in terms of building a career (you also get most of your pay increases then). So if some people want an easier track, good for them. I wish them well. But they should also be prepared that that means they may not get the social status and experiences they also want that only come with success. Life is about trade-offs.
End of Men
When I interviewed sex workers in the brothel, I was struck at how many came from communities where men did not work. Their boyfriends, their brothers, cousins, and their friends – all young men without jobs. The women were supporting lots of people, including many able-bodied young men.
I worry about men in the labor force. The economy is changing. Most of the job growth is in traditional “women jobs” like health care and education – and the economy rewards higher education more. It is becoming entre to the middle class. We should be worried that women are dominating college admissions, 2 to 1, which suggests men will fall farther behind and be shut out. That’s not good for anyone.
Much of this comes from the growing pains of an economy in a transition. We are becoming a tech economy instead of an industrial one. When we transitioned away from agriculture, men also struggled. They found their way, eventually, but it took a 100 years and many destructive social trends, adopting to new social norms and adjusting education to fit an industrial economy. If we want a better outcome this time, we need to accept the new economy as it is rather than try to turn back the clock on manufacturing jobs and unions. We also need to adjust education, which does not suit many boys or prepare them for the new economy.
We say college is necessary to be in the middle class; this is not just true economically, it is also true socially. People with more education do tend to earn more and have more jobs available to them. But a skilled tradesman can earn more than many college graduates, even people who went to grad school – yet they don’t get the same respect. I also noticed in the brothel a divide between women who went to college and those who did not. Many of the non-college grads wouldn’t answer my survey because they were put off by my question about how much education they had. I was told they felt offended and judged by the question. Honestly, I was just curious if a college wage premium existed in sex work like it does in other industries (surprisingly, there is a college wage premium in the illegal sex work market). But I see where they were coming from (recall how the media talked about “the poorly educated” in 2016 election), even if it wasn’t my intent. It’s messed up and says a lot about how divided our country is.
I am not sure all men should go to college. Some definitely would benefit – and we need to do more to reach them. For others, there are better, more lucrative alternatives. We need to reset our social norms; reconsider how we undertake this economic transition and how we treat our fellow citizens.
Break Up Tech?
There’s also another way history is repeating itself. Just like the early days of industrialization, when an economy is in transition, the first movers get big and powerful. The tech economy today is dominated by a few large, powerful firms. This is upsetting to some people, mostly in Washington and in law schools. Though I agree it poses problems, but breaking up big tech is not the right answer.
We are not an industrial economy that only produces rival goods and more. Breaking up big companies, just because they are big, is using a twentieth-century solution for twenty-first-century problems. It won’t solve anything and will impoverish everyone in the process. I think it is weird that the goal (or, to be fair, the obvious unintended consequence) of anti-trust these days is for consumers to pay higher prices. But that doesn’t mean big tech poses problems that need regulation.
I spoke to Luigi Zingales about what kinds of solutions would work. He’s brilliant, and I can’t do him justice. I hope you’ll take a look.
In Other News
Trying to be hopeful about Eric Adams.
Until next time, Pension Geeks!