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Why America Needs More Bad Jobs

Walter Russell Mead, who blogs at The American Interest, has an interesting perspective on what's needed to help save big cities. It's jobs, of course, but not the "good jobs" that everyone clamors for. No, Mead recommends bad jobs. He writes;
The first and most important precondition for returning health to poor urban neighborhoods is the creation of large numbers of private sector jobs that relatively unskilled people can do. These jobs are unlikely to be in large scale manufacturing plants. The days when domestic manufacturing anchored an emerging urban working class and provided a ladder into the middle class are as dead as the days when family farms gave the majority of the American people secure livelihoods...

Businesses that hire low skilled workers without much experience or with checkered work histories are often smelly and noxious. They are unlikely to pay particularly well. There will be lots of casual day labor involved with not many benefits -- and perhaps little information sent to the IRS. Casual construction work and small repair shops where people bang metal and use power tools all day long are the kinds of employers we need in the inner city. Working conditions are not always great -- and these industries do not always attract the most humanitarian and generous people on earth. The factories that hired illiterate and unskilled urban workers 100 years ago were offensive from many points of view; they did, however, actually hire those workers and put tens of millions of people on the thorny, difficult and uphill path toward middle class life.

Think of the path to successful middle class living as a ladder; the lower rungs on that ladder are not nice places to be, but if those rungs don't exist, nobody can climb. When politicians talk about creating jobs, they always talk about creating "good" jobs. That is all very well, but unless there are bad jobs and lots of them, people in the inner cities will have a hard time getting on the ladder at all, much less climbing into the middle class.

He makes a very good point. Unemployment numbers are officially at 9.2 percent right now, but that varies widely among groups. People with a bachelor's degree or higher have a much lower unemployment rate of 4.4 percent, but those without a high school diploma have an unemployment rate of 14.3 percent. In a down economy, employers can have their pick of employees, and as such, they are going to prefer the educated and already employed over the uneducated and unemployed.

Government restrictions often make these "bad" jobs hard to come by. Rules and regulations prevent people from starting businesses or hiring people because it is too complex. Firing is difficult and so you take a risk of bringing someone on board who will produce less than the cost of employing them, so people don't want to take that risk.

Yes, it would be fabulous if everyone could have a really great job. But, the reality is, until you've proven yourself capable--either through eduction or high performance in bad jobs--you're not going to be hired for the good jobs. The focus is usually on education, but perhaps it should be on creating a business climate where bad jobs are possible.

Every protection for employees that government requires increases the cost of hiring. And as the cost goes up, companies require higher skills and higher reliability to make a profit. For example, let's say you own a widget factory. If I can make 3 widgets in an hour and you can sell those widgets for $2 each, the total cost of employing me must be less than $6 an hour to make it worth it to hire me.

Now, if the minimum cost of employing someone is $10 an hour, I'm not going to be hired. The business owner will hire someone who is capable of making at least 5 widgets per hour, and more likely someone who can make 6, which will give the owner a profit. Increasing the cost of employing someone high enough and that will either result in a closed business (so no jobs at all) or in using technology to automate businesses (so jobs for the highly skilled technical person). Machines aren't affected by increases in health care costs.

But, if my skills only allow me to make 3 widgets per hour, I need an upgrade in my skills. The easiest way to do that is to let me work and gain those skills on the job. Our current practice of regulation and taxpayer subsidized training programs aren't helping. The foundation and training received at these bad jobs are the bottom rungs on the ladder for success. And it's better to be on the bottom rung and moving up then not allowed on the ladder at all.

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