Jobs, Families and Society

There is no such thing as society: there are individual men and women, and there are families.

Margaret Thatcher

Modern Western nations seem to be obsessed with consumerism. This is attested to by the fact that the principal measure of progress seems to be Gross Domestic Product (GDP). I have in other essays explained the limitations of GDP as an index of progress. But it seems to me that our social progress is impeded by an undue concentration on consumerism. Having more material possessions only goes a little way in improving human well-being. As far back as the 1930’s, the Nobel Prize winning economist, Simon Kuznets warned the American Congress that “the welfare  of a nation can scarcely be inferred from a measurement of national income – GDP.”

The main tensions in the contemporary industrialised world in economic policy largely result from the dichotomy between capitalism and socialism. This in turn affects how the adherents of these two conflicting ideologies think about the labour market.

Capitalists trust that free markets benefit all participants in the economy. They prize the higher outputs associated with the “efficient” allocation that markets ensure. In Australia the banner of capitalism is waved by the Liberal/National Party Coalition. (For the rest of this essay we will refer to them as the Conservatives.)The underlying ethos is in small government, lower taxation and minimum regulation. They argue that Government intervention in the economy usually results in poorer outcomes than allowing the market to dictate how resources should be allocated. Similarly they aspire to ensure the labour market is also not constrained, which they believe leads to the optimal allocation of labour and ensures the highest labour productivity outcomes. They ameliorate this laissez faire approach with welfare provisions that ensure that those who can’t or won’t compete in the labour market are provided with government welfare to enable basic subsistence.

Socialists on the other hand, are adamant that if the economy is left entirely at the mercy of greedy capitalists and uncaring big business then individuals with little market power will be greatly disadvantaged. So rather than trust the market they seek to constrain it. Their agendas tend more to be centred on the interest of Labour Unions, environmentalists and identity groups. Their policies are built on the expectation that government must mandate for what the market cannot deliver. In Australia this is the province of Labor and the Greens.(For the rest of this essay for convenience we will refer to this group as Labor.)

But let us look at the impacts on the labour market of these two markedly different approaches. And for reasons that will become clear later, my prime interest is in unskilled employees.

Under the Conservatives, with fewer restrictions, the economy in general is most likely to prosper. In broad terms those employees with the most desirable skills sets will do well. With fewer restrictions on hiring, and a more robust economy, even lower skilled people are likely to be more in demand. But inevitably the market will respond to an oversupply of unskilled labour by driving down the comparative wage rates for such employees.

Under Labor, the government will regulate (with encouragement from unions) that the unskilled worker should be paid more than the market would determine. There will also be more imposts on the employer for hiring people and as a result the level of unemployment of unskilled workers will increase. (After all it is far easier to use technology to displace an unskilled employee than a skilled one).

To counter this, to some degree, under Labor, the Government sector invariably expands. Whilst this might provide some relief for lesser skilled white collar workers, it provides little help to unskilled blue-collar workers.

(Another unfortunate characteristic of socialists is that they decry corporations making profits! They see this as an unconscionable gouging of the general populace to satisfy the greed of uncaring capitalists. But of course making a profit is essential to the ongoing survival of an enterprise and helps ensure the ongoing employment of its employees. What’s more such profits are often reinvested in the business which in turn results in more employment.)

But if we look at the impacts on the labour market it becomes immediately apparent that the losers under both ideological regimes are the unskilled, and in tandem, the young. Under the Conservatives, there will generally be more jobs for these underemployed segments of the workforce but with depressed wage outcomes. Under Labor there will be fewer jobs but those who manage to get jobs will be paid more than under a Conservative regime.

Now you might wonder what is the point of my argument? Why does this matter?

It seems we now have a growing underclass –unskilled males. The jobs that are in decline are the traditional blue collar labouring and manufacturing jobs. These have been historically filled by men. Women are faring better in the employment stakes because many of the jobs being created are in the services sector, caring for people. And as I have explained in other essays, despite the arguments by the feminists regarding the socialisation of gender traits, women are more genetically predisposed to want to work with people, providing care and nurture, than men are.

Five or six decades ago, unskilled men were a major part of the so-called “working class”. They not only had far greater prospects of being employed but earned enough to support a family. Under either political option of government they are now doomed either because they can’t access gainful employment or, indeed if they can, will struggle to earn enough to raise a family.

Now I have been a great proponent of meaningful work. It is good to see employees in jobs that enable them to do things that make a positive contribution to society, expand their skills, and further their personal development. But work can be meaningful too if it enables an employee to have the wherewithal to start and nurture a family and make a positive contribution to society by doing so.

