Official employment statistics does not take into account declining participation
in labor market as well as overestimate the contribution to employment of
new companies during the slow down (and underestimate those during acceleration
of economy). For some reason
of Labor Statistics does not provide the standard error estimate.
And this is a must for any "sampling" data (this is a survey of about 160,000
businesses and government agencies, representing approximately 400,000 individual
worksites) and actually its accuracy can later be calculated based on other
sources of data like tax records and social security payments. Birth/death
adjustment during economics slowdown definitely distorts the estimate up.
The declining participation in work force also means that actual unemployment
rate is higher.
The labor force participation rate is pro-cyclical, meaning that it goes
up as tight labor markets induce new entrants into the labor market; and
it goes down when soggy labor markets lead the discouraged unemployed to
drop out of the labor force.
So, the short answer to the puzzle why there was a statistically solid
job growth since mid 2006 might be related to the method of collecting the
statistic. It might well be that nonfarm payroll growth really is/was almost
absent and was result of aberration caused by the semi-absurd method of
adjustment of data. That's a serious deficiency...
The unemployment rate is measured by the Household Survey and number
of jobs lost in the Establishment Survey. The Birth/Death Revisions are
to the Establishment Survey.
Detailed data in the Bureau of Labor Statistics (BLS) Business Employment
Dynamics (BED) release, which comes out with a two-quarter lag, show employment
growth of only 19 thousand in 2006Q3, while the nonfarm payroll tally for
that quarter was over 450 thousand. The question arises why government reports
more then 100K created jobs figure each month. Richard Benson in his paper
Government Creates Jobs analyzed the situation in the following way:
Pimco's Gross analyses the situation in a slightly different way and
with less emotions but points out to the same mechanism of computer generated
At 5:30 every morning, Tony Gwiazdowski rolls out of bed, brews a pot of coffee and carefully arranges his laptop, cell phone
and notepad like silverware across the kitchen table.
And then he waits.
Gwiazdowski, 57, has been waiting for 16 months. Since losing his job as a transportation sales manager in February 2009, he wakes
each morning to the sobering reminder that, yes, he is still unemployed. So he pushes aside the fatigue, throws on some clothes and
sends out another flurry of resumes and cheery cover letters.
But most days go by without a single phone call. And around sundown, when he hears his neighbors returning home from work, Gwiazdowski
-- the former mayor of Hillsborough -- can't help but allow himself one tiny sigh of resignation.
"You sit there and you wonder, 'What am I doing wrong?'" said Gwiazdowski, who finds companionship in his 2-year-old golden retriever,
Charlie, until his wife returns from work.
"The worst moment is at the end of the day when it's 4:30 and you did everything you could, and the phone hasn't rung, the e-mails
haven't come through."
Gwiazdowski is one of a growing number of chronically unemployed workers in New Jersey and across the country who are struggling
to get through what is becoming one long, jobless nightmare -- even as the rest of the economy has begun to show signs of recovery.
Nationwide, 46 percent of the unemployed -- 6.7 million Americans -- have been without work for at least half a year, by far the
highest percentage recorded since the U.S. Labor Department began tracking the data in 1948.
In New Jersey, nearly 40 percent of the 416,000 unemployed workers last year fit that profile, up from about 20 percent in previous
years, according to the department, which provides only annual breakdowns for individual states. Most of them were unemployed for
more than a year.
But the repercussions of chronic unemployment go beyond the loss of a paycheck or the realization that one might never find the
same kind of job again. For many, the sinking feeling of joblessness -- with no end in sight -- can take a psychological toll, experts
Across the state, mental health crisis units saw a 20 percent increase in demand last year as more residents reported suffering
from unemployment-related stress, according to the New Jersey Association of Mental Health Agencies.
"The longer the unemployment continues, the more impact it will have on their personal lives and mental health," said Shauna Moses,
the association's associate executive director. "There's stress in the marriage, with the kids, other family members, with friends."
And while a few continue to cling to optimism, even the toughest admit there are moments of despair: Fear of never finding work,
envy of employed friends and embarassment at having to tell acquaintances that, nope, still no luck.
"When they say, 'Hi Mayor,' I don't tell a lot of people I'm out of work -- I say I'm semi-retired," said Gwiazdowski, who maxed
out on unemployment benefits several months ago.
"They might think, 'Gee, what's wrong with him? Why can't he get a job?' It's a long story and maybe people really don't care
and now they want to get away from you."
SECOND TIME AROUND
Lynn Kafalas has been there before, too. After losing her computer training job in 2000, the East Hanover resident took four agonizing
years to find new work -- by then, she had refashioned herself into a web designer.
That not-too-distant experience is why Kafalas, 52, who was laid off again eight months ago, grows uneasier with each passing
day. Already, some of her old demons have returned, like loneliness, self-doubt and, worst of all, insomnia. At night, her mind races
to dissect the latest interview: What went wrong? What else should she be doing? And why won't even Barnes & Noble hire her?
"It's like putting a stopper on my life -- I can't move on," said Kafalas, who has given up karate lessons, vacations and regular
outings with friends. "Everything is about the interviews."
And while most of her friends have been supportive, a few have hinted to her that she is doing something wrong, or not doing enough.
The remarks always hit Kafalas with a pang.
In a recent study, researchers at Rutgers University found that the chronically unemployed are prone to high levels of stress,
anxiety, depression, loneliness and even substance abuse, which take a toll on their self-esteem and personal relationships.
"They're the forgotten group," said Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers,
and a co-author of the report. "And the longer you are unemployed, the less likely you are to get a job."
Of the 900 unemployed workers first interviewed last August for the study, only one in 10 landed full-time work by March of this
year, and only half of those lucky few expressed satisfaction with their new jobs. Another one in 10 simply gave up searching.
Among those who were still unemployed, many struggled to make ends meet by borrowing from friends or family, turning to government
food stamps and forgoing health care, according to the study.
More than half said they avoided all social contact, while slightly less than half said they had lost touch with close friends.
Six in 10 said they had problems sleeping.
Kafalas says she deals with her chronic insomnia by hitting the gym for two hours almost every evening, lifting weights and pounding
the treadmill until she feels tired enough to fall asleep.
"Sometimes I forget what day it is. Is it Tuesday? And then I'll think of what TV show ran the night before," she said. "Waiting
is the toughest part."
AGE A FACTOR
Generally, the likelihood of long-term unemployment increases with age, experts say. A report by the National Employment Law Project
this month found that nearly half of those who were unemployed for six months or longer were at least 45 years old. Those between
16 and 24 made up just 14 percent.
Tell that to Adam Blank, 24, who has been living with his girlfriend and her parents at their Martinsville home since losing his
sales job at Best Buy a year and half ago.
Blank, who graduated from Rutgers with a major in communications, says he feels like a burden sometimes, especially since his
girlfriend, Tracy Rosen, 24, works full-time at a local nonprofit. He shows her family gratitude with small chores, like taking out
the garbage, washing dishes, sweeping floors and doing laundry.
Still, he often feels inadequate.
"All I'm doing on an almost daily basis is sitting around the house trying to keep myself from going stir-crazy," said Blank,
who dreams of starting a social media company.
When he is feeling particularly low, Blank said he turns to a tactic employed by prisoners of war in Vietnam: "They used to build
dream houses in their head to help keep their sanity. It's really just imagining a place I can call my own."
Meanwhile, Gwiazdowski, ever the optimist, says unemployment has taught him a few things.
He has learned, for example, how to quickly assess an interviewer's age and play up or down his work experience accordingly --
he doesn't want to appear "threatening" to a potential employer who is younger. He has learned that by occasionally deleting and
reuploading his resume to job sites, his entry appears fresh.
"It's almost like a game," he said, laughing. "You are desperate, but you can't show it."
But there are days when he just can't find any humor in his predicament -- like when he finishes a great interview but receives
no offer, or when he hears a fellow job seeker finally found work and feels a slight twinge of jealousy.
"That's what I'm missing -- putting on that shirt and tie in the morning and going to work," he said.
The memory of getting dressed for work is still so vivid, Gwiazdowski says, that he has to believe another job is just around
"You always have to hope that that morning when you get up, it's going to be the day," he said.
"Today is going to be the day that something is going to happen."
Leslie Kwoh may be reached at email@example.com or (973) 392-4147.
DrBuzzard Jun 13, 2010
I collect from the state of iowa, was on tier I and when the gov't recessed without passing extension, iowa stopped paying
tier I claims that were already open, i was scheduled to be on tier I until july 15th, and its gone now, as a surprise, when i
tried to claim my week this week i was notified. SURPRISE, talk about stress.
berganliz Jun 13, 2010
This is terrible....just wait until RIF'd teachers hit the unemployment offices....but then, this is what NJ wanted...fired
teachers who are to blame for the worst recession our country has seen in 150 years...thanks GWB.....thanks Donald Rumsfeld......thanks
Dick Cheney....thanks Karl "Miss Piggy" Rove...and thank you Mr. Big Boy himself...Gov Krispy Kreame!
rp121 Jun 13, 2010
For readers who care about this nation's unemployed- Call your Senators to pass HR 4213, the "Extenders" bill. Unfortunately,
it does not add UI benefits weeks, however it DOES continue the emergency federal tiers of UI. If it does not pass this week many
of us are cut off at 26 wks. No tier 1, 2 -nothing.
Uber lost $2.5 billion in 2015, probably lost $4 billion in 2016, and is on track to lose $5
billion in 2017.
The top line on the table below shows is total passenger payments, which must be split
between Uber corporate and its drivers. Driver gross earnings are substantially higher than
actual take home pay, as gross earning must cover all the expenses drivers bear, including
fuel, vehicle ownership, insurance and maintenance.
Most of the "profit" data released by Uber over time and discussed in the press is not true
GAAP (generally accepted accounting principles) profit comparable to the net income numbers
public companies publish but is EBIDTAR contribution. Companies have significant leeway as to
how they calculate EBIDTAR (although it would exclude interest, taxes, depreciation,
amortization) and the percentage of total costs excluded from EBIDTAR can vary significantly
from quarter to quarter, given the impact of one-time expenses such as legal settlements and
stock compensation. We only have true GAAP net profit results for 2014, 2015 and the 2nd/3rd
quarters of 2017, but have EBIDTAR contribution numbers for all other periods.
Uber had GAAP net income of negative $2.6 billion in 2015, and a negative profit margin of
132%. This is consistent with the negative $2.0 billion loss and (143%) margin for the year
ending September 2015 presented in part one of the NC Uber series over a year ago.
No GAAP profit results for 2016 have been disclosed, but actual losses likely exceed $4
billion given the EBIDTAR contribution of negative $3.2 billion. Uber's GAAP losses for the 2nd
and 3rd quarters of 2017 were over $2.5 billion, suggesting annual losses of roughly $5
While many Silicon Valley funded startups suffered large initial losses, none of them lost
anything remotely close to $2.6 billion in their sixth year of operation and then doubled their
losses to $5 billion in year eight. Reversing losses of this magnitude would require the
greatest corporate financial turnaround in history.
No evidence of significant efficiency/scale gains; 2015 and 2016 margin improvements
entirely explained by unilateral cuts in driver compensation, but losses soared when Uber had
to reverse these cuts in 2017.
Total 2015 gross passenger payments were 200% higher than 2014, but Uber corporate
revenue improved 300% because Uber cut the driver share of passenger revenue from 83% to 77%.
This was an effective $500 million wealth transfer from drivers to Uber's investors. These
driver compensation cuts improved Uber's EBIDTAR margin, but Uber's P&L gains were
wiped out by higher non-EBIDTAR expense. Thus the 300% Uber revenue growth did not result in
any improvement in Uber profit margins.
In 2016, Uber unilaterally imposed much larger cuts in driver compensation, costing
drivers an additional $3 billion.
 Prior to Uber's market entry, the take home pay of big-city cab drivers in the US was
in the $12-17/hour range, and these earnings were possible only if drivers worked 65-75 hours a
An independent study of the net earnings of Uber drivers (after accounting for the costs
of the vehicles they had to provide) in Denver, Houston and Detroit in late 2015 (prior to
Uber's big 2016 cuts) found that driver earnings had fallen to the $10-13/hour range.
 Multiple recent news reports have documented how Uber drivers are increasing unable to
support themselves from their reduced share of passenger payments.
A business model where profit improvement is hugely dependent on wage cuts is unsustainable,
especially when take home wages fall to (or below) minimum wage levels. Uber's primary focus
has always been the rate of growth in gross passenger revenue, as this has been a major
justification for its $68 billion valuation. This growth rate came under enormous pressure in
2017 given Uber efforts to raise fares, major increases in driver turnover as wages fell,
 and the avalanche of adverse publicity it was facing.
Since mass driver defections would cause passenger volume growth to collapse completely,
Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to 80%.
This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over 200% in
2016 will probably only grow by about 15% in 2017.
