Monday, 17 February 2014

McJobs, long-term unemployment and the Minimum Wage

Labour love to decry insecure jobs on low wages, of which flipping burgers for McDonalds is the archetype. The insecurity of self-employment, contracting or "zero-hours contracts" (what I used to call "temping") is another.

It's terrible, the lament goes, these jobs don't pay a living wage...

There are some truths buried in the mountain of cant written on the subject. Some, perhaps even most people in "zero hours" jobs, or flipping burgers for McDonalds would rather be doing something else. Many self-employed are under-utilised, and underpaid, at least at first. This is a small truth, but a big error.

Self-employment is for example largely a self-selecting sample - those who'd rather be in another job, will continue to look for one while contracting or working odd-jobs. Of these, those who can, will get another job. Those who can't will continue to struggle on. This leaves self-employment being mostly those who can't cope with a job, and those who don't want to work for someone else. The middle-ranking self-employed don't exist. They've got jobs. Temping is ideal for people (recent arts graduates for example) who don't know what they want to do for a living. And a living wage isn't far from the minimum wage, before tax. Why are we taxing the low paid?

Nor is it  the job-market's attitude to the unemployed. If you've been out of work for more than 6 months your chances of a call-back plummet. Again the lefties would prefer to blame the employer rather than look at why this is the case. Human behaviour is flexible, and people get accustomed to unemployment. So people who've been on the dole for 6 months are more likely to be absent, call in "sick". The HABIT of work is a qualification in itself. Please note "more likely", not "all of them will". I am NOT saying the unemployed are lazy and feckless. I am simply describing how the world IS.

Another common lament is "there were 700 applications for every vacancy". But if 600 of those are from people who've been out of work for 6 months or more, employers will simply file them in the round filing cabinet, and focus on the remaining 100 who will be more likely to turn up on their second day. Effectively what this means is the unemployed are not in the workforce, even though they may not have yet dropped out of the statistics into "economically inactive". Thus the labour force is shrunk, and the bargaining power of those still in work goes up. This is, broadly the mechanism by which the European social model has ensured crippling levels of youth unemployment and a total inequality between protected, hard-to-fire insiders who can strike at will for better pay, and a youth population who will NEVER enjoy those privileges if they ever get a job at all.

The problem is therefore a dearth of jobs which can take the unemployed and give them the evidence of the habit of work,which might make them attractive to potential employers. McDonalds does this. Zero Hours contracts enable zero-risk hiring to the same end. An employer seeing a school leaver with a year's burger-flipping might think "this guy wants to work, and now wants to get on" and offer on-the-job training. The same employer might see a graduate who's been "looking for work" for a year as too proud and lazy to work, who'll jump ship as soon as the city starts hiring again.

The left often lament job insecurity as a terrible thing. It is. But this is a small truth concealing a big error. First  Far, far, far worse than job insecurity is unemployment. I know of no man used to earning a wage whose relationship with wives and children survived long-term unemployment, intact. Without the means to provide men (especially men; this is less true of women) are rendered worthless not just in the eyes of their wives and children, but increasingly so in their own. Unemployment has catastrophic mental health implications. Unemployed people, and men in particular, become suddenly very much more likely to commit suicide.

Thanks to the minimum wage and job protection legislation, the kind of insecure, temporary jobs which require minimal training and make use of a casual workforce are simply not economic any more. Thanks to the bureaucracy of claiming benefits, no long-term unemployed person would reasonably take seasonal work which is why vegetable-picking is so often done by foreigners.

This is not such a problem during a long expansion. People get jobs. The minimum wage was introduced during a long expansion, has been untested in tough times. But it appears to have denied many young, inexperienced, and unlucky people who have a six-month gap on their CVs a chance of work, not just now, but ever. Many of these then handily (for Government statistics) drop out of the workforce altogether. Workfare, zero hours, low minimum wages, no fault dismissals are all decried by the left, and are all means to reduce the risk of hiring. Statutory job protection is not the same as job security; ultimately the best protection for an employee is a deep and liquid job market.

Lefties prefer to ascribe malice to people who favour supply-side reform to combat unemployment. I am not encouraging a "race to the bottom" for the benefit of "my rich banker mates and shareholders". I just think the burden of the minimum wage is borne by those who will never get a job.

Do I want to do boring menial work for a pittance. No.

Have I done boring, menial work for a pittance? Yes.

It's cruel to deny people the means to develop their skills. The Job-ladder: everyone's got to start near the bottom. Some start nearer the bottom than others and some never climb very high. But lets not put that bottom step out of reach of anyone.



4 comments:

Peter S said...

Very well put, my experience and that of many others, no doubt.

@parlow72 said...

I agree with the sentiments of your post. I've worked in these types of job before and during university. But one of things that annoys me when leftists talk about McJobs is what you can learn. There are real skills to be picked up and transferred to the next employer.
1) Customer Service. It's not about being subservient, it's making sure that your customer comes back.
2) Time management. If there's a break in service, use the break productively, clean up, plan ahead & innovate. These are all skills which are transferable to any industry
3) It's real life. If you arse about you'll get fired, the 'popular' employees usually don't last, the ones that keep their heads down and work prosper.
4) Here's the real thing, just look at the McDonalds business model, how it evolves. If you go into a McDs now you'll see business people having meeting (while eating drinking). Reliable free wifi, drives new business. Someone thought of that.
5) While many in McJobs use them as part time, temporary work there are real prospects. In the 'Service' sector chances are the CEO started at the bottom.

It must be so nice for the lucky few with Oxbridge PPE degrees to emote about about people on 'Zero hour contracts', but they've never worked a day in their lives.

Surreptitious Evil said...

It's not just the state of unemployment. Under-employment has almost as corrosive an effect (albeit not to the bank balance.)

I had a reasonably well-paid job a few years ago which had very little (almost no, some months) work to do (sales team didn't understand and wouldn't make the effort to sell the slightly different aspect of consultancy.)

That is incredibly draining to the work ethic. Luckily, I did a couple of reasonable sized TA jobs that reminded that I did actually enjoy what I did and I "got on my bike" and left.

Ben said...

Absolutely correct.

When recruiting for junior positions (that lead to a good career) I look for two things. Evidence of willingness to work, and evidence that they can learn the necessary skills. Any job will do for the first - Paper rounds, pizza places, warehouses, supermarkets, all great. For the second, qualifications are nice, but so are hobbies, indeed hobbies may be better in some ways.

There was an error in this gadget