Björn Rust (he/him) is a post-industrial designer, researcher and educator, developing context-sensitive solutions in service of people and the planet.

Recent writings

  1. On the limits of orthodox economic theory and the role of design in supporting state economic policy
  2. Opportunity hoarding
  3. Doing away with bullshit

Zero-sum workforce

reflection

It may not feel like it at times, with periodic warnings that emerging technologies threaten to displace the middle-class labour force, but opportunities still remain. One can be easily persuaded by this centuries-old dystopian trope, despite evidence that transitioning from one technological paradigm to another does not have to cost jobs.

But what of more present concerns that increasing labour productivity or immigration might increase unemployment? Happily, these too are said to be unfounded. The OECD reports that GDP per hour worked has fallen significantly since the mid-1990s, and while the migrant population has grown considerably over the past 50 years, it has only increased marginally as a percentage of the total human population.

But most importantly, work is not finite—the notion that the amount of work to be done is fixed, and therefore increases in productivity or the number of workers in the system reduces the number of available jobs, is a fallacy.

In an interview with Planet Money, professor of economics at MIT David Autor reveals that a hundred years ago Americans spent something in the order of 70 percent of every dollar on necessities like housing, food and clothing. Today he estimates they spend only 40 percent on such things, freeing up the remaining 30 percent for non-essentials—and this additional spending creates new jobs.

If we compare the employment rate of prime-age (25–54 years old) men and women in 1967, with that of 2006, we can see this growth in action. According to figures presented by Casey B. Mulligan, an economics professor at the University of Chicago, 14 percent of the full-time workforce during 1967 were female, compared to the 39 percent which were male. By 2006, the number of women employed in full-time positions had increased to 26 percent. If we submit to the zero-sum theory, the number of males with full-time employment should have fallen to 27 percent, when in fact it remained at 39 percent.

So as Autor indicates, there is no evidence that we are running out of jobs, and yet, during times of low employment as we are currently facing, zero-sum thinking and protectionist attitudes still tend to emerge. »If the public no longer believes that the economy can create new jobs, it will demand that we protect old jobs from new competitors in China and elsewhere«, writes Paul Krugman for the The New York Times. However, the ‘threat’ needn’t be foreign, as demonstrated during the Great Depression of the 1930s. At that time, the United States barred married women from some jobs—a policy which appears to be built on the premise that each woman hired represents a man not hired, which we see from Mulligan’s figures just isn’t true.

The fears that drive this flimsy logic—and tends to further punish marginalised groups—is referred to as the lump-of-labour fallacy. But as Jacob Goldstein, co-host of Planet Money points out »... the fallacy of the fallacy is that that means there’s nothing to worry about«. Autor agrees, citing that for people with high levels of education, a proportion of the employment growth we’ve experienced is in fairly low-paid, economically insecure personal services, like hospitality.

Inspired by: Planet Money: 13,000 Economists. 1 Question
Reference: The New York Times