The headline article in today’s Wall Street Journal put faces to numbers behind the employment situation.   Middle class, middle- skilled workers are faring poorer than others.  This is not surprising.  Middle-skilled probably means more like “no discernible value-adding skill”.   It’s the skill set of Joe, the mid-level bureaucrat in Saturday’s rant. 

Then on the opinion pages (subscriber-content), there is a rant from the owner of an audio systems provisioning company as to why he can’t hire or keep employees–they’re too expensive.    He laments that it costs $74,000 to put $44,000 in an employee’s pocket and give them $12,000 in benefits.

The clear reason for the dismal job market is that the quantity of labor available exceeds the quantity demanded, which is to say, the price of labor (i.e., its cost)  must decline to bring the market for labor into equilibrium.  There’s really nothing more to it than that. 

There are a couple of devils in the details.  First, the cost of labor includes a great many other things than just the wage rate, as the opinion piece attests.  Further, the price being paid for labor has at least two floors below which the price can’t go–the mandated minimum wage being one, and the amount of money received as unemployment compensation being another.   Workers will not reduce their asking wages below the latter floor so long as the benefits continue, and employers can’t pay anything less than the first one.   If the value of the labor provided to the employer is not anticipated to exceed either of these lower limitations, then the employer won’t hire. 

There is one more Journal article of interest, on how difficult it is for some firms to hire, even with unemployment being so high.  This seems to be anomalous, but investigating each of the examples cited makes clear that working conditions (factory floor, truck-stop, etc.) operate to bring down the economic wages, presumably to something below the floor of unemployment benefits.  

This is not hard.  It is basic supply and demand economics.  What is happening is the manifestation of at least two decades of declining competitiveness for American workers in the international marketplace.  The international wage arbitrage pushing American workers to the side really got going in the late seventies and early eighties.  In the following decades, it was papered over by profligate debt-fueled demand expansion and masked by increased productivity through information and communication technologies, giving the illusion that all was well.    Now the productivity enhancements available through technology are waning and  debt destruction is rapidly leading to demand contraction.   The party’s over and labor’s woes are settling hard as the driver of economic anemia. 

Peggy Noonan, in her weekly column in the Weekend Journal asks whether this is the first generation that can’t reasonably expect to be better off than their parents.  I would say, it depends on how “better off” is defined.  I should hope so, if “better-off” is how Ms. Noonan describes it:

The country I was born into was a country that had existed steadily, for almost two centuries, as a nation in which everyone thought—wherever they were from, whatever their circumstances—that their children would have better lives than they did. That was what kept people pulling their boots on in the morning after the first weary pause: My kids will have it better. They’ll be richer or more educated, they’ll have a better job or a better house, they’ll take a step up in terms of rank, class or status. America always claimed to be, and meant to be, a nation that made little of class. But America is human. “The richest family in town,” they said, admiringly. Read Booth Tarkington on turn-of-the-last-century Indiana. It’s all about trying to rise.

That’s it?  It’s all about trying to rise?  If we don’t rise, there is no reason for being?  I never knew the idea of America had so little depth.   It might be worth a little history lesson here to remind Ms. Noonan that the founding colony in America came here not to take a step up in terms of rank, class or status.  They came here to worship God in the manner they saw fit, without interference from the Crown and its close ally, the Church of England.

But what really sticks in my craw about the idea of rank being the animating force in American society is this:  It allows, even seeks, the judgment of others in lieu of the judgment in our hearts.  If our sole aim is to climb in status, how do we know when we get there?  By looking down at the lives of the poor schmucks we clambered over on our way up?   If this is the American Dream, then I want to wake up.   I always thought the American Dream was the idea that every life is individually valuable and should be allowed to flourish on its own terms.  Perhaps that means worshiping God in a different way, or living in a commune, or getting rich.  But rankings within the herd should count for very little in a country that assigns intrinsic worth to the individual and allows them to live as they please so long as doing so does not infringe on the rights of others to do the same.  

My idea of the dream is that we may, instead of living in bondage to the status in which we are born, completely disregard it, and set our sights on doing right according to the heart and mind of God that lives within us all.  That is the essence of freedom–the idea animating America’s birth. 

America didn’t get to be about status and getting rich and winning by acquisition until after the rise of industrialization and mass communications in the early twentieth century made mass marketing and mass ogling and coveting not only possible, but desirable–at least for the purveyors of American lifestyles.  The Great Depression put the lie to the cult of materialism that had developed out of industrialization. 

If this Great Recession that threatens to turn into something much deeper and darker helps move Americans past the idea of “rising” and into the idea of living a life animated by value, it will be well worth the journey.