Even when an unskilled male is able to form a lasting partnership with a woman, the woman will most likely be employed as well. Now if the couple have children, and the woman following her maternal instincts wants to give up work for a time to devote to raising their children, because of her partner’s low wage, she more than likely can’t afford to do so.

When the Basic Wage was first established in Australia, it was computed so as to allow a man to be able to keep a wife and two children “in frugal comfort”. Of course that was more than a hundred years ago when women seldom worked and were paid much less than men because they weren’t considered the “breadwinner”. But it is almost inevitable that if a heterosexual couple, the male partner of which is an unskilled worker, have children and the wife wishes not to work and has to be supported by a male partner on a minimum wage they will struggle financially. As well, many women in seeking a long-term male partner will seek out men who can earn enough to support them and their children if they have them. The inability of this cohort of men to enter long-term stable relationships has the unfortunate consequence of resulting in more single parent families, rather than children being born into a more traditional family environment, which I believe contributes to societal dysfunction. But please note I am not advocating a return to a regime where men were paid more than women. But I would be happier if we could ensure anyone on the minimum wage had the financial capacity to maintain a small family.

Now my fervent support of families might cause you to believe that I am an old-fashioned reactionary! But I believe stable, nurturing families underpin our society and contribute to our individual and collective well-being.

Oren Cass, a senior fellow of the Manhattan Institute for Policy Research writes:

To say that productive pluralism relies on families and communities is true, in part, as a matter of definition: self-sufficient families and communities are integral to prosperity. A strong family is one whose members fulfil their commitments to one another and provide for one another’s needs. A strong community is one to which engaged members make productive contributions. But the relationship also goes much deeper because it is family and community, not material resources that instil in individuals the capacity to become productive members of society and build strong families and communities of their own.

A study by Richard Reeves of the Brookings Institute using the personal data of some five thousand Americans showed how strongly family structures shaped the future of young people. Cass relates some of the findings of this study as follows:

  • For someone born in the bottom income quintile to a never-married mother the chances of rising to the top quintile was 5%. The probability of remaining in the bottom quintile was 50%.
  • The chance of rising to the top quintile for someone born in the bottom quintile to a married mother and raised by both parents, was higher (19%) than remaining in the bottom quintile (17%).
  • The critical implication is not the higher income per se, but that the children of two parent families had a far wider range of opportunities to become self-sufficient contributors to society.
  • Stanford Professor, Raj Chetty reached a complementary conclusion from examining economic mobility across regions of the USA. He concluded that a low fraction of children with single parents was the best predictor of upward mobility within a region.

Now I am unaware of similar studies in Australia, but I would be surprised if our circumstances were much different. Nor do I want to excoriate single parents (largely women) who struggle to do their best to raise children in difficult circumstances. But the benefits for children of being raised in a family comprising a mother and a father are now pretty well documented. Those benefits include better physical and mental health, less substance abuse and better educational outcomes. These children are far less likely to become single parents themselves and thus perpetuate intergenerationally the problems of single-parenthood.

Cass further writes:

Work (again especially for men) helps establish and preserve families. Where fewer men work, fewer marriages form. Unemployment doubles the risk of divorce, and male unemployment appears to be the main culprit.

In his book, The Dream and the Nightmare, American journalist and author, Myron Magnet took a swipe at American liberals who decried members of the working class as leading “dead end lives.” In his depiction of such working class lives he portrays a little family where the husband is a short-order cook and the wife cleans hotel rooms. He had this to say:

But you do not judge people’s lives only from the material point of view. Suppose that these two have brought up their children to respect the parents’ hard work, to be curious about the world, to study in school, to take pleasure in family and community life, to consider themselves worthwhile people, to work hard and think about the future, to become skilled tradesmen or even professionals as adults and to bring grandchildren to visit. If this is a dead end rather than a human accomplishment worthy of honour and admiration, then it is hard to know what human life is all about.

It is difficult to argue with Magnet’s conclusions. Such families are the backbone of our society.

When our attempts to promote economic growth fail to consider the social prerequisites for growth, it is not surprising that such prerequisites are not facilitated. It seems we often put the cart before the horse. We assume that economic prosperity will somehow result in improved social outcomes. However there is a strong case to be made that if we got the social prerequisites right – strong families caring for their children, promoting self-sufficiency and the importance of education – then economic prosperity would naturally follow.

(As an aside I would emphasise that the lack of such social prerequisites goes a long way to explaining the plight of indigenous people in remote communities.)

This misunderstanding is reflected in the despair of economists who deride the fact that many unemployed people won’t relocate to other areas where job opportunities are better. Those who do relocate have social resilience and have built up their own bank of social capital which gives them optimism they will prosper in a new community. Many people are not so fortunate and cling to the communities where they are comfortable and have social support. It might come as a surprise to some, but the world responds to issues of emotional and social capability probably more strongly than it responds to the issues of dollars and cents!