December 12, 2017 at 6:19 am
December 12, 2017 at 7:34 am
"Uber's business model can never produce sustainable profits"
Two words not in my vocabulary are "Never" and "Always", that is a pretty absolute
statement in an non-absolute environment. The same environment that has produced the "Silicon
Valley Growth Model", with 15x earnings companies like NVIDA, FB and Tesla (Average
earnings/stock price ratio in dot com bubble was 10x) will people pay ridiculous amounts of
money for a company with no underlying fundamentals you damn right they will! Please stop
with the I know all no body knows anything, especially the psychology and irrationality of
markets which are made up of irrational people/investors/traders.
SoCal Rhino ,
December 12, 2017 at 8:30 am
My thoughts exactly. Seems the only possible recovery for the investors is a perfectly
engineered legendary pump and dump IPO scheme. Risky, but there's a lot of fools out there
and many who would also like to get on board early in the ride in fear of missing out on all
the money to be hoovered up from the greater fools. Count me out.
December 12, 2017 at 9:52 am
The author clearly distinguishes between GAAP profitability and valuations, which is after
all rather the point of the series. And he makes a more nuanced point than the half sentence
you have quoted without context or with an indication that you omitted a portion. Did you
miss the part about how Uber would have a strong incentive to share the evidence of a network
effect or other financial story that pointed the way to eventual profit? Otherwise (my words)
it is the classic sell at a loss, make it up with volume path to liquidation.
December 12, 2017 at 6:52 am
apples and oranges comparison, nvidia has lots and lots of patented tech that produces
revenue, facebook has a kajillion admittedly irrational users, but those users drive massive
ad sales (as just one example of how that company capitalizes itself) and tesla makes an
actual car, using technology that inspires it's buyers (the put your money where your mouth
is crowd and it can't be denied that tesla, whatever it's faults are, battery tech is not one
of them and that intellectual property is worth a lot, and tesla's investors are in on that
real business, profitable or otherwise)
Uber is an iphone app. They lose money and have no
path to profitability (unless it's the theory you espouse that people are unintelligent so
even unintelligent ideas work to fleece them). This article touches on one of the great
things about the time we now inhabit, uber drivers could bail en masse, there are two sides
to the low attachment employees who you can get rid of easily. The drivers can delete the
uber app as soon as another iphone app comes along that gets them a better return
December 12, 2017 at 6:55 am
Yet another source (unintended) of subsidies for Uber, Lyft, etc.,
which might or might not have been mentioned earlier in the series:
Are Losing Money as Ride-Hailing Services Grow [NYT]
For many air travelers, getting to and from the airport has long been part of the whole
miserable experience. Do they drive and park in some distant lot? Take mass transit or a
taxi? Deal with a rental car?
Ride-hailing services like Uber and Lyft are quickly changing those calculations. That
has meant a bit less angst for travelers.
But that's not the case for airports. Travelers' changing habits, in fact, have begun to
shake the airports' financial underpinnings. The money they currently collect from
ride-hailing services do not compensate for the lower revenues from the other sources.
At the same time, some airports have had to add staff to oversee the operations of the
ride-hailing companies, the report said. And with more ride-hailing vehicles on the roads
there's more congestion.
Socialize the losses, privatize the gains, VC-ize the subsidies.
Louis Fyne ,
December 12, 2017 at 8:35 am
The cold hard truth is that Uber is backed into a corner with severely limited abilities
to tweak the numbers on either the supply or the demand side: cut driver compensation and
they trigger driver churn (as has already been demonstrated), increase fare prices for riders
and riders defect to cheaper alternatives. The only question is how long can they keep the
show going before the lights go out, slick marketing and propaganda can only take you so far,
and one assumes the dumb money has a finite supply of patience and will at some point begin
asking the tough questions.
December 12, 2017 at 11:30 am
The irony is that Uber would have been a perfectly fine, very profitable mid-sized company
if Uber stuck with its initial model -- sticking to dense cities with limited parking,
limiting driver supply, and charging a premium price for door-to-door delivery, whether by
livery or a regular sedan. And then perhaps branching into robo-cars.
But somehow Uber/board/Travis got suckered into the siren call of self-driving cars,
triple-digit user growth, and being in the top 100 US cities and on every continent.
David Carl Grimes ,
December 12, 2017 at 6:57 am
I've shared a similar sentiment in one of the previous posts about Uber. But operating
profitably in decent sized niche doesn't fit well with ambitions of global domination. For
Uber to be "right-sized", an admission of folly would have to be made, its managers and
investors would have to transcend the sunk cost fallacy in their strategic decision making,
and said investors would have to accept massive hits on their invested capital. The cold,
hard reality of being blindsided and kicked to the curb in the smartphone business forced
RIM/Blackberry to right-size, and they may yet have a profitable future as an enterprise
facing software and services company. Uber would benefit from that form of sober mindedness,
but I wouldn't hold my breath.
Michael Fiorillo ,
December 12, 2017 at 9:33 am
The question is: Why did Softbank invest in Uber?
December 12, 2017 at 10:50 am
I know nothing about Softbank or its management, but I do know that the Japanese were the
dumb money rubes in the late '80's, overpaying for trophy real estate they lost billions
Until informed otherwise, that's my default assumption
Yves Smith Post author ,
December 12, 2017 at 11:38 am
Softbank possibly looking to buy more Uber shares at a 30% discount is very odd. Uber had
a Series G funding round in June 2016 where a $3.5
billion investment from Saudi Arabia's Public Investment Fund resulted in its current $68
billion valuation. Now apparently Softbank wants to lead a new $6 billion funding round to
buy the shares of Uber employees and early investors at a 30% discount from this last
"valuation". It's odd because Saudi Arabia's Public Investment Fund has pledged
$45 billion to SoftBank's Vision Fund , an amount which was supposed to come from the
proceeds of its pending Aramco IPO. If the Uber bid is linked to SoftBank's Vision Fund, or
KSA money, then its not clear why this investor might be looking to literally 'double down'
from $3.5 billion o $6 billion on a declining investment.
Robert McGregor ,
December 12, 2017 at 7:04 am
SoftBank has not yet invested. Its tender is still open. If it does not get enough shares
at a price it likes, it won't invest.
As to why, I have no idea.
December 12, 2017 at 7:19 am
"Growth and Efficiency" are the sine qua non of Neoliberalism. Kalanick's "hype
brilliance" was to con the market with "revenue growth" and signs of efficiency, and
hopes of greater efficiency, and make most people just overlook the essential fact
that Uber is the most unprofitable company of all time!
Phil in Kansas City ,
December 12, 2017 at 7:55 am
What comprises "Uber Expenses"? 2014 – $1.06 billion; 2015 $3.33 billion; 2016 $9.65
billion; forecast 2017 $11.418 billion!!!!!! To me this is the big question – what are
they spending $10 billion per year on?
ALso – why did driver share go from 68% in 2016 to 80% in 2017? If you use 68% as in
2016, 2017 Uber revenue is $11.808 billion, which means a bit better than break-even EBITDA,
assuming Uber expenses are as stated $11.428 billion.
Perhaps not so bleak as the article presents, although I would not invest in this
lyman alpha blob ,
December 12, 2017 at 2:37 pm
I have the same question: What comprises over 11 billion dollars in expenses in 2017?
Could it be they are paying out dividends to the early investors? Which would mean they are
cannibalizing their own company for the sake of the VC! How long can this go on before
they'll need a new infusion of cash?
Vedant Desai ,
December 12, 2017 at 10:37 am
The Saudis have thrown a few billion Uber's way and they aren't necessarily known as the
Maybe the pole dancers have started chipping in too as
they are for bitcoin .
Louis Fyne ,
December 12, 2017 at 8:44 am
Oh article does answer your 2nd question. Read this paragraph:-
Since mass driver defections would cause passenger volume growth to collapse completely
, Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to
80%. This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over
200% in 2016 will probably only grow by about 15% in 2017.
As for the 1st, read this line in the article:-
There are undoubtedly a number of things Uber could do to reduce losses at the margin,
but it is difficult to imagine it could suddenly find the $4-5 billion in profit
improvement needed merely to reach breakeven.
December 12, 2017 at 9:49 am
in addition to all the points listed in the article/comments, the absolute biggest flaw
with Uber is that Uber HQ conditioned its customers on (a) cheap fares and (b) that a car is
available within minutes (1-5 if in a big city).
Those two are not mutually compatible in the long-term.
Martin Finnucane ,
December 12, 2017 at 11:06 am
Thus (a) "We cost less" and (b) "We're more convenient" -- aren't those also the
advantages that Walmart claims and feeds as a steady diet to its ever hungry consumers? Often
if not always, disruption may repose upon delusion.
December 12, 2017 at 11:09 am
Uber's business model could never produce sustainable profits unless it was able
to exploit significant anti-competitive market power.
Upon that dependent clause hangs the future of capitalism, and – dare I say it?
– its inevitable demise.
Jim A. ,
December 12, 2017 at 12:21 pm
When this Uber madness blows up, I wonder if people will finally begin to discuss the
brutal reality of Silicon Valley's so called "disruption".
It is heavily built in around the idea of economic exploitation. Uber drivers are often,
especially when the true costs to operate an Uber including the vehicle depreciation are
factored in, making not very much per hour driven, especially if they don't get the surge
Instacart is another example. They are paying the deliver operators very little.
December 12, 2017 at 5:40 pm
At a fundamental level, I think that the Silicon Valley "disruption" model only works for
markets (like software) where the marginal cost for production is de minimus and the
products can be protected by IP laws. Volume and market power really work in those cases. But
out here in meat-space, where actual material and labor are big inputs to each item sold, you
can never just sit back on your laurels and rake in the money. Somebody else will always be
able to come and and make an equivalent product. If they can do it more cheaply, you are in
Joe Bentzel ,
December 12, 2017 at 2:19 pm
There aren't that many areas in goods and services where the marginal costs are very
Software is actually quite unique in that regard, costing merely the bandwidth and
permanent storage space to store.
1. From the article, they cannot go public and have limited ways to raise more money. An
IPO with its more stringent disclosure requirements would expose them.
2. They tried lowering driver compensation and found that model unsustainable.
3. There are no benefits to expanding in terms of economies of scale.
From where I am standing, it looks like a lot of industries gave similar barriers. Silicon
Valley is not going to be able to disrupt those.
Tesla, another Silicon Valley company seems to be struggling to mass produce its Model 3
and deliver an electric car that breaks even, is reliable, while disrupting the industry in
the ways that Elon Musk attempted to hype up.
So that basically leaves services and manufacturing out for Silicon Valley disruption.
Phil in KC ,
December 12, 2017 at 3:20 pm
UBER has become a "too big to fail" startup because of all the different tentacles of
capital from various Tier 1 VCs and investment bankers.
VCs have admitted openly that UBER is a subsidized business, meaning it's product is sold
below market value, and the losses reflect that subsidization. The whole "2 sided platform"
argument is just marketecture to hustle more investors. It's a form of service "dumping" that
puts legacy businesses into bankruptcy. Back during the dotcom bubble one popular investment
banker (Paul Deninger) characterized this model as "Terrorist Competition", i.e. coffers full
of invested cash to commoditize the market and drive out competition.
UBER is an absolute disaster that has forked the startup model in Silicon Valley in order
to drive total dependence on venture capital by founders. And its current diversification
into "autonomous vehicles", food delivery, et al are simply more evidence that the company
will never be profitable due to its whacky "blitzscaling" approach of layering on new
"businesses" prior to achieving "fit" in its current one.
It's economic model has also metastasized into a form of startup cancer that is killing
Silicon Valley as a "technology" innovator. Now it's all cargo cult marketing BS tied to
UBER is the victory of venture capital and user subsidized startups over creativity by
It's shadow is long and that's why this company should be ..wait for it UNBUNDLED (the new
silicon valley word attached to that other BS religion called "disruption"). Call it a great
unbundling and you can break up this monster corp any way you want.
Naked Capitalism is a great website.
Phil in KC ,
December 12, 2017 at 3:10 pm
1. I Agree with your last point.
2. The elevator pitch for Uber: subsidize rides to attract customers, put the competition
out of business, and then enjoy an unregulated monopoly, all while exploiting economically
3. But more than one can play that game, and
4. Cab and livery companies are finding ways to survive!
Jan Stickle ,
December 12, 2017 at 5:00 pm
If subsidizing rides is counted as an expense, (not being an accountant, I would guess it
so), then whether the subsidy goes to the driver or the passenger, that would account for the
ballooning expenses, to answer my own question. Otherwise, the overhead for operating what
Uber describes as a tech company should be minimal: A billion should fund a decent
headquarters with staff, plus field offices in, say, 100 U.S. cities. However, their global
pretensions are probably burning cash like crazy. On top of that, I wonder what the exec
compensation is like?
After reading HH's initial series, I made a crude, back-of-the-envelope calculation that
Uber would run out of money sometime in the third fiscal quarter of 2018, but that was based
on assuming losses were stabilizing in the range of 3 billion a year. Not so, according to
the article. I think crunch time is rapidly approaching. If so, then SoftBank's tender offer
may look quite appetizing to VC firms and to any Uber employee able to cash in their options.
