Summary: Today we have a graphic that tells us much about both the recovery and the trends shaping the New America — growth in food stamps vs. jobs. What forces drive these contrasting trends, and how will they help reshape America?
Below we see the US recovery in one graphic, from the February 4 issue of Bloomberg Briefs. It shows the weakness of the recovery, but has another and deeper lesson for us. The pressure of the Great Recession on business accelerated existing political and economic trends. As a result the New America has an increasing fraction of jobs that are some combination of minimum-wage, temporary, part-time, and with no benefits (Wal-Mart and Amazon have perfected these tactics; see the links below).
Free competition, open borders to immigration, and the destruction of private sector unions all contributed to this situation. Despite what we’re told, this was not inevitable or immutable by public policy. The nations of Northern Europe have shown this by the successful protection of their middle classes.
Foreshadowing the next wave of automation
This structural change in the bargaining power of management and labor puts us in a weak position to cope with the robot revolution, the next wave automation (see posts below for descriptions and analysis). Employers have learned to structure their workforce to minimize wages — and prevent unionization (including defanging the New Deal’s labor protection laws and agencies). The next wave of automation will further erode away both jobs and skill premiums, pushing more people into the ranks of the marginal workers.