It's great that we've got Dickensian working conditions these days


Felicity Lawrence is trying to tell us, over in The Guardian, that working a pretty bad job in a Sports Direct warehouse is equivalent to Dickensian times. Total nonsense, of course. For the only people asking for another bowl of gruel these days are the Islingtonistas who scoff down the Italian equivalent, that polenta pictured above. That the cheap (and disgusting) sustenance carbohydrate of the masses is now eaten by no one at all other than fashionistas shows us quite how far we've come. However, there's a deeper mistake that she makes:

Sadly, the Sports Direct warehouse is not an aberration. Much of the growth in employment of recent years has been in this field: jobs that in fact represent the death of the real job. The idea that a company’s value and brand is built not just by its owners but by the labour of all its workers has become a lost paternalistic dream. The notion that staff should be rewarded for their part in success with a fair share not just of profit but of security has all but disappeared. The risks of doing business, traditionally carried by capital, have been pushed down to those who can least afford them.

Yes, that's exactly how we want it too. No, not because we're siding with the plutocrats but because anyone at all with the ability to see can note that this last recession was somehow different. Where did all the unemployment go? Given the fall in GDP we would have expected a rise in unemployment to perhaps 4 or 5 million. As many did in fact predict and as did happen (and very much worse) elsewhere. Instead, in the UK, productivity and wages fell.

The answer is at the core of the Keynesian (and New K) analysis. Wages are sticky downwards: thus, in a recession, when labour needs to become cheaper relative to what it produces, we get spikes of unemployment as that's the only way that wages do indeed fall. And this time around this just didn't happen. Incomes took the hit, not employment. The result being that we must conclude that we have a much more flexible labour force, that wages are less sticky downwards.

This is generally thought to be a good thing. In bad times, that all or most lose 5% of their incomes could be, if that's the way you want to look at it (we do), considered to be better than 5% of the people losing their entire incomes. So, that's how the labour market has been rigged. So that it is incomes and wages that take the minor hit, not some subset of the population that take the major unemployment hit.

Profits and capital income also fell, by much more than those labour incomes, so it is shared pain, not entirely loaded on one side or another.

But that is the choice that has to be faced. We either place all the risks of busts on capital, in which case we risk soaring unemployment in such busts, or some part of it is placed upon flexible labour and thus some part of the pain is felt in minor losses of income.

Well, which do you prefer? And you can only choose one of those two, there are no others available to pick from.