I think there is a way to make a re-envisioned Uber profitable, and with a more independent
board, they may be able to restructure the company to show a pathway to profitability before
the IPO. But time is running out.
A not insignificant question is the recruitment and retention of the front line
"partners." It would seem to me that at some point, Uber will run out of economically
ignorant drivers with good manners and nice cars. I would be very interested to know how many
drivers give up Uber and other ride-sharing gigs once the 1099's start flying at the
beginning of the year. One of the harsh realities of owning a business or being an contractor
is the humble fact that you get paid LAST!
We became instant Uber riders while spending holidays with relatives in San Diego. While
their model is indeed unique from a rider perspective, it was the driver pool that fascinates
me. These are not professional livery drivers, but rather freebooters of all stripes driving
for various reasons. The remuneration they receive cannot possibly generate much income after
expenses, never mind the problems associated with IRS filing as independent contractors.
One guy was just cruising listening to music; cooler to get paid for it than just sitting
home! A young lady was babbling and gesticulating non stop about nothing coherent and
appeared to be on some sort of stimulant. A foreign gentleman, very professional, drove for
extra money when not at his regular job. He was the only one who had actually bought a new
Prius for this gig, hoping to pay it off in two years.
This is indeed a brave new world. There was a period in Nicaragua just after the Contra
war ended when citizens emerged from their homes and hit the streets in large numbers,
desperately looking for income. Every car was a taxi and there was a bipedal mini Walmart at
every city intersection as individuals sold everything and anything in a sort of euphoric
optimism towards the future. Reality just hadn't caught up with them yet .
November 21, 2017 by Yves Smith Yves here. Reader
UserFriendly sent this post with the message, "I can confirm this." I can too. And before you
try to attribute our reactions to being Americans, note that the study very clearly points out
that its finding have been confirmed in "all of the world's regions".
By Bill Mitchell, Professor in Economics and Director of the Centre of Full Employment
and Equity at the University of Newcastle, NSW, Australia. Originally published at billy blog
Here is a summary of another interesting study I read last week (published March 30, 2017)
– Happiness at Work
– from academic researchers Jan‐Emmanuel De Neve and George Ward. It explores the
relationship between happiness and labour force status, including whether an individual is
employed or not and the types of jobs they are doing. The results reinforce a long literature,
which emphatically concludes that people are devastated when they lose their jobs and do not
adapt to unemployment as its duration increases. The unemployed are miserable and remain so
even as they become entrenched in long-term unemployment. Further, they do not seem to sense
(or exploit) a freedom to release some inner sense of creativity and purpose. The overwhelming
proportion continually seek work – and relate their social status and life happiness to
gaining a job, rather than living without a job on income support. The overwhelming conclusion
is that "work makes up such an important part of our lives" and that result is robust across
different countries and cultures. Being employed leads to much higher evaluations of the
quality of life relative to being unemployed. And, nothing much has changed in this regard over
the last 80 or so years. These results were well-known in the 1930s, for example. They have a
strong bearing on the debate between income guarantees versus employment guarantees. The UBI
proponents have produced no robust literature to refute these long-held findings.
While the 'Happiness Study' notes that "the relationship between happiness and employment is
a complex and dynamic interaction that runs in both directions" the authors are
The overwhelming importance of having a job for happiness is evident throughout the
analysis, and holds across all of the world's regions. When considering the world's
population as a whole, people with a job evaluate the quality of their lives much more
favorably than those who are unemployed. The importance of having a job extends far beyond
the salary attached to it, with non-pecuniary aspects of employment such as social status,
social relations, daily structure, and goals all exerting a strong influence on people's
And, the inverse:
The importance of employment for people's subjective wellbeing shines a spotlight on the
misery and unhappiness associated with being unemployed.
There is a burgeoning literature on 'happiness', which the authors aim to contribute to.
They define happiness as "subjective well-being", which is "measured along multiple
life evaluation (by way of the Cantril "ladder of life"), positive and negative affect to
measure respondents' experienced positive and negative wellbeing, as well as the more
domain-specific items of job satisfaction and employee engagement. We find that these diverse
measures of subjective wellbeing correlate strongly with each other
Cantril's 'Ladder of Life Scale' (or "Cantril Ladder") is used by polling organisations to
assess well-being. It was developed by social researcher Hadley Cantril (1965) and documented
in his book The pattern of human concerns .
You can learn more about the use of the 'Cantril Ladder' HERE
As we read, the "Cantril Self-Anchoring Scale consists of the following":
Please imagine a ladder with steps numbered from zero at the bottom to 10 at the top. The
top of the ladder represents the best possible life for you and the bottom of the ladder
represents the worst possible life for you. On which step of the ladder would you say you
personally feel you stand at this time? (ladder-present) On which step do you think you
will stand about five years from now? (ladder-future)
[Reference: Cantril, H. (1965) The pattern of human concerns , New Brunswick,
Rutgers University Press.]
Christian Bjørnskov's 2010 article – How Comparable are the Gallup
World Poll Life Satisfaction Data? – also describes how it works.
[Reference: Bjørnskov, C. (2010) 'How Comparable are the Gallup World Poll Life
Satisfaction Data?', Journal of Happiness Studies , 11 (1), 41-60.]
The Cantril scale is usually reported as values between 0 and 10.
The authors in the happiness study use poll data from 150 nations which they say "is
representative of 98% of the world's population". This survey data is available on a mostly
annual basis since 2006.
The following graph (Figure 1 from the Study) shows "the self-reported wellbeing of
individuals around the world according to whether or not they are employed."
The "bars measure the subjective wellbeing of individuals of working age" by employment
The results show the differences between having a job and being unemployed are "very large
indeed" on the three well-being measures (life evaluation, positive and negative affective
People employed "evaluate the quality of their lives around 0.6 points higher on average as
compared to the unemployed on a scale from 0 to 10."
The authors also conduct more sophisticated (and searching) statistical analysis
(multivariate regression) which control for a range of characteristics (gender, age, education,
marital status, composition of household) as well as to "account for the many political,
economic, and cultural differences between countries as well as year-to-year variation".
The conclusion they reach is simple:
the unemployed evaluate the overall state of their lives less highly on the Cantril ladder
and experience more negative emotions in their day-to-day lives as well as fewer positive
ones. These are among the most widely accepted and replicated findings in the science of
happiness Here, income is being held constant along with a number of other relevant
covariates, showing that these unemployment effects go well beyond the income loss associated
with losing one's job.
These results are not surprising. The earliest study of this sort of outcome was from the famous study published by Philip
Eisenberg and Paul Lazersfeld in 1938. [Reference: Eisenberg, P. and Lazarsfeld, P. (1938) 'The psychological effects of
unemployment', Psychological Bulletin , 35(6), 358-390.]
They explore four dimensions of unemployment:
I. The Effects of Unemployment on Personality.
II. Socio-Political Attitudes Affected by Unemployment.
III. Differing Attitudes Produced by Unemployment and Related Factors.
IV. The Effects of Unemployment on Children and Youth.
On the first dimension, they conclude that:
1. "unemployment tends to make people more emotionally unstable than they were previous to
2. The unemployed experience feelings of "personal threat"; "fear"; "sense of proportion is
shattered"; loss of "common sense of values"; "prestige lost in own eyes and as he imagines, in
the eyes of his fellow men"; "feelings of inferiority"; loss of "self-confidence" and a general
loss of "morale".
Devastation, in other words. They were not surprised because they note that:
in the light of the structure of our society where the job one holds is the prime
indicator of status and prestige.
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched
cultural bias towards associating our work status with our general status and prestige and
feelings of these standings. That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study in
It might change over time but that will take a long process of re-education and cultural
shift. Trying to dump a set of new cultural values that only a small minority might currently
hold to onto a society that clearly still values work is only going to create major social
tensions. Eisenberg and Lazarsfeld also considered an earlier 1937 study by Cantril who explored
whether "the unemployed tend to evolve more imaginative schemes than the employed".
[Reference: Cantril, H. (1934) 'The Social Psychology of Everyday Life', Psychological
Bulletin , 31, 297-330.]
The proposition was (is) that once unemployed, do people then explore new options that were
not possible while working, which deliver them with the satisfaction that they lose when they
become jobless. The specific question asked in the research was: "Have there been any changes of interests
and habits among the unemployed?" Related studies found that the "unemployed become so apathetic that they rarely read
anything". Other activities, such as attending movies etc were seen as being motivated by the
need to "kill time" – "a minimal indication of the increased desire for such
On the third dimension, Eisenberg and Lazersfeld examine the questions – "Are there
unemployed who don't want to work? Is the relief situation likely to increase this number?",
which are still a central issue today – the bludger being subsidized by income
They concluded that:
the number is few. In spite of hopeless attempts the unemployed continually look for work,
often going back again and again to their last place of work. Other writers reiterate this
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on their
own opinions, have known that the importance of work in our lives goes well beyond the income
we earn. The non-pecuniary effects of not having a job are significant in terms of lost status,
social alienation, abandonment of daily structure etc, and that has not changed much over
history. The happiness paper did explore "how short-lived is the misery associated with being out of
work" in the current cultural settings.
The proposition examined was that:
If the pain is only fleeting and people quickly get used to being unemployed, then we
might see joblessness as less of a key public policy priority in terms of happiness.
They conclude that:
a number of studies have demonstrated that people do not adapt much, if at all, to being
unemployed there is a large initial shock to becoming unemployed, and then as people stay
unemployed over time their levels of life satisfaction remain low . several studies have
shown that even once a person becomes re-employed, the prior experience of unemployment
leaves a mark on his or her happiness.
So there is no sudden or even medium-term realisation that being jobless endows the
individual with a new sense of freedom to become their creative selves, freed from the yoke of
work. To bloom into musicians, artists, or whatever.
The reality is that there is an on-going malaise – a deeply entrenched sense of
failure is overwhelming, which stifles happiness and creativity, even after the individual is
able to return to work.
This negativity, borne heavily by the individual, however, also impacts on society in
The paper recognises that:
A further canonical finding in the literature on unemployment and subjective wellbeing is
that there are so-called "spillover" effects.
High levels of unemployment "increase fear and heighten the sense of job insecurity". Who
will lose their job next type questions?
The researchers found in their data that the higher is the unemployment rate the greater the
anxiety among those who remain employed.
The overwhelming conclusion is that "work makes up such an important part of our lives" and
that result is robust across different countries and cultures.
Being employed leads to much higher evaluations of the quality of life relative to being
The unemployed are miserable and remain so even as they become entrenched in long-term
unemployment. They do not seem to sense (or exploit) a freedom to release some inner sense of
creativity and purpose.
The overwhelming proportion continually seek work – and relate their social status and
life happiness to gaining a job, rather than living without a job on income support.
Modern Monetary Theory (MMT) allows us to understand that it is the government that chooses
the unemployment rate – it is a political choice.
For currency-issuing governments it means their deficits are too low relative to the
spending and saving decisions of the non-government sector.
For Eurozone-type nations, it means that in surrendering their currencies and adopting a
foreign currency, they are unable to guarantee sufficient work in the face of negative shifts
in non-government spending. Again, a political choice.
Guarantee can be used as a vehicle to not only ensure their are sufficient jobs available
at all times but also to start a process of wiping out the worst jobs in the non-government
That can be done by using the JG wage to ensure low-paid private employers have to
restructure their workplaces and pay higher wages and achieve higher productivity in order to
attract labour from the Job Guarantee pool.
The Series So Far
This is a further part of a series I am writing as background to my next book with Joan
Muysken analysing the Future of Work . More instalments will come as the research
The series so far:
- When Austrians
ate dogs .
- Employment as a
human right .
- The rise of the
"private government .
- The evolution of
full employment legislation in the US .
- Automation and
full employment – back to the 1960s .
- Countering the
march of the robots narrative .
- Unemployment is
miserable and does not spawn an upsurge in personal creativity .
The blogs in these series should be considered working notes rather than self-contained
topics. Ultimately, they will be edited into the final manuscript of my next book due in 2018.
The book will likely be published by Edward Elgar (UK).
That is enough for today!
November 21, 2017 at 6:11 am
The Rev Kev ,
November 21, 2017 at 6:35 am
Perhaps I'm utterly depressed but I haven't had a job job for over 5 years. Plenty of
work, however, more than I can handle and it requires priorisation. But I am deliberately not part of the organized herd. I stay away from big cities –
it's scary how managed the herd is in large groups – and I suppose that unemployment
for a herd animal is rather distressing as it is effectively being kicked out of the
Anyway my advice, worth what you pay for it but let he who has ears, etc. – is to go
local, very local, grow your own food, be part of a community, manage your own work, and
renounce the energy feast herd dynamics. "Unemployment", like "recession", is a mechanism of
control. Not very practical advice for most, I realize, trapped in the herd as they are in
car payments and mortgages, but perhaps aspirational?
