Cutting Jobs in a Surplus Labor Market

President Trump ran as a negotiator and job creator. However, one of his first actions was to put a freeze on certain Federal jobs. The Republicans who are for smaller government are proposing to cut, if not entire agencies, their budgets. Republican governors are also reducing costs by shrinking their bureaucracies. It’s as if somehow government jobs except, of course military, police, fire, border petrol and other security positions aren’t really jobs. In their world, free market consequences for loss of federal, state and municipal jobs are somehow different from loss of manufacturing jobs which our president may be willing to go to war to protect. Neglected is the fact that money earned from labor, regardless of industry, creates the same demand, stimulates growth and increases competition for labor thus raising its price. Theirs is a promise of streamlining government by reducing their responsibilities and improving efficiency. Consequences be damned. About 50 years ago I attended a week long session conducted by Deming, the father of statistical quality control and person who is credited with Japan’s post war industrial resurgence. From this I took away three things. 1. 80% of problems are not people but system problems (my experience running a manufacturing organization is that the number should be more like 90%). 2. Don’t put up motivational posters. They only demoralize workers saying that everything would be better if only you just worked a bit harder, and excuse management from attending to real issues, the systems. 3. We need to focus on efficiency and automation during periods when there is a labor shortage. When there is a labor surplus i.e. fewer jobs, efficiency and automation only adds to the surplus. Labor statistics from 2014 show that at that time, there were a total of 150.5 million jobs in the US. 12.2 million of them were in manufacturing, considered a segment with good middle class wages; another 21.1 million in retail and wholesale and 18.1 million in leisure and hospitality. The latter two considered low paying jobs for the most part. Of our 150.5 million workers, 21.8 million are on government payrolls; 2.7 million on federal and 19.1 million on state and local. For the most part government workers are said to be “overpaid” when compared to workers with comparable skills in the private sector. This may well be, depending on your point of view, but these jobs are also considered middle class jobs. So government employs, about 14.5% of our total workforce, and they represent a significant portion of our middleclass. There is constant talk about the “shrinking middle class” while at the same time “small government” is one of the Right’s ideological talking points. From where I sit, “creating jobs” and “shrinking government”, given that we are facing not only globalization but technological advances including the development of AI, all of which are taking away jobs, are somehow at odds with each other. I know that creating jobs and eliminating inefficiencies in government are catchy slogans, but slogans are not going to retain or enlarge a vibrant middle class. It’s hard to argue against improvement but instead of reducing cost, which in most cases means reducing jobs, maybe we should focus on improving the quality of service. Unfortunately that goes against the notion that government is an evil and would not play well with the Presidents base.