I was thinking today, that maybe the problem with the economy is that we all work too much. Productivity has to reach a point when it becomes a bad thing. Not just because we are all too busy working to go out and buy or enjoy anything, but because our productivity has outpaced our ability to innovate and create new companies. Productivity is good as long as we keep innovating and creating new jobs… because well, there are enough jobs that we don’t have to worry about being too productive. Now, however, we’re so productive and somewhat stalled for innovation – or only innovating on matters of productivity – that there aren’t enough jobs to go around.
In other words… let’s say company A employs 50 people and company B employs 50 people. They make the same type of good and they are the only two companies that make it.Everyone in each company starts out working 40 hours a week. Then company B produces an inferior product and it closes. Now, the employable workforce is still 100 people, but company A decides that rather than hire the employees from company A, they’ll just double the hours of everyone that already works for company A to meet the new demand created by company B’s collapse. Shareholder’s are happy… employees probably still make the same wage so that the bottom line increases.
All the ex-employees of company B are only skilled creating the same type of product/service that they’ve always created, and now there’s only one company creating it and they aren’t hiring because they can get 80 hours out of their employees. To combat this… former employees can either learn a new skill or come up with a better product/service to try to compete with company A – though likely when they do this they’ll need to ask their employees to work at least 80 hours.
Unfortunately… none of that’s happening. The ex-company B employees are too busy trying to learn a new skill or find a job to have time to innovate, and they just lost their jobs so they don’t have any money to go starting new businesses. Company A’s productivity is through the roof… market demand is being met and profits are increasing. All the company B employees are on the sidelines watching… oh and they are also consumers of the product/service, but again with less money to spend, so company A must try to reduce the cost of its product/service by not offering company A employees as many perks or increasing salaries, even though they are working much more. But, hey, the bottom line is looking great!
If company A would have brought on the company B employees, everyone would work 40 hours, the margins would be less, but everyone would at least be employed.
In reality, the stock market and shareholders do demand more productivity, so we don’t hire more people, we ask our employees to work more. If we ever really wanted to end unemployment, we’d reduce working time and share the work. We’d also stop working our lives and start living our lives… but then those at the top, those that make money from our productivity, wouldn’t be as rich… so, good luck with that.