What economists don’t see: the real jobs crisis is that most jobs suck

As US unemployment is stuck at 10%, economists worry whether we looking at "structural unemployment“. By “structural unemployment,” they mean that a high level unemployment has become a permanent feature of the economy.

In his article in the current issue of The New Yorker, “The Jobs Crisis”, James Surowiecki rightly debunks the notion of structural unemployment. He points out that economists always begin to worry in a lengthy recession whether unemployment has become structural. But in each recession, lo and behold, the economy recovers. Sometimes quickly. Sometimes slowly. But eventually it recovers. In the case of the current recession, he argues that all the evidence points to the current level of unemployment being a “normal” feature of the aftermath of the financial meltdown of 2008. 

Thus if unemployment had become structural, you would expect to see differentials between prospering sectors and those in decline. No such evidence is present. And the Beveridge Curve, in which economists believe as strongly as the Aztecs worshipped the sun, is behaving much the way it has in previous recessions: there are as few job vacancies as you’d expect.

So according to Surowiecki, the jobs crisis—stubbornly high unemployment—is simply a matter of getting out of the recession. We can either do it slowly, as now, or more quickly, if we had the political courage to inject a political bigger stimulus package.  We don’t have that political courage. So the only thing we can do is wait it out.

The real jobs crisis: the quality of jobs

What Surowiecki’s article misses is the real jobs crisis. As Richard Florida has so often pointed out, the real jobs crisis concerns the quality of the jobs, not the quantity.  When we have reports that 84% of the people who have jobs are planning to look for another job in 2011, you have a good indication of the desperation in the workforce today. Moreover, when most jobs suck, changing jobs isn’t going to do anyone any good.  It’s exchanging one bad job for another.

So reducing unemployment from 10% to 5% is important. But it’s not nearly as important as transforming the world of work so that most jobs are good jobs and provide deep satisfaction for those who hold them.

This is not just a matter of keeping the workers happy. In today’s knowledge economy, the motivation of workers is a key determinant of productivity. The lack of passion in today’s workforce is a fundamental cause of the continuing sharp decline in the performance of the Fortune 500.

The result of that decline in performance is that the economy is no longer providing good living for its citizens.  The economic pie is no longer large enough for everyone to get a fair slice:  Real average hourly earnings (excluding fringe benefits) now stand roughly at 1974 levels.

This decline in performance is also what underlies the political gridlock in Washington DC. After you puncture the Internet bubble of the 1990s and real estate bubble of the 2000s, and allow for the funny numbers created by the financial tricks that accompanied these debacles, it turns out that the real economy hasn’t been growing fast enough to accommodate gains for everyone. Once the rich and powerful take their cut, there’s nothing left for those in the middle or the bottom. So politics becomes a zero sum game: nothing gets done.

The solution: radical change

Not having correctly identified the right problem, it is hardly surprising that economists like Surowiecki  don’t identify the right solution.

They miss the good news that some organizations have figured out how to run their organizations in a radically different way and get better results. A whole array of books have been published that describe what’s involved. I’ve synthesized what these books are saying in my article, The Death—And Reinvention—of Management. Or you can read the books themselves, such as  The Power of Pull by John Hagel, John Seely Brown and Lang Davison, or Reorganize for Resilience by Ranjay Gulati or my own book, The Leader's Guide to Radical Management: Reinventing the Workplace for the 21st Century .

So here's a New Year's resolution for economists: in 2011: spend some time on the real jobs crisis.

POSTSCRIPT

Is my proposed solution radical enough? Read my subsequent post:

Radical management is the most dangerous revolution: it changes people's hearts

 

Comments

[Johanna Kotipelto]

Great read, once again; thank you, Steve!

Would you see a kind of a "too much process thinking where it doesn't belong" approach explaining what is happening here? You see, I hear horror stories of chopping entities of knowledge work into pieces and then spreading those pieces around. It's like a car assembly line: you there, wheels; you two, the steering wheel! And the outcome? Experts lose their knowledge on how the car is supposed to work; in my field: no one is able to serve the customer any more since they come in with the whole problem.

True leadership (radical management!) is definitely needed.

Have an excellently radical year 2011!

[Al Shaw]

I was enjoying the article - until the final third!

The idea that better management is the answer to the crisis of job satisfaction in the developed capitalist world can hardly be described as "radical".

In fact, it strikes me as quite a reactionary idea, if I may say so.

A set of more radical ideas for improving job satisfaction and improving the quality of work could include:

a) removing all state subsidies (direct and indirect) from all private businesses

b) nationalizing failing corporations that are currently propped up by public finance, and breaking them up into small worker-owned businesses and co-operatives

c) removing US forces from the un-winnable war in Afghanistan, and re-directing the public monies saved to reduce the public finance deficit and/or boost spending on education and health care

d) legislating significant limits on business mergers, acquisitions and monopolies, in order to maintain a long-term more even distribution of economic productivity

e) repeal laws that enshrine limited liability for privately-owned companies - thus forcing corporations to deal exclusively with the full consequences of malpractice such as occurred during the BP oil disaster. The improvements thus gained in environmental standards and worker safety would be dramatic and rapid.

How's that for starters? What do you think?

[Steve Denning]

Hi Al,

Thanks for the comment. I sympathize with your obvious frustration.

