In my recent post, I attempted to explore some economic consequences of splitting the government into two governments with distinct voting populations. One government had a higher minimum voting age of 55 and when a person chooses to vote in this government, he loses his right to vote in the other government with a minimum voting age of 16. The older voting age government is specifically responsible for serving the government’s obligations for debt payments and for entitle spending. In addition, this older-represented government will manage labor laws for its age group (those over 55). I imagined that the older population will necessarily have labor laws that are more lenient to employers in terms of age discrimination, mandatory benefits and minimum wage, and so on. The reason is to give older workers more competitive advantage as independent contractors after they reach the age of 55 when they are no longer covered by the youth government’s labor laws.
Although I hinted that 55 will become an effective retirement age for most people, what really would happen is a transition from employer commitment to a mode of being an independent contractor that can continue for the rest of ones working life. The independent contractor would be more mature and no longer burdened with child-rearing expenses. This worker would have some retirement savings to manage the more random uncertain income of independent contracts.
Our nation is obsessed with the concept of employment. We see unemployment rates as a crucial political problem. We worry about unemployment rates and workforce participation rates. Our ideal is that all able-bodied people should be working, and more specifically that they should be employed, ideally full time.
Furthermore, our nation recognizes involuntary termination for economic reasons (layoffs) as a special condition that deserves unemployment benefits funded in part by mandatory contributions by employers. This unemployment benefit is a government safety net for periods while the worker seeks new work. As a result, an unemployed person retains some employment status of searching for a job.
This is a specific concept of employment that applies to modern western economies. The obsession with this particular model of employment needs an explanation.
One explanation is that the employment arrangement grew out of the labor conflicts from a century ago when unions became strong used collective bargaining to obtain concessions from employers. The common employer concessions became law. The employers countered by distinguishing management employees from hourly workers. Initially plants remained open during strikes because management still showed up to work. The strike was between labor and management. Sometimes the management had to perform the labor jobs during the strike or they would attempt to hire strike breakers. This division between labor and management during union negotiations became embodied in the law as the exemptions from unions and subsequent labor laws.
However, I think the obsession with a commitment to employment predates the labor movement era.
In the early 19th century, there was no government enforced employment commitment or expectations of that commitment. The workers were paid hourly only as long as the business cycle supported the jobs. For stable businesses, this could result in long-term employment. For less stable businesses, this could be very unpredictable or cyclical.
Early 19th century work was at-will where working relationships can begin and terminate quickly and perhaps with many repetitions. I assume there were disagreements between workers and managers that required remediation, but these were dealt with on a case by case basis without a call for collective bargaining or a demand for a common standard for defining work. The emergence of a common definition of work, that we recognize today in the term employment, emerged later in the 19th century.
Although there were few governing laws for employment contracts, the contracts themselves were contracts between peers. The contracts were between individuals who committed to the terms of the contract. This was also a time when there was a strong sense of honor and reputation and this provided additional informal commitments toward each other’s interests. The employed would voluntarily work harder during periods of crisis. The employer would strive to sustain the employment during periods of financial stress. The informal agreements were not perfect and probably not consistent but they did allow for a relatively harmonious relationship between workers and employers.
This imagined worker-employer relationship may be fantasy on my part as I assemble the bits and pieces of what I know abut the era. I’m sure it is far more complex than presented here, but this is how I envision that era. I may be wrong, but I think work contract or expectation in the late 18th and early 19th century was very different than it is today. In particular, there was less of an obsession about being employed in the modern sense. People worked because they needed money or had something to offer. The work was more immediate and short term. The weekly wages varied over time with some periods bringing in less income from earlier periods. A career was an accident of stringing together different compensated endeavors. Occasionally that would result in a lifetime doing one thing, but most often that was restricted to the self-employed skilled tradesman.
The concept of a life-long career working continuously under one employer seems to be a more modern concept. Again from my sketchy knowledge, it appears this more modern definition of employment emerged after the civil war and its abolishment of slavery.
In order to abolish slavery there was a need to distinguish slavery from other work arrangements. I imagine that this led to a more careful definition of employment to exclude arrangements that would attempt to continue of slavery through cleverly worded contracts. To end slavery, we need to be more careful to define legitimate work. Ending slavery did not end the need for working. But that work must not appear to be a slavery.
I think more is involved than just distinguishing legitimate work arrangements from slavery. In particular, employment includes a concept of a commitment to provide certain benefits such as paid time off or over-time pay. That commitment also includes workers rights to not be terminated without justified cause. The termination must be justified within a small set of valid conditions such as a violation of a clearly stated rule. If termination occurs for economic reasons, then there needs to be a fair and justified reason for selecting the workers to lay off.
