What better time than the run-up to Labor Day to lament the state of the American job market – including not just still-disturbingly high rates of un- & underemployment, but all the subpar indicators on the Federal Reserve dashboard? And what better time to blame corporate America’s recent splurge on unproductive spending of all kinds for the sorry state of so much of the nation’s workforce?
But here’s the funny (not “funny ha-ha”) thing about it. There does seem to be little question that unproductive uses of corporate resources are abundant. Two columns this week – from Harold Meyerson in The Washington Post and Paul Roberts in The Los Angeles Times — show that convincingly. The percentage of companies’ profits devoted to financing buybacks of shares of their own stock is especially outrageous, given how heavily executive compensation these days depends on stock prices.
But it could be seriously misguided to assume, in Roberts’ words, that a major answer, and probably the major answer, to U.S. workers’ woes is to “restore a broader sense of the corporation as a social citizen” and thereby encourage business to view “workers, communities and other stakeholders” as assets much more worthy of investing in.
I’m not doubting that more corporate spending on plant, equipment, technology, and worker training would expand employment. But given the continued rise of labor-saving technologies, it’s far from clear that such behavior would expand high wage employment by anything close to leaps and bounds – at least in the manufacturing and tech companies that Meyerson and Roberts obviously are thinking of first and foremost.
In fact, for what it’s worth, the academic and policy classes in America seem far more worried today that the current generation of business equipment and software, characterized by advanced robotics and artificial intelligence, will break the historic pattern and wind up displacing on net many more good jobs than it creates.
So let’s definitely use Labor Day as an opportunity to spotlight the need to make America’s economy much less of a casino focused tightly on enriching the already wealthy, and much more of an engine of healthy growth and rising living standards for the rest of the nation. But let’s not forget that, with so many massive demographic, social, and cultural as well as technological waves breaking over the economy, not to mention the (often but not completely policy-driven) globalization of production and investment, bashing the usual villains is bound to yield dramatically diminishing returns.