But let’s take one of your suggestions: “nationalizing failing corporations that are currently propped up by public finance, and breaking them up into small worker-owned businesses and co-operatives.”

If that’s all you do to the big corporations, then those small worker-owned businesses and cooperatives will soon start to succeed, and introduce management, and grow into, guess what? More big hierarchical bureaucracies! So we are back to square one.

Robert Pirsig once wrote: “If a factory is torn down but the rationality which produced it is left standing, then that rationality will simply produce another factory.”

So tearing down the big corporations without changing the rationality which produced them will simply produce more corporations of the same ilk.

So it is in this sense that the final third of my article is more revolutionary than it might look at first glance: it’s radical in the sense that uproots the rationality that created those organizations in the first place and recreates them with a rationality that is fundamentally different.

It is about a revolution that is to be achieved, not by guns or legislation, but changing people’s minds and hearts. So it’s a revolution that is capable of producing lasting change.

Hope you will help us make it happen! Join us here: http://bit.ly/eF2wfX

Steve

[Steve Denning]

Hi Johanna,

"Would you see a kind of a 'too much process thinking where it doesn't belong' approach explaining what is happening here?"

Absolutely! That's what a hierarchical bureaucracy is all about. As Matthew Stewart has amusingly written, you've got the big boss at the top: "I'm the man!"

You've got the medium bosses in the middle: "Get off my turf!"

And you've got the little bosses down below: "It's not my job!"

And where is the real boss: the client? Nowhere to be seen!

All the layers of bosses and middle managers and aggregators and reviewers are not anywhere near the place where real value is being generated for the client. For the most part, they are just slowing down the process of delivering value to clients sooner.

So the key is to make the clients the real boss and have everyone in the organization doing whatever is needed to meet their needs sooner.

Steve

[Devremülk]

i like to read your posts. thanks for this one.

[gregorylent]

and hence, if you can get away with it, not working as much as possible is wisdom. time is more valuable than money.

[Suburbanshift]

"The result of that decline in performance is that the economy is no longer providing good living for its citizens." Well -- I agree -- and would add that increasing wealth concentration at the very top isn't helping.

[Mark Riffey]

Sucky jobs - agreed. There are a lot of them. Many that many no sense at all. When a Fortune 500 company can lay off 10000 people in a day, it is hard not to wonder what those people were doing. If they can be discarded like the trash, hey sure werent creating revenue, directly or indirectly. That's a failure of management that the line employee (who should be paying more attention to their employer's business) pays for.

re: "The economic pie is no longer large enough for everyone to get a fair slice"... The idea that there is 1 pie and anyone who takes a slice is taking from someone else doesnt reflect the reality of economics.

Whether zero sum is applicable to political progress is another story entirely.

[Bruce Lynn]

This is a silly piece because you never say what it is about jobs that 'suck', but I do disagree with most of what you are asserting.

Fact is, there are two types of good paying jobs (and good pay is part of what makes a job not suck) -- (a) jobs other things/people can't do, and (b) jobs others don't want to do (thank god for motivated immigrants). I guess B does 'suck', but the way out of that option is being able to do something that someone or something can't do.

The problem is that (a) the highly motivated developing world (think BRIC), and (b) computers got a whole lot more capable in the past decade. Unfortunately, they got more capable than the Western workforce (look at investment in education and skills).

If you want a job that doesn't 'suck', then you had better get skilled. And the more you desired job doesn't suck, the better you need to be at it (think pro athlete, pop star, film writer) because there are going to be a lot of people (from around the world) wanting those jobs.

[Steve Denning]

Bruce,

Thanks for your comment. As to what exactly it is about jobs today that suck, I've written about that elsewhere. For instance, chapter one (pages 9-21) of my book, The Leader's Guide to Radical Management, spells this out in gruesome detail. That chapter gives five examples of work at every level, from a senior manager to a new recruit and describes the dispiriting impact of traditional management. It's not the fault of the individual managers. It's the fault of the system within which they are all operating. That's why fixing this requires a fundamental change in the way work is managed.

Steve

[Bruce Lynn]

Are you saying that there are too many builder and journalism jobs and not enough engineering an medical jobs? Refer WSJ - http://online.wsj.com/public/resources/documents/st_BESTJOBS0104_20110105.html?mod=e2tw.

[Steve Denning]

Bruce,

What I'm saying is that large-scale studies like Deloitte's Shift Index and the Towers Perrin data consistently show that only one in five workers is fully engaged in his or her work. It varies somewhat by sector, but overall that's the picture. Many software and medical jobs also suck, for reasons I spell out in chapter 1 of my book. It's not so much "what is the job title?" but rather "how is the workplace managed?"

I haven't seen the details of the CareerCast study quoted in the WSJ article, but from the article itself, the study appears to be looking as much at the prospects of getting and keeping a job and the physical stress involved, more than whether the job as it exists is one that inspires commitment, engagement and passion.

Steve

[employment genius]

In last year's State of the Union, Obama declared job creation his "No. 1 focus," then spent much of 2010 on other priorities like overhauling healthcare and Wall Street rules.

With the elevated unemployment rate still ranking as Americans' top concern, there is little doubt jobs will again be the centerpiece of Obama's speech.

But more than ever before, Obama is also expected to use the annual address to cast himself as more of a fiscal hawk, possibly a tough sell for a leader presiding over trillion-dollar-plus annual budget deficits.