These are commitments that go beyond the actual work relationship of an hour worked for an hour of wage. There is a commitment to continue providing for the employee’s continue income for the long term. This also includes a commitment for employee development through training and annual setting and evaluation of career development goals.
This insistence on a commitment by employer was an innovation that occurred after the civil war and motivated the labor movement that emerged in the late 19th and early 20th century. Prior to the civil war, many work arrangements may have involved some commitment based on community honor and respect. People made personal contracts that were enforced by a community that demanded honorable treatment of workers through difficult times. This was an informal commitment and primarily occurred in smaller businesses and in smaller communities. I doubt it was very common in larger businesses and in larger cities. There was no governing law that forced this commitment.
Meanwhile prior to the civil war, slavery despite all of its evil did involve a commitment to the slave by the owner if for no other reasons than to protect his investment. That commitment included providing food, shelter, and health care for the entire year and through slow years. In agricultural settings, the slaves had food and shelter during the seasons that did not require as much work or during years when the weather resulted in poorer crops. For all of the awfulness of slavery it did offer some security in the form of access to basic needs. That security may have been comparable to the security of domesticated farm animals that have access to food, shelter, and protection. Such an commitment does not compensate for a the loss of freedom and human dignity, but it did set an expectation that a employer makes a long-term commitment to keep workers cared for despite the ups and down of demand for the labor.
With the abolishment of slavery, this entire-year and year-to-year security of compensation in form of shelter, food, and healthcare was also abolished. In the agricultural setting, the legitimate work had to be redefined to pay workers hourly wages for actual work performed. People worked the fields when the fields needed working. The work became seasonal so that there were long period of unemployment when people had to survive on savings. In addition, for good years, more people can work and they may work for more days. In bad years, some may not have any work for the entire year.
Agriculture in particular benefited from slavery-like arrangements because they assure access to an adequate workforce at the precise (and sometimes unexpected due to weather) times when the work is needed in relatively remote and isolated rural areas. Slavery was an institution that provided this assured pool of workers available for when work was needed by providing for their welfare (basic sustenance) during periods when there is no essential work to do.
The mechanization of agriculture eventually obviated the need for maintaining a captive workforce for many tasks. However, some areas where mechanization was not helpful (such as servicing crops of fresh vegetables and fruits) still required workers to be available when the season demands it: first to plant the crops and then return months later to harvest the crops. These are still labor intensive tasks that require human workers but the owners no long have access to a captive workforce. The requirement to pay decent hourly wages for actual labor performed could only justify hiring labor for the few weeks out of the year when the crops needed work. A different type of mechanization in the form of transportation, first railroads and later automobiles, allowed for the emergence of migrant workers. The freedom from being tied to a particular farm year-round (in slavery or indentured servitude) resulted in the worker’s need to continually migrate to various parts of the country where crops needed working for that particular time of year. Migrant work is not a form of employment but instead is a form of independent contracting. In order to meet the cost of living, the worker has to keep moving around to where the current work is needed.
Although slavery is outlawed, in recent years there has been a rising concern over its continued practice, now called human trafficking. The prominent modern example of human trafficking involves sex workers captured from more impoverished countries and transported where there is a market for sex services or manual labor services. As reprehensible as the practice is, there remains a demand for a conveniently captive workforce, particularly in remote places where there is no local free market of economical labor. Despite the attempts to stop it, slavery conditions continue to exist.
I don’t think we ever really solved the problem of slavery because we never solved the need for slavery. That need is for a captive workforce to be available when the work is needed. Satisfying that need requires the commitment of employment to provide sustenance all year round, not just during periods when the work is needed. Conversely, the employees need that commitment to justify the inconvenience of being available in the future when the work is more needed.
The civil war was caused by the extreme inequality of free workers in cities working at will in cities where there were diverse work opportunities within commutable distances as opposed to slave workers confined to remote rural locations with only one employer available. There were two options to solve this inequality. History records the choice of abolishing slavery. The second choice was to make slavery universal for all workers but by securing certain worker’s rights for reasonable freedom of movement, reasonable working hours and compensation, and freedom from abuses. The second choice could have resulted if the national government became a universal slave holder of all workers. The government would become a very generous and benevolent slave holder of all working adults, some with multiple employment opportunities in cities and others with one opportunity in a rural setting.
Although history records the choice of abolishing slavery, I wonder if over time we actually adopted the second choice. Modern labor laws are analogous to work-rules imposed on employers in order to be able to access the slaves owned by a benevolent government. The government is a kind slave owner who grants certain freedoms and protections including benefits for retirement, unemployment, or disability. This government also expects that able-bodied individuals to enter into a full time employment that in modern terms is a lenient definition of 5 8-hour days or 40 hour work-weeks. The work relationships appear to be contracts between workers and employers, but the government takes its cut of the pay in the form of payroll taxes. The exact same effect could be implemented where the government gives a paycheck directly to the worker while the employer pays a larger amount directly to the government. In fact, for the cases of social-security, unemployment, or disability benefits, the pay does come directly from the government.
