When You Look Around, Something Isn’t Right

This post by David McWilliams, an Irish economist who was traveling to Southern California for a conference, got me to thinking:

Evening just arrived in California and I’m always struck by how old people are doing manual/service jobs like waiting on tables at airports in the US. It doesn’t seem right to have really quite old people standing around all day. V harsh system. Does this strike you too?

Yes it does, David.

Surely you’ve noticed it, too: all the older people doing jobs that teenagers and young adults used to do. I notice it in the grocery store. In fast food and casual restaurants. At sitdown restaurants. At coffee shops. At Walmart, Target and Costco. Everywhere you look, older people are working low-skill minimum wage jobs that used to be taken by inexperienced youth.

And yet we’re told everything is good. That unemployment is near historic lows. The stock market is at or near historic highs, not only in nominal terms but also in valuations. Homes prices are high — sky high in some places. In short, the financial and real estate markets tell us things are great. It’s only when you look around that something seems off.

The takeaway here, Vera, is that this economy — and, likely, the economy of the future — values so-called knowledge workers and pretty much treats everyone else like trash. Indeed, some people at the bottom of the labor pyramid — those low-skill workers with  few options — make only the federal minimum wage, which is presently a paltry $7.25 an hour. For a full-time worker (40 hours per week), that’s only an annual income of $14,500, assuming no days off for vacation or illness.

And yet we’re a rich country. Just look around. People live in houses worth millions. Some of our executives make hundreds of millions a year in compensation. New graduates of certain colleges and programs enter the workforce making six-digit incomes. And yet we can afford to pay people only $14,500 a year?

It’s no wonder older people are working these menial jobs. They’ve never had a chance to save or get ahead financially. They’re stuck in a labor rut that has no upward mobility. They lack the smarts and skills that the market is rewarding in this technologically driven era and so they’re treated like trash. It’s unconscionable, yet few seem to be bothered by it.

Given your parentage, it’s likely you’ll end up being a knowledge worker that the market values. It’s unlikely you’ll be stuck working night shifts at Walmart stocking shelved for $11 an hour. But consider this: Is something wrong with a system that rewards some so lavishly while treating so many other hardworking people so harshly?

I think there is. And if we don’t address it, I think we’ll all be worse off because of it.

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