The US Does Not Have a Labor Market

David Cay JohnstonDavid Cay Johnston has been writing a lot of great stuff over at Al Jazeera America. This last week he wrote, Flat Wages Show the US Doesn’t Have a Labor Market. That’s quite a thing for a conservative to say. But that’s one of the things that is so great about Johnston: he doesn’t follow the herd. He is, fundamentally, conservative. But he isn’t partisan. The person I most associate him with is Dean Baker. The fact is that even though they come at problems from different points of view, they both are interested in the common good. And they see that our system does not facilitate that.

In this article, Johnston focuses on the Supreme Court’s definition of a market. He wrote, “The high court has held that a market requires a buyer (employer) and seller (worker) acting without coercion and a reasonable command of the facts reaching an agreement on price (pay).” This is really critical. We have a tendency to be really loose when it comes to this kind of stuff. But not any system where goods and services are transferred is a market. No one would say that a mafia protection scheme is a market, even though a service (not getting beaten up or killed) is exchanged for money. Coercion really is key.

So let’s look at labor. Is it a market in this sense? Not at all. It is totally coercive. I’ve talked about this a lot. People don’t have a choice but to have a job. We are all born into the Monopoly game with all the properties already sold. So we can’t just farm a fallow field or hunt. Nor can we just cut down some trees and build a house. These are all options that civilization has taken away. But in the conservative mind (and even more, the libertarian mind), civilization owes nothing to the individual. Rights have been taken away and not replaced, but they think it is “natural.”

But we can see that there is no labor market just by the outcome. Macroeconomics is nothing but feedbacks. So wealth should be something that is constantly circling around the economy. But it largely isn’t. Other than the late 1990s, when has the the US economy reached full employment? You’d have to go back more than a generation. Full employment is the exception, not the rule. And this means that workers have basically no leverage in the economy: there are always more people than jobs. And the end result is that money piles up with people who already have large piles.

Johnston puts forth two ideas[1] on how we could go about creating a labor market in this country. The first is to raise the minimum wage. I’m for that. But it is also the case that it is a remedy that doesn’t fix the underlying problem. Clearly it should be done, however. Second, is that we should encourage the creation of labor unions. This is the core of the issue. And from my perspective, we should mandate labor unions. When I was a libertarian, I used to argue this. You couldn’t have management able to organize as a unit and not have labor do the same thing. Almost no libertarians believe this, because they don’t actually believe in “free markets and free minds”; they just hate workers. (Note how popular libertarianism is among upper middle class white college graduates.)

But the Republicans are not willing to touch this stuff. And to be honest, the Democrats are fairly squishy on it as well. But these are things that we should all agree on. In particular, the minimum wage is something that even majorities of Republicans believe in. Really, it all comes down to accountability. Johnston wrote, “Congress will act only when voters make the reelection of representatives depend on raising wages.” That’s true. The problem is that too many of the people affected are too busy working second and third jobs to show up at the polls.


[1] He talked about a third one, but it is fairly technical: labor inspectors. It’s important though.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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