November 21, 2017 at 10:24 am
I think what is missing from this article is the term "identity." If you meet new people,
often the conversation starts with what you do for a living. Your identity, in part, is what
you do. You can call yourself a plumber, a writer, a banker, a consultant, a reporter but the
point is this is part of your identity. When you lose your job long term, your identity here
loses one of its main anchor points.
Worse, there is a deliberate stigma attached with being long term unemployed. In that article
you have seen the word bludger being used. In parts of the US I have read of the shame of
'living off the county'. And yes, I have been there, seen that, and got the t-shirt. It's
going to be interesting as mechanization and computers turn large portions of the population
from workers to 'gig' workers. Expect mass demoralization.
November 21, 2017 at 12:13 pm
yes the lives many of us have lived, no longer exist though we appear not notice, as we
"can" live in many of same "ways" ..rather well known psychologist defined some 40 years ago, best to "drop through
November 21, 2017 at 2:20 pm
Well, you also lose money, maybe you become homeless etc. as you have nowhere else to turn
(if there are kids involved to support it gets even scarier though there are some programs).
Or maybe you become dependent on another person(s) to support you which is of course
degrading as you know you must rely on them to live, whether it's a spouse or lover when you
want to work and bring in money, or mom and dads basement, or the kindest friend ever who
lets you sleep on their couch. I mean these are the things that really matter.
Privileged people whose main worry in unemployment would be losing identity, wow out of
touch much? Who cares about some identity for parties, but the ability to have a stable
decent life (gig work hardly counts) is what is needed.
November 21, 2017 at 7:08 pm
I believe your comment sums up the situation the best -- and most realistically.
November 22, 2017 at 12:45 am
I normally wouldn't comment like this, but you have brought up some extremely important
points about identity that I would like to address.
Recently I had the most intense mushroom experience of my entire life–so intense
that my identity had been completely stripped and I was left in a formless state, at the
level of seeing my bare, unvarnished animal neural circuitry in operation. Suddenly with a
flash of inspiration I realized that the identity of everyone, all of us, is inextricably
tied up in what we do and what we do for other people.
Following from that, I understood that if we passively rely on others for survival,
whether it be relying on friends, family, or government, then we do not have an identity or
reason for existing. And the inner self, the animal core of who we are, will realise this
lack of identity (even if the concious mind denies it), and will continually generate
feelings of profound depression and intense nihilism that will inevitably destroy us if the
root cause is not addressed.
Before this experience I was somewhat ambivalent about my politics, but immediately after
I knew that the political right was correct on everything important, from attitudes on sex to
economic philosophy. People need a core of cultural stability and hard work to grow and
become actualized. The alternative is rudderless dissatisfaction and envy that leads
On the topic of giving "out of kindnes and goodwill", giving without demanding anything in
return is a form of abuse, as it deprives those who receive our feel-good generosity the
motivation to form a coherent identity. If the parents of a basement-dweller were truly good
people, instead of supporting said dweller they'd drag her out by the ear and make her grow
food in the yard or some such. Likewise, those who have supported you without also giving
concrete demands and expecations in return have been unkind, and for your own good I hope
that you will immediately remove yourself from their support. On the other hand, if you have
been thoughtlessly giving because it warms the cockles of your heart, then stop it now. You
are ruining other people this way, and if your voting habits are informed by this kind of
malevolence I'd encourage you to change those as well.
Anyway the original poster is right about everything. Working and having a purpose in life
is an entirely different animal from making money and being "successful" in the
government-sponsored commercial economy. Society and government deliberately try to conflate
the two for various reasons, primarily graft of labor and genius, but that is only a
deliberate mis-framing that needlessly harms people when the mainstream economic system is in
catastrophic decline, as ours is today. You should try to clear up this misconception within
yourself as a way of getting better.
Well, I hope this message can give you a few different thoughts and help you find your way
out of the existential angst you're caught in. Don't wallow in helplessness. Think of
something useful to do, anything, whether it earns you money or not, and go out and start
doing it. You'll be surprised at how much better you feel about yourself in no time.
Jeremy Grimm ,
November 21, 2017 at 12:33 pm
The problem is you said – I – had an extreme experience [burning bush], the
truth was reviled to – I – and I alone during this extreme chemically altered
state. Which by the way just happens to conform to a heap of environmental biases I
collected. This is why sound methodology demands peer review. disheveled some people think Mister Toads Wild ride at Disneyland on psychotropics is an
excellent adventure too.
Henry Moon Pie ,
November 21, 2017 at 7:00 am
I think your observation about the importance of work to identity is most perceptive. This
post makes too little distinction between work and a job and glosses over the place of work
in defining who we are to ourselves and to others. I recall the scene in the movie "About a
Boy" when the hero meets someone he cares about and she asks him what he does for a
I believe there's another aspect of work -- related to identity -- missing in the analysis
of this post. Work can offer a sense of mission -- of acting as part of an effort toward a
larger goal no individual could achieve alone. However you may regard the value in putting
man on the moon there is no mistaking the sense of mission deeply felt by the engineers and
technicians working on the project. What jobs today can claim service to a mission someone
November 21, 2017 at 8:29 am
Agreed on your points. Wage slavery is nothing to aspire to. Self-determination within a
context of an interdependent community is a much better way to live. We do our thing in the city, however.
November 21, 2017 at 10:10 am
Finding that "interdependent community" is the hard part. My experience has been that this
endeavour is almost chance based; Serendipity if you will.
Here Down South, the churches still seem to have a stranglehold on small and mid scale social
organization. One of the big effects of 'churching' is the requirement that the individual
gave up personal critical thinking. Thus, the status quo is reinforced. One big happy 'Holy
November 21, 2017 at 3:07 pm
from the article
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched
cultural bias towards associating our work status with our general status and prestige and
feelings of these standings.
That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study
It might change over time but that will take a long process of re-education and cultural
shift. Trying to dump a set of new cultural values that only a small minority might
currently hold to onto a society that clearly still values work is only going to create
major social tensions.
Yves Smith Post author ,
November 21, 2017 at 4:23 pm
I would agree about the entenched cultural norms, etc. But not the pessimism and timeline
for change. An individual can communicate a complex idea to millions in seconds, things move
fast these days.
For me, it seems that what we (we being UBI/radical change proponents) are lacking is a
compelling easily accessible story. Not just regarding UBI (as that is but one part of the
trully revolutionary transformations that must occur) but encompassing everything.
We have countless think pieces, bits of academic writing, books, etc that focus on
individual pieces and changes in isolation. But we've largely abandoned the all-encompassing
narrative, which at their heart is precisely what religion offers and why it can be so
seductive, successful, and resilient for so long.
The status quo has this type of story, it's not all that compelling but given the fact
that it is the status quo and has inertia and tradition on its side (along with the news
media, political, entertainment, etc) it doesn't have to be.
We need to abandon the single narrow issue activism that has become so prominent over the
years and get back to engaging with issues as unseparable and intimately interconnected.
Tinkering around the edges will do nothing, a new political religion is what is
November 21, 2017 at 5:11 pm
Sorry, I disagree vehemently. Deeply held cultural attitudes are very slow to change and
the study found that work being critical to happiness examined a large number of
Look at feminism. I was a half-generation after the time when women were starting to get a
shot at real jobs. IIRC, the first class that accepted women at Harvard Law School was in the
1950 and at Harvard Business School, 1965. And the number of first attendees was puny. The
1965 class at HBS had 10 8 women out of a graduating class of over 800; my class in 1981 had
only 11% women.
In the 1980s, you saw a shift from the belief that women could do what men could do to
promotion of the idea that women could/should be feminine as well as successful. This looked
like seriously mixed messages, in that IMHO the earlier tendency to de-emphasize gender roles
in the workplace looked like a positive development.
Women make less than 80% of what men do in the US. Even female doctors in the same
specialities make 80% of their male peers.
The Speenhamland in the UK had what amounted to an income guarantee from the 1790s to
1832. Most people didn't want to be on it and preferred to work. Two generations and being on
the support of local governments was still seen as carrying a stigma.
More generally, social animals have strongly ingrained tendencies to resent situations
they see as unfair. Having someone who is capable of working not work elicits resentment from
many, which is why most people don't want to be in that position. You aren't going to change
And people need a sense of purpose. There are tons of cases of rich heirs falling into
drug addiction or alcoholism and despair because they have no sense of purpose in life. Work
provides that, even if it's mundane work to support a family. That is one of the great
dissservices the Democrats have done to the citizenry at large: sneering at ordinary work
when blue-collar men were the anchors of families and able to take pride in that.
Yves Smith Post author ,
November 21, 2017 at 8:34 pm
So a few points.
Regarding the large number of societies, we often like to think we're more different than
we actually are focusing on a few glaringly obvious differences and generalizing from there.
Even going back a few hundred years when ideas travelled slower we were still (especially the
"west" though the "east" wasn't all that much more different either) quite similar. So I'm
less inclined to see the large number of societies as evidence.
Generally on societal changes and movements: The issue here is that the leadership has not
changed, they may soften some edges here or there (only to resharpen them again when we're
looking elsewhere) but their underlying ideologies are largely unchanged. A good mass of any
population will go along to survive, whether they agree or not (and we find increasing
evidence that many do not agree, though certainly that they do not agree on a single
It may be impossible to implement such changes in who controls the levers of power in a
democratic fashion but it also may be immoral not implement such changes. Of course this is
also clearly a similar path to that walked by many a demonized (in most cases rightfully so)
dictator and despot. 'Tread carefully' are wise words to keep in mind.
Today we have a situation which reflects your example re: social animals and resentment of
unfairness: the elite (who falls into this category is of course debatable, some individuals
moreso than others). But they have intelligently, for their benefit, redirected that
resentment towards those that have little. Is there really any logical connection between not
engaging in wage labor (note: NOT equivalent to not working) and unfairness? Or is it a myth
crafted by those who currently benefit the most?
That resentment is also precisely why it is key that a Basic income be universal with no
means testing, everyone gets the same.
I think we should not extrapolate too much from the relatively small segment of the
population falling into the the inherited money category. Correlation is not causation and
It also seems that so often individuals jump to the hollywood crafted image of the
layabout stoner sitting on the couch giggling at cartoons (or something similarly negative)
when the concept of less wage labor is brought up. A reduction of wage labor does not equate
to lack of work being done, it simply means doing much of that work for different reasons and
rewards and incentives.
As I said in the Links thread today, we produce too much, we consume too much, we grow too
much. More wage labor overall as a requirement for survival is certainly not the solution to
any real problem that we face, its a massively inefficient use of resources and a massive
strain on the ecosystems.
November 21, 2017 at 8:53 pm
I am really gobsmacked at the sense of entitlement on display here. Why are people
entitled to an income with no work? Being an adult means toil: cleaning up after yourself,
cleaning up after your kids if you have them, if you are subsistence farmer, tending your
crops and livestock, if you are a modern society denizen, paying your bills and your taxes on
time. The idea that people are entitled to a life of leisure is bollocks. Yet you promote
Society means we have obligations to each other. That means work. In rejecting work you
And the touting of "creativity" is a top 10% trope that Thomas Frank called out in Listen,
Liberal. It's a way of devaluing what the bottom 90% do.
November 21, 2017 at 9:38 pm
My argument with the article is that, to me, it smacks of Taylorism. A follow-on study
would analyze how many hours a laborer must work before the acquired sense of purpose and
dignity and associated happiness began to decline. Would it be 30 hours a week of
backbreaking labor before dignity found itself eroded? 40? 50? 60? When does the worker
break? Just how far can we push the mule before it collapses?
The author alludes to this: "The overwhelming proportion relate their social status and
life happiness to gaining a job"
Work equals happiness. Got it.
But, as a former robotics instructor, and as one who watches the industry (and former
students), I see an automated future as damn near inevitable. Massive job displacement is
coming, life as a minimum wage burger flipper will cease, with no future employment prospects
short of government intervention (WPA and CCC for all, I say). I'm not a Luddite, obviously,
but there are going to be a lot of people, billions, worldwide, with no prospect of
employment. Saying, "You're lazy and entitled" is a bit presumptuous, Yves. Not everyone has
your ability, not everyone has my ability. When the burger flipping jobs are gone, where do
they go? When roombas mop the floors, where do the floor moppers go?
nihil obstet ,
November 21, 2017 at 10:05 pm
"WPA and CCC for all, I say. "
We could use a new Civilian Conservation Corps and and a Works Progress Administration.
There's lots of work that needs doing that isn't getting done by private corporations.
November 21, 2017 at 10:14 pm
The outrage at non-work wealth and income would be more convincing if it were aimed also
at owners of capital. About 30% of national income is passive -- interest, rents, dividends.
