To grasp the dead-end jobs boom, head to the car wash
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Version 0 of 1. Labour isn't working. Politicians preach that a job is the best route out of poverty, but too much work in modern Britain provides neither security nor prosperity. Inflation, which inched back up last week, has been eating into pay packets for years. The cumulative fall in real wages is about 8% across the range – the biggest drop in living memory. It affects not only the poor, but the middling too. In researching the book Hard Times we heard from Maria, a mother working full time on fairly typical pay, about the consequences. "Net per month I get £1,400; my rent is £1,385." She lives in a flat in unfashionable Cricklewood, and yet after rent has just £15 to survive on each month. Her childcare during school holidays is £28 a day. She would sink without a tax credit system, which has itself been cut. Lower down the wage range, insecurity compounds the squeeze. Unemployment is falling fast, but the slump has left a million more workers either unwillingly temping or unwillingly part time. The official zero-hour contracts tally, which was just 100,000 a decade ago, today stands (on a different methodology) at 1.4m. Burgeoning self-employment, sometimes a last-gasp alternative to the dole, masks a dearth of employed posts in every region bar London. Such grim realities are slowly making themselves felt in Westminster. George Osborne talks about a £7 minimum wage, though doesn't promise when; Vince Cable wishes to "move forward" on zero-hours contracts, although three of the four options in his consultation last year would change nothing but guidance. Labour is more convincing, promising to peg the minimum wage to typical pay, and a "right to demand" fixed shifts after a year of zero hours. But it is still inhibited by the fear that, in an economy addicted to cheap labour, protection for people in jobs will condemn others to no job at all. One cannot transcend this miserable trade-off without digging into the roots of the low-grade jobs boom which, as things stand, appears entrenched. Looking ahead to 2020, the Institute for Employment Research has projected that administrative, skilled trade and manufacturing posts will disappear, while elementary, caring and "residual" jobs expand. Yes, IT and executive posts will also grow at the top, but those without the right experience and contacts can expect toil and trouble. So where did all the dead-end jobs come from in the first place? Economists normally answer such questions by thinking about a country's productive potential (the so-called "supply side") in the context of the global markets it serves. Poor vocational training might, for example, reduce potential in high-skill sectors and increase "comparative advantage" in lower-paying industries. Policy recommendations will then focus on better education. Such orthodox analysis is worthy enough. But market forces do not push rewards apart for the rich and poor in the same neutral way that the laws of physics repel magnets of the same pole. Inequality is not a feature of nature, merely an economic arrangement which can become self-reinforcing. Where the market is allowed to determine that some human beings are worth vastly less than others, workers get used and discarded like disposable kit, and social habits change. The routine retaining of house servants was one facet of pre-war inequality; later on, live-in domestics disappeared during the great levelling after the war. Likewise, the trivial cost of employing Edwardian postmen made it viable to run multiple daily deliveries each day, so that correspondences could bounce back and forth between sunrise and sunset. By mid-century, however, with workers' wages higher, the letter-writing gentry had to make do with twice-daily deliveries. If the great levelling of the first half of the 20th century can be illustrated by the delivery of letters, the delivery of pizzas makes the point about the great divergence since the 1970s. During the 1980s some came to feel their time was too valuable to cook; others became desperate to do so for modest reward. The result was a mushrooming of restaurants and takeaways. In the 1990s the same takeaways began offering home delivery. That made business sense because, at the top, more customers could pay to save a quick trip, while at the bottom more workers would accept a miserable wage for taking the walk. As well as using more cheap labour when it is readily available, employers may use it with less care – investing less in raising the output of their staff. This is where the self-reinforcing dynamics of inequality kick in. Between the 1970s and the 1990s, for example, American employers have been shown to have spent less on kit to make their lowly workers more productive than their counterparts in West Germany, where institutions pushed up pay and forced firms to focus on getting a bigger bang for their mark. Across many other countries, too, a free-for-all in hiring and firing has been linked to diminished productivity, which soon translates into lower pay and worse terms. Sluggish business investment is a striking feature of Britain's recovery, as is low productivity, and the dynamics of casualisation are at work. Consider the market for car washing. In the 1980s, mechanised drive-in washes were spreading: they should surely have been ubiquitous by now. Instead, there are more and more places where motorists can drop off their cars to be cleaned using more traditional means – the elbow grease of cheap labour. These manual car washes are sometimes branded "American-style", a nod to the import of low-wage business models. In food factories, too, the mechanisation of processing has been slowed by a reliance on hired (and often immigrant) hands. Some recoil from the idea of going down the Japanese route of robotised chicken-deboners, fearing too many unskilled jobs would go. In the end, though, and even if the adjustment is painful, an economy with fewer dead-end posts should create more interesting openings, even if it is hard to know if these will be in personal training, web design or something not yet thought of. The way out of the low-pay trap is to invest in doing things smarter; the exploitation of capital if you like. Sensible regulation against the casual exploitation of cheap labour will not inhibit, but should actually assist in that. |