There are, however, other contingent factors in play in our society that contribute to this epidemic of unemployed, unskilled men. A major one is our educational system. If you accept my hypothesis that having a large cohort of unskilled men who are doomed to a life of being unemployed or underemployed and without the opportunity to nurture a family even when the economy is performing well, represents a major glitch in our social functioning, we need to take pause and ask why has this occurred. It seems clear to me that it is a manifestation of an education system that is not meeting society’s needs.

In the last four or five decades the goals of education have changed. Once, education was viewed as preparing young people for life in the real world. Hopefully they would acquire basic numeracy and literacy skills and then those who were more academically gifted would go on to university and those who had manual skills would pursue apprenticeships. It was legal to leave school at the age of fourteen and many did. They entered the world of work as juniors and apprentices and were soon making their own way in life, learning how to manage money, how to deal with others in the workplace and making a positive contribution to society.

But today the metric that matters most in education is getting young people into university. Now in one sense the system is succeeding as more and more high school graduates move on to university. But this is happening at great cost. The funding arrangements of universities encourage them to seek as many new students as possible. The flooding of university campuses with high school graduates has resulted in a “dumbing down” of degree courses thus eroding the value of a degree to employers who are looking more and more for those with post-graduate qualifications. It has also resulted in many graduates who are unable to obtain work in the areas of their university studies. It has meant as well that those entering university are ill-equipped by their primary and secondary schooling to deal with the rigour required for real academic pursuit. But importantly, as a contingent issue, vocational education has been devalued.

Many of those (usually boys) that are trapped in schools with little academic interest would be far better off in vocational training. I am not sure about how things play out today but a decade or so ago, state schools in Queensland were rewarded for their retention rates. So being able to retain children in schools, whether or not they were learning anything significant, was a priority goal! Now it pays to give a little thought to what we are doing to these young people, keeping them in school where they have little chance of success certainly is a blow to their self-concept.

I have been involved in an initiative where I observed a major change in attitudes when high school age boys, who were nominated by their teachers as “troublesome”, who were taken out of school and given something meaningful to do in a workplace. The same boys who were considered difficult by their teachers integrated into workplaces with adults and presented no problems for their employers.

What sense does it make to treat the vast majority of those in high school as prospective university graduates, when they are clearly not? The distortion that results from this idealistic assumption is ruining the lives of our young people and contributing to social dysfunction we could well do without.

Those who are locked into a school environment, who don’t want to be there, are often disruptive which impedes the progress of those who might genuinely benefit from a high school education. They should, instead, be out in the community, either in some form of employment or doing vocational training. These young people (mostly boys) learn best by doing. They are unfortunately trapped in our schools, as educationalist, John Edwards, once famously said, “drowning in a sea of blah”.

European countries put a lot more focus on vocational education. In Switzerland for example, approximately two-thirds of students pursue the vocational training route.

And in Australia, despite massive increases in education funding, our educational outcomes compared with the rest of the developed world are slipping. It is unlikely that our politicians will look at effective ways of halting our declining educational outcomes and put a halt to the mindless response of committing even more expenditure to little effect. But it is obvious to anyone with a genuine concern for education and educational outcomes that there needs to be substantial changes to our education system.

So let me try to summarise my thinking around this difficult topic.

Firstly it is clear to me that we undervalue the social capital embedded in traditional families of a heterosexual couple who raise children in a stable relationship.

The Howard Government was generally supportive of this view but in my opinion provided too much support to middle class families and not enough for working class families.

Secondly, as I have stated above, a factor contributing to this malaise is the high rates of unemployment of unskilled men, combined with the concern that even when employed they don’t earn enough to be able to support a family.

The solution to this problem seems to me is to curtail some of the welfare provided to middle class people and raise the minimum wage.

At the same time we need to change our education system. It should focus less on maximising university entrants and concentrate more on skilling in vocational areas. If done well this would reduce the number of unskilled people in the workforce. This would not only increase productivity but would also allow a reduction in skilled migration requirements.

So what should our ambitions for our society be in this regard? To my mind our ambition should be that every person, no matter their starting conditions, should be able to find a vocation that allows them to support a family. They should have the opportunity to have a good life. This does not assume wealth, but in the manner of the original basic wage decision, to at least be able to enjoy a meaningful, if frugal, life with the opportunity to raise a family. They should live in the optimism that their children might have even greater opportunity than they have had.

Under such conditions we should seek to create and nurture families that are stable, caring and committed to making a contribution to society.

I have no doubt that if we concentrated more on the creation of such social capital our economy would prosper as well.