Why are the owners of capital "entitled to an income with no work?" It's all about the
morality that underlies the returns to capital while sugaring over a devaluation of labor. As
a moral issue, everyone should share the returns on capital or we should tax away the
interest, rents, and dividends. If it's an economic issue, berating people for their beliefs
isn't a reason.
Yves Smith Post author ,
November 22, 2017 at 2:27 am
Why are the owners of capital "entitled to an income with no work?"
THIS!!!! So much, THIS!!!! But, what else is a Wobbly to say, eh?
November 22, 2017 at 2:58 am
The overwhelming majority do work. The top 0.1% is almost entirely private equity managers
who are able to classify labor income as capital gains through the carried interest loophole.
Go look at the Forbes 400.
The 1% are mainly CEOs, plus elite professionals, like partners at top law and consulting
firms and specialty surgeons (heart, brain, oncology). The CEOs similarly should be seen as
getting labor income but have a lot of stock incentive pay (that is how they get seriously
rich) which again gets capital gains treatment.
You are mistaking clever taking advantage of the tax code for where the income actually
comes from. Even the kids of rich people are under pressure to act like entrepreneurs from
their families and peers. Look at Paris Hilton and Ivanka as examples. They both could have
sat back and enjoyed their inheritance, but both went and launched businesses. I'm not saying
the kids of the rich succeed, or would have succeed to the extent they do without parental
string-pulling, but the point is very few hand their fortune over to a money manager and go
sailing or play the cello.
November 22, 2017 at 1:34 am
Isn't the brother of the infamous Koch duo doing exactly that? Actually, if all the .001%ers were like him, we'd all be better off
November 21, 2017 at 9:09 pm
What's your take on Rutger Bergman's ted talk? i think most jobs aren't real jobs at all,
like marketing and ceo's. why can't we do 20 hour work weeks so we don't have huge amounts of unemployment? Note, I was "unemployed" for years since "markets" decide not to fund science in the US.
Yay Germany At least I was fortunate enough to not be forced to work at Walmart or McDonalds
like the majority of people with absolutely no life choices. Ah the sweet coercion of
Andrew Dodds ,
November 22, 2017 at 2:48 am
Your hopes for a UBI are undone by some of the real world observations I've made over many
years, with regard to how a guaranteed income increase, of any measure, for a whole
population of an area, affects prices. Shorter: income going up means prices are raised by
merchants to capture the new income.
- Examples: A single industry town raises wages for all employees by 2% for the new calendar
year. Within the first 2 weeks of the new year, all stores and restaurants and service
providers in the town raise their prices by 2%. This happens every year there is a general
- Example: Medicare part D passes and within 2 years, Pharma now having new captive
customers whose insurance will pay for drugs, raise prices higher and higher, even on generic
- A more recent example: ACA passes with no drug price ceilings. Again, as with the passage
of Medicare part D, Pharma raises drug prices to unheard of levels, even older and cheap but
life saving drugs, in the knowledge that a new, large group will have insurance that will pay
for the drugs – a new source of money.
Your assumption that any UBI would not be instantly captured by raised prices is naive, at
best. It's also naive to assume companies would continue to pay wages at the same level to
people still employed, instead of reducing wages and letting UBI fill in the rest. Some
corporations already underpay their workers, then encourage the workers to apply for food
stamps and other public supports to make up for the reduced wage.
The point of the paper is the importance of paid employment to a person's sense of well
being. I agree with the paper.
November 21, 2017 at 11:28 am
For the vast majority, a UBI would be income-neutral – it would have to be, to avoid
massive inflation. So people would receive a UBI, but pay more tax to compensate. The effect
on prices would be zero.
The advantage of a UBI is mostly felt at the lower end, where insecure/seasonal work does
now pay. At the moment, a person who went from farm labourer to Christmas work to summer
resort work in the UK would certainly be working hard, but also relentlessly hounded by the
DWP over universal credit. A UBI would make this sort of lifestyle possible.
Lambert Strether ,
November 22, 2017 at 1:44 am
Good for you, but your perspicacity is not scalable. People are social animals and your attitude toward "the herd", at least as expressed here,
is that of a predator, even if your taste doesn't run toward predation. Social solutions will necessarily be scalable or they won't be solutions for long.
November 21, 2017 at 6:37 am
> the organized herd a herd animal trapped in the herd
I don't think throwing 80% to 90% of the population into the "prey" bucket is especially
perspicacious politically (except, of course, for predators or parasites). I also don't think it's especially perspicacious morally. You write:
Not very practical advice for most, I realize, trapped in the herd as they are in car
payments and mortgages, but perhaps aspirational?
Let me translate that: "Trapped in the herd as many are to support spouses and children."
In other words, taking the cares of the world on themselves in order to care for others.
November 21, 2017 at 7:41 am
Unemployed stay at home dad here. My children are now old enough to no longer need a stay
at home dad. Things I have done: picked up two musical instruments and last year dug a
natural swimming pond by hand. Further, one would need to refute all the increased happiness
in retirement (NBER). Why social security but not UBI? I get being part of the precariat is
painful and this is a reality for most the unemployed no matter where you live in the world.
A UBI is unworkable because it will never be large enough to make people's lives
unprecarious. Having said that, I am almost positive if you gave every unemployed person 24 k
a year and health benefits, there would be a mass of non working happy creative folks.
November 21, 2017 at 8:34 am
UBI seems to me to encourage non-virtuous behavior – sloth, irresponsibility,
fecklessness, and spendthriftness. I like the Finnish model – unemployment insurance is
not limited – except if you refuse work provided by the local job center. Lots of work
is not being done all over America – we could guarantee honest work to all with some
imagination. Start with not spraying roundup and rather using human labor to control weeds
and invasive species.
I do agree that universal health insurance is necessary and sadly Obamacare is not
a different chris ,
November 21, 2017 at 9:19 am
The crux of this problem is the definition used for "non-virtuous behaviour."
A new CCC is a good place to start though. (Your Tax Dollars At Work! [For some definition of
As for BJ above, I would suppose that child rearing was his "employment" for years. good so
far, but his follow-up is untypical. The 'Empty Nester' mother is a well known meme.
November 21, 2017 at 11:18 am
Spendthriftness on 24K a year? Seriously? If we are disgorging unprofessional opinions, I will add my own: sloth and
irresponsibility are more signs of depression rather than freedom from having to work. In
fact, I believe (and I think much of the stuff here) supports the idea that people want to be
seen as useful in some way. Doesn't include me! :) .. unfortunately, I have the charmingly named "dependents" so there
you have it.
November 21, 2017 at 9:23 am
I lived 6 years as a grad student on 24k a year and would say it was easy. Only thing I
would have to had worried about was awful health insurance. A two household each with 24k
would be even easier, especially if you could do it in a low cost area. So I am not sure what
you mean by spendthrift. But again it will never happen, so we will be stuck with what we
have or most likely an even more sinister system. I guess I am advocating for a JG with
unlimited number of home makers per household.
November 21, 2017 at 10:55 am
except if you refuse work provided by the local job center
And who's to say that the local "job center" has work that would be appropriate for every
person's specific talents and interests? This is no better than saying that you should be
willing to go work for some minimum-wage retail job with unpredictable scheduling and other
forms of employer abuses after you lose a high-paying job requiring special talents. I have
to call bullshit on this model. I went through a two-year stretch if unemployment in no small
part because the vast majority of the available jobs for my skill set were associated with
the MIC, surveillance state or the parasitic FIRE sector. I was able to do this because I had
saved up enough FY money and had no debts or family to support.
I can also attest to the negative aspects of unemployment that the post describes. Its all
true and I can't really say that I'e recovered even now, 2.5 years after finding another
November 21, 2017 at 10:42 am
The job center in the neighbouring Sweden had the same function. Had is the important
word. My guess is that the last time someone lost their unemployment insurance payout due to
not accepting a job was in the early 1980s. Prior to that companies might, maybe, possibly
have considered hiring someone assigned to them – full employment forced companies to
accept what was offered. Companies did not like the situation and the situation has since
Now, when full employment is a thing of the past, the way to lose unemployment insurance
payouts is by not applying to enough jobs. An easily gamed system by people not wanting to
work: just apply to completely unsuitable positions and the number of applications will be
high. Many companies are therefore overwhelmed by applications and are therefore often forced
to hire more people in HR to filter out the unsuitable candidates.
People in HR tend not to know much about qualifications and or personalities for the job so
they tend to filter out too many. We're all familiar with the skills-shortage .
Next step of this is that the companies who do want to hire have to use recruitment agencies.
Basically outsourcing the HR to another company whose people are working on commission.
Recruiters sometimes know how to find 'talent', often they are the same kind of people with
the same skills and backgrounds as people working in HR.
To even get to the hiring manager a candidate has to go through two almost identical and
often meaningless interviews. Recruiter and then HR. Good for the GDP I suppose, not sure if
it is good for anything else.
But back on topic again, there is a second way of losing unemployment insurance payout:
Time. Once the period covered has passed there is no more payouts of insurance. After that it
it is time to live on savings, then sell all assets, and then once that is done finally go to
the welfare office and prove that savings are gone and all assets are sold and maybe welfare
might be paid out. People on welfare in Sweden are poor and the indignities they are being
put through are many. Forget about hobbies and forget about volunteering as the money for
either of those activities simply aren't available. Am I surprised by a report saying
unemployed in Sweden are unhappy? Nope.
Jeremy Grimm ,
November 21, 2017 at 1:53 pm
meanwhile NYTimes testimonials Friday, show average family of 4 healthprofit costs
(tripled, due to trump demise ACA) to be $30,000. per year, with around $10,000. deductible
end of any semblance of affordable access, "murKa"
Bill Smith ,
November 21, 2017 at 8:01 am
What do you mean by virtuous behavior?
Where does a character like Bertie Wooster in "Jeeves" fit in your notions of virtuous
behavior? Would you consider him more virtuous working in the management of a firm,
controlling the lives and labor of others -- and humorously helped by his his brilliant
valet, Jeeves, getting him out of trouble?
For contrast -- in class and social status -- take a beer-soaked trailer trash gentleman
of leisure -- and for sake of argument blessed with less than average intelligence -- where
would you put him to work where you'd feel pleased with his product or his service? Would you
feel better about this fellow enjoying a six-pack after working 8 hours a day 5 days a week
virtuously digging and then filling a hole in the ground while carefully watched and goaded
by an overseer? [Actually -- how different is that from "using human labor to control weeds
and invasive species"? I take it you're a fan of chain-gangs and making the poor pick up
trash on the highways?]
What about some of our engineers and scientists virtuously serving the MIC? Is their
behavior virtuous because they're not guilty of sloth, irresponsibility [in executing their
work], fecklessness, and spendthriftness? On this last quality how do you feel about our
government who pay the salaries for all these jobs building better ways to kill and maim?
November 21, 2017 at 11:07 am
How big is the swimming pool and how long did it take? Where did you put the dirt?
November 21, 2017 at 9:32 am
It is a design by David Pagan Butler. It is his plunge pool design, deepend is 14 by 8 by
7 deep. I used the dirt to make swales around some trees. Win win all around.
November 21, 2017 at 11:25 am
curious to know whether you are married to someone with a job?
David Kane Miller ,
November 21, 2017 at 6:55 am
The answer is yes my spouse works. So I do have a schedule of waking up to make her lunch
everyday, meeting her at lunch to walk, and making dinner when she gets home, but we do all
those things on her days off so .
But again we would need to explain away, why people who are retired are happier? Just
because they think they payed into social security? Try explaining to someone on the SS dole
how the government spends money into existence and is not paid by taxes or that the
government never saved their tax money, so there are not entitled to this money.
a different chris ,
November 21, 2017 at 9:23 am
I hated working for other people and doing what they wanted. I began to feel some
happiness when I had a half acre on which I could create my own projects. Things improved
even more when I could assure myself of some small guaranteed income by claiming Social
Security at age 62. To arise in the morning when I feel rested, with interesting projects
like gardens, fences, small buildings ahead and work at my own pace is the essence of delight
for me. I've been following your arguments against UBI for years and disagree vehemently.
November 21, 2017 at 9:42 am
I feel I would behave the same as you, if I had the chance. *But* no statements about
human beings are absolute, and because UBI would work for either of us does not mean it would
work for the majority. Nothing devised by man is perfect.
November 21, 2017 at 9:37 am
It's not you; it's not me. It's those deplorable people.
Lambert Strether ,
November 22, 2017 at 1:56 am
first you had to buy the half acre in a suitable location, then you had to work many years
to qualify for social security, the availability of which you paid for and feel you deserve.
You also have to buy stuff for fences gardens and small buildings. At most that rhymes with a
ubi but is significantly different in it's make up.
November 21, 2017 at 7:16 am
> when I
had a half acre on which I could create my own projects
That is, when you acquired the half acre, which not everyone can do. It seems to
me there's a good deal of projecting going on with this thread from people who are, in
essence, statistical outliers. But Mitchell summarizes the literature:
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on
their own opinions, have known that the importance of work in our lives goes well beyond
the income we earn.