It is extreme to call this arrangement a continuation of slavery where there is one universal slave owner that is the government. However, we could have resolved the issues that led to the Civil War by adopting such a universal slaveholder approach and it could end up operating a lot like our modern experience with employment. The employment is an assurance of a steady income that is largely shielded from the ups and down of labor demands. The compensation and benefits are far better than in slavery, but there is a similar result of predictable income despite some days being much busier than other days.
On the other hand, this arrangement has lead to a wealthier economy than we had two centuries ago. If the economy were to suddenly collapse, the labor arrangement will persist but in a far less favorable form for most workers. That is a topic for another post.
My comparison to slavery is a limited one in terms of clarifying what I find peculiar about the modern interpretation and obsession with employment. We see employment not merely as a compensation for a service a person can provide. Instead, we see it as a long term commitment of the employer to maintain a steady income and to coddle the employee through career development investments. The employment ideal is that the employer will do more than just compensate for work. The employer will provide the employee’s long term welfare.
This is the concept of employment I am arguing can have an age limit. From an macro-economic and sociological perspective, I think our current concept of employment makes more sense for younger people than for older people. The model develops young talents and in return the young provide energy an innovation to drive the economy. These benefits decline as people age. In such assured-welfare arrangements, older adults will tend to continue doing what they had been doing when they were younger, and with less innovation and energy. Certainly there are exceptions, but the majority of older workers are not developing and are not producing as rapidly as younger people. This becomes a problem (that I think is present today) when the older people occupy advancement positions and thus block advancement opportunities for younger people. The older employees are choking the economic potential of the country.
The two-age group economy/government has a consequence of a relatively young retirement age of 55. In earlier posts, I described this low retirement age as an unintended consequence of my imagined government of two age groups that provides younger adults more democratic power over the operational parts of the government. The older adults’ political power will shift to servicing the obligations of debts and entitlements. I hypothesized that this change in voting representation will ultimately result in a different labor laws for the two groups.
The labor laws for work by older adults will be different from the labor laws for younger adults. The older adult labor laws will be more lenient on employers to make the older adults more economically competitive by eliminating the obligations for long term welfare. Older adult employment will be in the form of short-term independent contracts with no benefits of minimum hourly wage, hour limitations, paid leave, or employer contributions to retirement, healthcare, or unemployment insurance.
The older workers will continue to work. Many may continue to work full time performing similar tasks as they performed in their youth. Nonetheless, the nature of the work will fundamentally change because they will no longer burden employers with the need to take care of their long term welfare. The jobs will be short term contacts with no benefits and no obligations to renew the contract. Employers of older adults will not be responsible for the welfare of these workers.
Despite this lower employer burden for older workers, I suspect employers will still prefer the younger workers because of the economic growth potential from the younger workers, especially as the elder positions are vacated due to more or less forced retirement at 55. The young workers will drive the economic success of companies. The older adults will offer specialized or short-term services (such as consulting) to supplement the young worker’s contributions.
Again, I imagined that the two workforce model will emerge as a consequence of dividing political power into two age groups with distinct government responsibilities. The nature of the employer-employee relationship will change fundamentally when a worker enters the older group. One way to describe that change is to distinguish employment from contract work where employment shares a legacy with slavery in the the sense of the employer (business owner) having an obligation to take care the welfare of the employee in terms of providing steady income despite the ups and downs of business cycles. That employment includes employer investment in employee development and advancement. This obligation to take care of employees would cease when the worker reaches the age 55.
The consequence is not so much retirement as it is a transformation from an employment arrangement to an independent contract arrangement. Using the slavery metaphor, it is like becoming a freedman. The freedman’s life usually didn’t get easier upon becoming free of bondage. Instead, life became more difficult because the freedman is fully responsible for his own welfare. The freedman must struggle to be economically relevant in order to earn enough to get through they year. The analogy falls apart because the current system permits savings to be available to the older worker (such as from 401K contributions during youth).
In addition, there are the entitlement obligations from the government (social security, medicare, etc) that were not available to freedmen in older times. However, in my model government, the older population is politically responsible for managing those entitlement obligations within a finite revenue. This will confront them with tough choices of balancing the needs for the all of the eligible recipients plus the servicing of national debts within a finite budget.
The freedman model of work is appropriate for more mature workers who have some resources to handle unsteady cash flows. In modern times we can define that point of maturity by 55 years of age. At the time of the country’s founding, this maturity was expected in early adulthood and thus available only to the wealthier families. The alternative was slavery, indentured servitude, or poverty.