If the solution that works for you is going to scale, that implies that millions more will
have to own land. If UBI depends on that, how does that happen? (Of course, in a
post-collapse scenario, the land might be taken , but that same scenario makes the
existence of institutions required to convey the UBI highly unlikely. )
November 21, 2017 at 7:25 am
Very glad to hear that Bill Mitchell is working on the "Future of Work" book, and to have
this post, and the links to the other segments. Thank you, Yves!
November 21, 2017 at 11:26 am
I don't agree with this statement. Never will. I'm the complete opposite. Give me more
leisure time and you'll find me painting, writing, playing instruments and doing things that
I enjoy. I recall back to when I was a student, I relished in the free time I got (believe me
University gave me a lot of free time) between lectures, meaning I could enjoy this time
pursuing creative activities. Sure I might be different than most people but I know countless
people who are the same.
My own opinion is that root problem lies in the pathology of the working mentality, that
'work' and having a 'job' is so engrained into our society and mindset that once you give
most people the time to enjoy other things, they simply can't. They don't know what to do
with themselves and they eventually become unhappy, watching daytime TV sat on the sofa.
I recall back to a conversation with my mother about my father, she said to me, 'I don't
know how your father is going to cope once he retires and has nothing to do' and it's that
very example of where work for so many people becomes so engrained in their mindset, that
they are almost scared of having 'nothing to do' as they say. It's a shame, it's this
systemic working mentality that has led to this mindset. I'm glad I'm the opposite of this
and proud by mother brought me up to be this way. Work, and job are not in my vocabulary. I
work to live, not live to work.
November 21, 2017 at 12:18 pm
I agree with Andrew. I think this data on the negative effects says more about how being
employed fundamentally breaks the human psyche and turns them into chattel, incapable of
thinking for themselves and destroying their natural creativity. The more a human is molded
into a "good worker" the less they become a full fledged human being. The happiest people are
those that have never placed importance on work, that have always lived by the maxim "work to
live, not live to work". From my own experience every assertion in this article is the
opposite of reality. It is working that makes me apathethic, uncreative, and miserable. The
constant knowing that you're wasting your life, day after day, engaged in an activity merely
to build revenue streams for the rich, instead of doing things that help society or that
please you on a personal level, is what I find misery inducing.
November 21, 2017 at 12:48 pm
I agree. If financial insecurity is removed from the equation -- free time can be used creatively
for self-actualization, whatever form that may take: cultivating the arts, hobbies, community
activities, worthy causes and projects. The ideology wafting from Mitchell's post smells to me like a rationale for wage slavery
(market driven living, neo-liberalism, etc.)
November 21, 2017 at 3:18 pm
Besides how are people supposed to spend their time "exploring other opportunities" when
unemployed anyway? To collect unemployment which isn't exactly paying that much anyway, they
have to show they are applying to jobs. To go to the movies the example given costs money,
which one may tend to be short on when unemployed. They probably are looking for work
regardless (for the income). There may still be some free time. But they could go back to
school? Uh in case one just woke up from a rock they were under for 100 years, that costs
money, which one may tend to be short on when unemployed, plus there is no guarantee the new
career will pan out either, no guarantee someone is just chomping at the bit to hire a newly
trained 50 year old or something. I have always taken classes when unemployed, and paid for
it and it's not cheap.
Yes to use one's time wisely in unemployment in the existing system requires a kind of
deep psychological maturity that few have, a kind of Surrender To Fate, to the uncertainty of
whether one will have an income again or not (either that or a sugar daddy or a trust fund).
Because it's not easy to deal with that uncertainty. And uncertainty is the name of the game
in unemployment, that and not having an income may be the pain in it's entirety.
Yves Smith Post author ,
November 21, 2017 at 5:21 pm
Sadly this breaking down into a "good worker" begins for most shortly after they begin
school. This type of education harms society in a myriad of ways including instilling a
dislike of learning, deference to authority (no matter how irrational and unjust), and a
destruction of a child's natural curiosity.
Yves Smith Post author ,
November 21, 2017 at 4:29 pm
I don't buy your premise that people are "creative". The overwhelming majority do not have
creative projects they'd be pursuing if they had leisure and income. Go look at retirees,
ones that have just retired, are healthy, and have money.
November 21, 2017 at 6:25 pm
You are really misconstruing what the studies have found and misapplied it to your
situation. Leisure time when you have a job or a role (being a student) is not at all the
same as having time when you are unemployed, with or without a social safety net.
November 21, 2017 at 6:37 pm
- Work: that can be me hiring someone to cut my yard, or another type of one-off thing
filled with precariousness.
- Job: that less temporary work, but by no means permanent. Just a step up from the
precariousness of work.
- Career: that is work in the same field over a long period of time and it is more likely
that someone will develop an identity through performing the work. Still precarious, but
maybe more fulfilling.
- Sense of purpose: I was always under the impression that is something you have to give
yourself. If it can be taken away by someone what was the purpose?
Lambert Strether ,
November 22, 2017 at 2:00 am
one often has a role when unemployed: finding work. But it's not a very fulfilling one!
But if one is trying to find work, it's not exactly the absence of a role either even if it
still leaves significantly more free time than otherwise, maybe winning the lottery is the
absence of a role.
But then it's also not like we give people a UBI even for a few years (at any time in
adult life) to get an education. Only if they take out a student loan approaching the size of
a mortgage or have parents willing to pony up are they allowed that (to pay not just for the
education but to live because having a roof over one's head etc. is never free, a UBI via
debt it might be called).
November 21, 2017 at 7:47 am
> Give me more leisure time and you'll find me painting, writing, playing instruments
and doing things that I enjoy.
Nothing to breed resentment of "the creative class" here! Blowback from Speenhamland
brought on the workhouses, so be careful what you wish for.
November 21, 2017 at 10:00 am
Again the UBI vs JG debate .
UBI won't happen and JG has been tried (and failed).
The argument that JG would allow the public sector to hire more people is demeaning to
people already employed in the public sector and demonstrably false – people are hired
into the public sector without there being a JG. It is most certainly possible to be against
a JG while wanting more people working in the public sector.
The way forward is to have a government acting for people instead of for corporations.
Increase the amount of paid vacations, reduce the pension age and stop with the Soviet style
worship of work: While some people are apparently proud of their friends and relatives who
died while at work it is also possible to feel sad about that.
November 21, 2017 at 10:27 am
JG has been tried (and failed).
When and where? The NCCC seemed to work pretty good here in the Western US.
Yves Smith Post author ,
November 21, 2017 at 4:39 pm
The JG was tried in Communist countries in Europe, Asia and Americas. The arguments then
and there were the same as here and now, made by the same type of social 'scientists'
Would a JG be different here and now as the Republicans and Democrats are representing the
best interests of the people? Or are they representing the same kind of interests as the
Communist parties did?
November 21, 2017 at 10:00 am
Data, please. The USSR fell because it was spending on its military to keep up with the
US, a much larger economy. Countering your assertion we have this:
November 21, 2017 at 10:15 am
As long as people argue that "it's not fair" to fix the inequality issue and employ things
like debt jubilee or student loan forgiveness, or if we fix the ridiculous cost of health
care what will all those insurance agents do then we will wind up with the real kind of class
warfare, rather than the current punching from the top down, the punching will come from the
bottom, because the situation is not fair now, it's just TINA according to those who profit
from it. In my own life there is a balance of creativity and work, and I find work enables my
creativity by putting some pressure on my time, i.e., I get up earlier, I practice at 8:30 am
instead of sleeping til 10 and winding up with S.A..D., I go to bed rather than watch tv or
drink to excess.. in other words i have some kind of weird schedule, I have days off sort of
When I've been unemployed I feel the way s described in the article. I find the arguments in
favor of ubi tend to come from people who already have assets, or jobs, or family who they
take care of which is actually a job although uncommonly described as such. The only truth I
see in real life is that the unemployed I am intimately familiar with first are mentally
oppressed by the notion that to repair their situation will require they work every waking
hour at substandard wages for the rest of their life and that is a major barrier to getting
started, and that is a policy choice the gov't and elite classes purposefully made which
created the precariat and will be their undoing if they are unable to see this.
November 21, 2017 at 10:08 am
Hey look, even the msm is looking at it
November 21, 2017 at 7:53 am
As someone who works in the public sector I never quite thought of it like that,
November 21, 2017 at 10:45 am
Disappointing that there's no analysis in this context of less employment, as in shorter
work weeks and/or days, as opposed to merely all or none.
November 21, 2017 at 11:31 am
see – hear
(but no possibility without healthcare access, rather than healthtprofit)
November 21, 2017 at 1:04 pm
Interesting point. I read a science fiction story in which the protagonist arrives for
work at his full time job at 10:00 AM, and he's finished for the day at 4:00 PM. I can't
remember the name of the story or novel, unfortunately.
Lambert Strether ,
November 22, 2017 at 2:02 am
Agreed. And they already have it in places like Denmark. Why don't we talk about that? It
actually exists unlike utopian schemes for either total UBI or total work guarantee
(government job creation is not utopian, but imagining it will employ everyone is, and I
would like the UBI to be more widely tried, but in this country we are nowhere close). Funny
how utopia becomes more interesting to people than actual existing arrangements, even though
of course those could be improved on too.
The Danish work arrangement is less than a 40 hour week, and mothers especially often work
part-time but both sexes can. It's here in this country where work is either impossibly
grueling or you are not working. No other choice. In countries with more flexible work
arrangements more women actually work, but it's flexible and flexible for men who choose to
do the parenting as well. I'm not saying this should be for parents only of course.
Otis B Driftwood ,
November 21, 2017 at 7:58 am
Because the JG sets the baseline for employment, which private companies must meet, the JG
(unlike the UBI) can do this.
November 21, 2017 at 8:38 am
My own situation is that I am unhappy in my well-paying job and would like nothing more
than to devote myself to other interests. I'm thirty years on in a relationship with someone
who grew up in bad financial circumstances and panics whenever I talk about leaving my job. I
tell her that we have 2 years of living expenses in the bank but I can't guarantee making the
same amount of money if I do leave my job. She has a job that she loves and is important and
pays barely 1/2 of my own income. So she worries about her future with me. She worries about
losing her home. I suppose that makes me the definition of a wage slave. And it makes for an
increasingly unhappy marriage. I admire those who have faced similar circumstances and found
a way through this. Sorry to vent, but this topic and the comments hit a nerve with me and
I'm still trying to figure this out.
November 21, 2017 at 1:11 pm
We are presently going through a period where that "two year cushion" has evaporated, for
various reasons. We are seeing our way through this, straight into penury and privation.
Take nothing for granted in todays' economy.
November 21, 2017 at 12:47 pm
yes find the lower paying job that you like more first. If you just quit for nothing in
the hopes of finding one it might not happen. Of course unemployment also happens sometimes,
whether we want it or not.
Lambert Strether ,
November 22, 2017 at 2:03 am
The newer generations are worse when it comes to lifestyle. Those of that are older can at
least remember a time without cellphones internet streaming services leasing a new car every
2 years etc.
What about the young? My niece and her husband should be all set , his mom sunk money into
a home on the condition she moved into a mother in law apartment. So far so good right? 2
years in they are imploding even with the free child care she provides. Combined their
wireless bill a month is over $300. The sit on the couch side by side and stream netflix
shows to dueling iphones in front of a 65 inch tv that is not even turned on. Wearing
headphones in silence.
Both driving new vehicles , both have gym memberships they don't use . They buy lattes 3
or 4 times a day which is probably another 500 a month.
My uncle passed away recently and my niece asked if she was in the will. It was literally
her only communication on the subject. They are going under and could easily trim a few
thousand a month from the budget but simply won't. No one in the family is going to lift a
finger for them at this point they burned every possible bridge already. I have seen people
living in cars plenty lately but I think these will be the first I see to living in brand new
Somewhere along the line they got the impression that the american dream was a leased car
a starbucks in one hand and an iphone in the other .
Confront them with the concept of living within a paycheck and they react like a patient
hearing he has 3 months to live.
November 22, 2017 at 3:00 am
Ah. Reagan's "welfare queens" updated. Kids these days!
November 21, 2017 at 8:00 am
Yeah being poor, never mind growing up poor, just well and truly sucks and it can really
@@@@ you up. Gives people all sorts of issues. I'm rather like her, but I have had the joy of
multi-hour commutes to unexciting soul crushing work. Happy, happy, joy, joy! However don't
forget that with the current political economy things are likely to go bad in all sorts of
ways. This whole site is devoted to that. My suggestion is to keep the job unless you have
something lined up. Not being able to rent has it own stresses too. Take my word for it.
November 21, 2017 at 9:19 am
I may be engaging in semantics but I think conflating work and jobs makes this article a
bit of a mixed bag. I know plenty of people who are terribly unhappy in their jobs, but
nonetheless extract a sense of wellbeing from having a stable source of INCOME to pay their
bills (anecdotally speaking, acute stress from recent job losses is closely linked to
uncertainty about how bills are going to be paid, that's why those with a safety net of
accumulated savings report less stress than those without). Loss of status, social standing
and identity and the chronic stress borne from these become evident much later I.e. when the
unemployment is prolonged, accompanied of course by the still unresolved top-of-mind concern
of "how to pay the bills".
As such, acute stress for the recently unemployed is driven by financial/income
uncertainty (I.e. how am I going to pay the bills) whereas chronic stress from prolonged
unemployment brings into play the more identity driven aspects like loss of social standing
and status. For policy interventions to have any effects, policy makers would have to
delineate the primary drivers of stress (or lack of wellbeing as the author calls it) during
the various phases of the unemployment lifecycle. An Unemployment Insurance Fund (UIF) like
we have here in South Africa appears to address the early stages of unemployment, and the
accompanying acute stress, quite well by providing the income guarantee (for six months) that
cushions the shock of losing a job. What's still missing of course are interventions that
promote the quick return to employment for those on UIF, so maybe a middle of the road
solution between UBI and a jobs guarantee scheme is how policy makers should be framing this,
instead of the binary either/or we currently have.
November 21, 2017 at 10:06 am
Lots' of people think they're unhappy with their jobs. Let them sit unemployed for 9
months and ask them if they want that job back. The usual parade of anecdata is on display here in the comments. Mitchell's real data and
analysis in the article above still stand.
November 21, 2017 at 1:15 pm
If you'd read through my comment, and not rushed through it with a view of dishing out a
flippant response, you'd have seen that nowhere do I question the validity of his data, I
merely question how the argument is presented in some areas (NC discourages unquestioning
deference to the views of experts no??). By the way, anecdotes do add to richer understanding
of a nuanced and layered topic (as this one is) so your dismissal of them in your haste to
invalidate people's observations is hardly helpful.
Lambert Strether ,
November 22, 2017 at 2:04 am
Yes people many not like their jobs but prefer the security of having them to not. Yes
even if the boss sexually harasses one (as we are seeing is very common). Yes even if there
is other workplace abuse. Yes even when it causes depression or PTSD (but if one stays with
such a job long term it ruins the self confidence that is one prerequisite to get another
job!). Yes even if one is in therapy because of job stress, sexual harassment or you name it.
The job allows the having health insurance, allows the therapy, allows the complaining about
the job in therapy to make it through another week.
November 21, 2017 at 8:13 am
> The usual parade of anecdata is on display here in the comments. Mitchell's real data
and analysis in the article above still stand.
Ding ding ding!
November 21, 2017 at 1:40 pm
When unemployed, the stress of worry about money may suppress the creative juices.
Speaking from experience. People may well 'keep looking for jobs' because they know ultimately they need a job with
steady income. The great experience of some freelancers notwithstanding, not all are cut out
I would love to see some more about happiness or its lack in retirement–referenced
by stay-at-home dad BJ , above.
I wonder, too, about the impact of *how* one loses one's job. Getting laid off vs fired vs
quitting vs involuntary retirement vs voluntary, etc feel very different. Speaking from
experience on that, too. I will search on these points and post anything of interest.
November 21, 2017 at 10:23 am
There are also other things that are degrading about the very process of being unemployed
not mentioned here. What about the constant rejection that it can entail? One is unemployed
and looking for work, one sends out resumes, many of them will never be answered, that's
rejection. Then if one is lucky they get interviews, many will never lead to jobs, yet more
rejection. Does the process of constant rejection itself have a negative effect on a human
being whether it's looking for jobs or dates or whatever? Isn't it learned helplessness to if
one keeps trying for something and keeps failing. Isn't that itself demoralizing entirely
independent of any doubtful innate demoralizing quality of leisure.
Yves Smith Post author ,
November 21, 2017 at 5:15 pm
I am not so sure if I agree with this article. I think it really depends on whether or not
you have income to support yourself, hate or love your job, and the amount of outside
interests you have, among other things. Almost everyone I know who lives in the NYC area and
commutes into the city .doesn't like their job and finds the whole situation "soul-crushing".
Those that live in Manhattan proper are (feel) a bit better off. I for one stopped working
somewhat voluntarily last year. I write somewhat because I began to dislike my job so much
that it was interfering with my state of well being, however, if I had been allowed to work
remotely I probably would have stuck it out for another couple of years.
I am close enough to
62 that I can make do before SS kicks in although I have completely changed my lifestyle
– i.e. I've given up a materialistic lifestyle and live very frugally.
saved for many years once I decided to embark on this path. I do not find myself depressed at
all and the path this year has been very enriching and exciting (and scary) as I reflect on
what I want for the future. I'm pretty sure I will end up moving and buying a property so
that I can become as self sufficient as possible. Also, I probably will get a job down the
line – but if I can't get one because I am deemed too old that will be ok as well. The
biggest unknown for me is how much health insurance will cost in the future .
November 22, 2017 at 3:30 am
The article made clear that the studies included "unemployed but with income" from
government support. It is amazing the degree to which readers ignore that and want to make
the findings about "unemployed with no income".
November 21, 2017 at 10:43 am
That's because we Americans all have work=good=worthy=blessed by God while
workless=scum=worthless=accursed by God engraved into our collective soul. Our politics, our
beliefs, are just overlays to that.
Even when we agree that the whole situation just crushes people into paste, and for which
they have no defense regardless of how hard they work, how carefully they plan, or what they
do, that underlay makes use feel that this is their/our fault. Any suggestions that at least
some support can be decoupled from work, and that maybe work, and how much you earn, should
not determine their value, brings the atavistic fear of being the "undeserving poor,"
parasites and therefore reprobated scum.
So we don't hear what you are saying without extra effort because it's bypassing our
Left in Wisconsin ,
November 21, 2017 at 12:02 pm
Add my voice to those above who feel that forced labor is the bane of existence, not the
wellspring. All this study says to me is that refusing to employ someone in capitalist
society does not make them happy. It makes them outcasts.
So, I say yes to a JG, because anyone who wants work should be offered work. But at the
same time, a proper JG is not forced labor. And the only way to ensure that it is not forced
labor, is to decouple basic needs from wage slavery.
November 21, 2017 at 1:31 pm
I am critical of those who distinguish between the job and the income. Of course the
income is critical to the dignity of the job. For many jobs, it is the primary source of that
dignity. The notion that all jobs should provide some intrinsic dignity unrelated to the
income, or that people whose dignity is primarily based on the income they earn rather than
the work they do are deluded, is to buy in to the propaganda of "passion" being a requirement
for your work and to really be blind to what is required to make a society function. Someone
has to change the diapers, and wipe the butts of old people. (yes, I've done both.) It
doesn't require passion and any sense of satisfaction is gone by about the second day. But if
you could make a middle class living doing it, there would be a lot fewer unhappy people in
It is well known that auto factory jobs were not perceived as good jobs until the UAW was
able to make them middle class jobs. The nature of the actual work itself hasn't changed all
that much over the years – mostly it is still very repetitive work that requires little
specialized training, even if the machine technology is much improved. Indeed, I would guess
that more intrinsic satisfaction came from bashing metal than pushing buttons on a CNC
machine, and so the jobs may even be less self-actualizing than they used to be.
The capitalist myth is that the private sector economy generates all the wealth and the
public sector is a claim on that wealth. Yet human development proves to us that this is not
true – a substantial portion of "human capital" is developed outside the paid economy,
government investment in R&D generates productivity growth, etc. And MMT demonstrates
that we do not require private sector savings to fund public investment.
We are still a ways from having the math to demonstrate that government investment in
caring and nurturing is always socially productive – first we need productivity numbers
that reflect more than just private sector "product." But I think we are moving in that
direction. Rather than prioritize a minimum wage JG of make-work, we should first simply pay
people good wages to raise their own children or look after their elderly and disabled
relatives. The MMT JG, as I understand it, would still require people to leave their kids
with others to look after them in order to perform some minimum wage task. That is just
Whiskey Bob ,
November 21, 2017 at 1:34 pm
Maybe it's dumb, it's certainly dumb in a system like the U.S. where work is brutal and
often low paid and paid childcare is not well remunerated either. But caretakers also working
seems to work in countries with greater income equality, good job protections, flexible work
arrangements, and a decent amount of paid parental leave – yea Denmark, they think
their children should be raised by professionals, but also work-life balance is still pretty
November 21, 2017 at 2:28 pm
My take is that capitalism has made the benefits and malus of having a job so ingrained
into culture and so reinforced. Having a job is so closely linked to happiness because it
gives you the money needed to pursue it.
A job affords you the ability to pursue whatever goals you want within a capitalist
framework. "Everything" costs money and so having a job gives you the money to pay for those
costs and go on to fulfill your pursuit of happiness.
Analyzing whether people are happy or not under these conditions seem apparent that it is
going to lead to results heavily biased towards finding happiness through employment.
The unemployed are often living off someone else's income and feel like an undeserving
parasite. Adults are generally ingrained with the culture that they have to grow up and be
independent and be able to provide for a new family that they will start up. Becoming
unemployed is like being emasculated and infantile, the opposite of what is expected of
There's also that not having a job is increasingly being punished especially in the case
of America. American wages have stayed either largely static or have worsened, making being
unemployed that much more of a burden on family or friends. Unemployment has been demonized
by Reaganism and has become systematically punishable for the long term unemployed. If you
are unemployed for too long, you start losing government support. This compounds the frantic
rush to get out of unemployment once unemployed.
There is little luxury to enjoy while unemployed. Life while unemployed is a frustrating
and often disappointing hell of constant job applications and having many of them lead to
nothing. The people providing support often start to become less so over time and become more
convinced of laziness or some kind of lack of character or willpower or education or ability
or whatever. Any sense of systemic failure is transplanted into a sense of personal failure,
especially under neoliberalism.
I am not so sure about the case of Europe and otherwise. I am sure that the third world
often has little or no social safety nets so having work (in exploitative conditions in many
cases) is a must for survival.
Anyways, I wonder about the exact methodologies of these studies and I think they often
take the current feelings about unemployment and then attempt to extrapolate talking points
for UBI/JG from them. Yes, UBI wouldn't change culture overnight and it would take a very,
very long time for people to let down their guard and adjust if UBI is to be implemented in a
manner that would warrant trust. This article seems to understand the potential for that, but
decides against it being a significant factor due to the studies emphasizing the malus of
I wonder how different the results would be if there were studies that asked people how
they would feel if they were unemployed under a UBI system versus the current system. I know
a good number of young people (mostly under 30) who would love to drop out and just play
video games all day. Though the significance of such a drastic demographic shift would
probably lead to great political consequences. It would probably prove the anti-UBI crowd
right in that under a capitalist framework, the capitalists and the employed wouldn't
tolerate the unemployed and would seek to turn them into an underclass.
Personally I think a combination of UBI and JG should be pursued. JG would work better
within the current capitalist framework. I don't think it is without its pitfalls due to
similar possible issues (with the similar policy of full employment) either under
Keynesianism (e.g. Milton Friedman sees it as inefficient) or in the USSR (e.g. bullshit
jobs). There is the possibility of UBI having benefits (not having the unemployed be a burden
but a subsidized contributer to the economy) so I personally don't think it should be fully
disregarded until it is understood better. I would like it if there were better scientific
studies to expand upon the implications of UBI and better measure if it would work or not.
The upcoming studies testing an actual UBI system should help to end the debates once and for
November 21, 2017 at 5:30 pm
I have a creative pursuit (no money) and a engineering/physical science technical career
(income!). I am proficient in and passionate about both. Over the last few years, the
technical career became tenuous due to consolidation of regional consulting firms (endemic to
this era)- wages flat to declining, higher work stress, less time off, conversation to
contact employment, etc.- which has resulted in two layoffs.
During the time of tenuous employment, my art took on a darker tone. During unemployment the
art stopped altogether.
I'm recently re-employed in a field that I'm not proficient. Both the peter principle and
imposter syndrome apply. My art has resumed, but the topics are singular about despair and
work, to the point that I feel like I'm constantly reworking the same one piece over and over
again. And the quality has plummeted too.
In some fields (e.g. engineering), being a wage slave is the only realistic option due to
the dominance of a small number of large firms. The big players crowd out independents and
free lancers, while pressuring their own employees through just-high-enough wages and
limiting time off. Engineering services is a relationship- based field, and the big boys (and
they are nearly all boys) have vastly bigger networks to draw work from than a small firm
unless that small firm has a big contact to feed them work (until they get gobbled up). The
big firms also have more areas of expertise which limits how useful a boutique firm is to a
client pool, except under very narrow circumstances. And if you are an introvert like most
engineering people, there's no way to compete with big firms and their marketing staff to
expand a network enough to compete.
In that way, consulting is a lot like art. To make a living at it you need either contacts or
a sponsor. Or an inheritance.
nihil obstet ,
November 21, 2017 at 6:07 pm
I would be interested to know what the definition of unemployment was for the purpose of
this study (I couldn't find it in the supplied links). If it's simply "people who don't have
a job," for example, then it would include the likes of the idle rich, retirees, wards of the
state, and so on. Binary statements like this one do make it sound like the broad definition
is the one in use:
When considering the world's population as a whole, people with a job evaluate the
quality of their lives much more favorably than those who are unemployed.
The conclusion seems at odds with results I've seen for some of those groups – for
example, I thought it was fairly well accepted that retirees who are supported by a
government plan that is sufficient for them to live on were generally at least as happy as
they had been during their working life.
If, on the other hand, the study uses a narrow definition (e.g. people who are of working
age, want a job or need one to support themselves financially, but can't find one) then the
conclusion seems a lot more reasonable. But that's a heavily loaded definition in economic
and cultural terms. In that case, the conclusion (people are happier if they have a job) only
holds true in the current prevailing model of society. It doesn't rule out the possibility of
structuring society or the economy differently in such a way that people can be non-working
and happy. The existence of one such population already (retirees) strongly suggests that
outcomes like this are possible. A UBI would be an example of just such a restructuring of
society, and therefore I don't think that this study and its result are necessarily a valid
argument against it.
November 21, 2017 at 6:52 pm
Which makes a person happier -- being considered worthless by one's society or valuable?
How many studies do we need to answer that question? Apparently, a lot, because studies like
this one keep on going. The underlying assumption is that jobs make one valuable. So if you
don't have a job you're worthless. Now, who's happier on the whole, people with jobs or the
unemployed? That's surely good for a few more studies. Did you know that members of socially
devalued groups (minorities, non-heteros, and the like) have higher rates of dysfunction,
rather like the unemployed? Hmm, I wonder if there's maybe a similar principle at work. And
my solution is not to turn all the people of color white nor to change all the women to men
nor to "cure" gays. Well, maybe a few more conclusive studies of this kind will convince me
that we must all be the same, toeing the line for those whom it has pleased God to dictate
our values to us.
I am convinced that we shouldn't outlaw jobs, because I believe the tons of stories about
happy people in their jobs However, I also believe we shouldn't force everyone into jobs,
because I know tons of stories about happy people without jobs. You know, the stories that
the JG people explain away: parents caring for their children (JG -- "oh, we'll make that a
job!"), volunteers working on local planning issues (JG -- "oh, we'll make that a job, too.
In fact, we'll make everything worth doing a job. The important thing is to be able to force
people to work schedules and bosses, because otherwise, they'll all lie around doing nothing
and be miserable"), the retired (JG -- "that's not really the same, but they'd be better off
staying in a job"). And this is all before we get to those who can't really hold a job
because of disability or geography or other responsibilities.
I support the JG over the current situation, but as to what we should be working for, the
more I read the JG arguments, the more paternalistic and just plain narrow minded judgmental
Lambert Strether ,
November 22, 2017 at 1:24 am
If someone else gives you a sense of purpose and takes it away what was the purpose?
Data like that provided by Mitchell is important to demolishing the horrid "economic
anxiety" frame much beloved by liberals, especially wonkish Democrats.* It's not (a) just feelings , to be solved by scented candles or training (the liberal version of
rugged individualism) and (b) the effects are real and measurable. It's not surprising, when
you think about it, that the working class is about work .
* To put this another way, anybody who has really suffered the crawling
inwardness of anxiety, in the clinical sense, knows that it affects every aspect of one's
being. Anxiety is not something deplorables deploy as cover for less than creditable
I have gotten many question about revisions to the Reader Emails on
Birth/Death Model and Unemployment Rate.
In case you missed it the
BLS has admitted that its Birth/Death Model has overestimated jobs by
about 800,000. The New York Times talked about this in
The Labor Department said that it planned to revise the job figures
by subtracting more than 800,000 jobs that it had wrongly estimated
were filled by workers.
The so-called "benchmark revision" that was announced today will
not formally be incorporated into the job figures until February,
and could be revised. But the figures indicate that last March the
government overestimated the total number of jobs by 824,000, or
0.6 percent. Its overestimate of private-sector employment was even
greater - 855,000 jobs, or 0.8 percent.
The culprit is probably the much maligned birth-death model, although
Victoria Battista, an economist at the Bureau of Labor Statistics,
said the bureau was looking into other possible issues, such as
changing response rates to the questionnaire sent out by the bureau
to employers each month.
That model adds in jobs assumed to have been created by employers
who are too new to have been added to the survey, and subtracts
jobs from employers assumed to have failed and therefore not responded
to the bureau's survey.
I have been complaining for years that the Birth/Death model was
I include in every monthly jobs post a statement similar to this one:
"At this point in the cycle birth death numbers should have been massively
contracting for months. The BLS is going to keep adding jobs through
the entire recession in a complete display of incompetence."
At least they finally understand there is a problem, years after it
was obvious to anyone using some semblance of common sense.
Birth Death Model Revisions 2009
click on chart for sharper image
Given those fantasyland projections I have serious doubts that 800,000
take aways is enough.
Short Comings In BLS Birth Death Model
Inquiring minds are reading
Recession shows shortcomings in U.S. economic data.
The U.S. government is having a tough time guesstimating how many
small businesses failed in this recession, casting doubt on the
reliability of vital data on employment and economic growth.
Somehow throughout this entire recession, the BLS model showed that
more jobs were being created by new businesses (birth) than those lost
by businesses going out of businesses. When you think about all the
small 1-2 person businesses in real estate that folded shop I just do
not buy the BLS's data.
The formula the U.S. Labor Department designed to help it deliver
timely, thorough monthly employment reports broke down in the heat
of the financial crisis, miscounting the number of jobs by an estimated
824,000 in the year through March.
That model appears to have misjudged how many companies went out
of business during the recession, meaning the labor market was even
weaker than initially thought when President Barack Obama took office
in January. More recent figures may still be underestimating job
losses now, but it will be many months before the Labor Department
One characteristic of this recession is that it has hit small businesses
especially hard, driving down demand and choking off vital sources
of credit at the same time.
Jan Hatzius, an economist at Goldman Sachs in New York, thinks that
is distorting not only the employment data, but also figures for
retail sales, durable goods and even the biggest economic indicator
of all -- gross domestic product.
Indeed, 43,546 businesses filed for bankruptcy in 2008, the highest
tally since 1998, and the pace has picked up this year, according
to data from the American Bankruptcy Institute.
In the second quarter of 2009, the most recent data available, 16,014
businesses filed for bankruptcy, up from 14,319 in the previous
three-month period and the highest mark in 16 years.
The Labor Department simply can't catch all those failures fast
enough to compile its monthly employment reports, which are normally
released on the first Friday after the end of the month. So it must
make an educated guess.
Each month, the department surveys about 160,000 firms to get a
sense of how many jobs were added or cut. It also uses the "birth-death"
model to try to estimate out how many companies opened or closed.
Once a year, the department looks at unemployment insurance tax
records to get a more accurate picture of how many people were employed,
and matches that up with its own data. Each February, it tries to
reconcile these differences by releasing a "benchmark revision".
Normally, the discrepancy is modest. This coming February, it is
likely to be about 824,000, according to the Labor Department's
preliminary estimate last month. That would mean instead of about
7.2 million jobs lost since the start of the recession in December
2007, there were more like 8 million.
"Preliminary research indicated that a big portion of that was a
result of a breakdown in the birth-death model," said Chris Manning,
the department's benchmark branch chief.
They are revising it, but I do not think by enough.
Reader Question On The Unemployment Rate
Kevin (and many others have asked) "What exactly do you think is going
to happen to all these missed unemployed people? Is the unemployment
rate going to spike in January, or does it get added in gradually?"
In terms of the unemployment rate, what happens is nothing. The unemployment
rate is measured by the Household Survey not the Establishment Survey.
The Birth/Death Revisions are to the Establishment Survey.
So while there will be dramatic revisions to the Establishment Survey
in terms of jobs lost in the January report (published on the first
Friday in February), it will not affect the unemployment rate.
Given how screwed up the Establishment Survey is (not that I have any
love affair with the Household Survey), when the economy does turn it
will likely show up in the Household Survey first. This is what happened
at the end of the last recession and it will likely happen again.
There has to be a better way than either of these methods.
Manning said his department was still trying to figure out what
went awry this time. One possibility is that the model was not sensitive
enough to the credit crunch, which choked off borrowing and pushed
many companies into bankruptcy.
Mike "Mish" Shedlock
"We're researching ways to better understand the limitations of
the model, in particular when it comes to responding to economic
shocks," he said.
Manning said his department was still trying to figure out what
went awry this time. One possibility is that the model was not sensitive
enough to the credit crunch, which choked off borrowing and pushed
many companies into bankruptcy.
"We're researching ways to better understand the limitations of
the model, in particular when it comes to responding to economic
shocks," he said.
"That's one of the best firsts in history. I love this.
800,000 jobs falsely added. So where does that put the
unemployment rate? is my burning question.
I do love their little deceptive
touches. I love how they're going to do the
revisions in February, so that nothing will disturb the nation's
psychological security - for example, a sudden revising upward
of the unemployment rate above 11%.
The recovery is a combination of reflation, Fed leverage,
massive government spending, Wall Street corruption feeling
sated and happy about itself again, and a blanket of renewed
false optimism spread tightly across the face of proletarian
We'll save the revisions for later.
"Pseudonymous, Mish addresses your question in the latter
part of his post:
Kevin (and many others have asked)
"What exactly do you think is going to happen to all
these missed unemployed people? Is the unemployment rate
going to spike in January, or does it get added in
In terms of the unemployment rate, what happens is nothing.
The unemployment rate is measured by the Household Survey not
the Establishment Survey. The Birth/Death Revisions are to the
So while there will be dramatic revisions to the
Establishment Survey in terms of jobs lost in the January report
(published on the first Friday in February), it will not affect
the unemployment rate.
"Forget about the unemployment numbers. All one needs to look
at is total employment as a percentage of the population. That
number has been going down for 10 years.
"Recent news stories have claimed that as the year comes to
an end, around 1 million unemployed will have used up all
available benefits. As a nice coincidence, their benefits ending
will begin to take hold just as Banks and Wall-Street firms
begin to payout year end bonuses. Figures vary, but all told it
is going to be way up into the tens of billions. It should make
for an nice holiday contrast. The bailed out bankers and
wall-street crowd will cash in fortunes enough to last any
normal person half a life time or more. That this is only
possible due to Taxpayer payouts to the financial services
industry shouldn't spoil the gusto of the banker's and street
firm's holiday festivities.
Lets all wish them well in spending their riches. New homes, new
cars, new mistresses, luxury clothes and vacations should be a
noticeable boost to a sagging consumer economy. The Fed has done
it's work well, and there are the payouts to prove it.
If you add up the household survey job losses this recession
(B2) you get just over 9M as of Oct. HS is very volatile, but if
you look at trailing 3-month avg numbers you get a pretty smooth
and IMO accurate story of what is happening to headline jobs
(you could plot and post this). HS shows that real job losses
began in dec 06, a year before the recession supposedly began.
Oct was particularly troubling because it shot back up to over
500k, completely reversing the Jun-Jul low numbers. Not a good
I downloaded the spreadsheet with future job loss
guesstimates... consider 400k balance of this year, 200k avg
2010, 0 in 2011, and then just enough to maintain status quo
(100k) for four years. Where, exactly, are the new jobs coming
from? Boomers will let the SUV's slip from their cold, dead
hands before letting loose of their jobs...
"So the NYT has written about the US government's penchant
for lying in its stats?
Next thing the NYT will show that it's catching up by
promulgating the idea - 10 years after sentient beings knew it -
that Greenspan was a hack moron who failed as a consultant and
HAD to suckle at teh tax teat to avoid dying of starvation?
Or they might reveal that Keynes studied economics for precisely
ONE term (note: not a semester - a TERM... shorter) and got his
job through nepotism.
For the record, I first wrote about the CES birth-death model
back in 2001 (sadly the archive of the place I was at is now no
To give a favour, here's something from DECEMBER 2004 which is
still online (at http://www.marketmentat.com/markets/oz/jobs-report-even-worse-than-it-looked/)...
"The CES net birth death model – which I prefer to call the
"fictional job creation" model – added 54,000 phantom jobs,
which (as luck would have it) offset the 54,000 downward
revision to September and October!!!
So, there's been a 54,000 "reduction of history", offset by
54,000 phantoms. Without those phantoms, the job situation in
the US looks dire; and phantoms don't spend anything – not even
on hedonically adjusted stuff."
There is nothing new under the sun - just as the central
planners of the old Soviet Union used to regularly lie to their
proles, so too the ponerocracy of the US does likewise, while
shovelling money to their cronies in ways that would make an
African dictator blush.
Fortunately (for the brown bits of the world) the US is now last
century's story, much as England was waning in the first third
of the 20th century and Rome was on the skids after it started
clipping its coin.
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