To The Moon

Taking a look at the current state of work in the developed world.

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What happens when an economic system breaks down? Not in the sense of colossal bank failures, runs on money, or a total upheaval into a new system, but when an existing one just starts rusting out and falling apart. What is the result when the various regulations and free-market initiatives cease striking the proper balance and portions of the system stop functioning as a result?

We might soon know. In certain areas, we’re seeing it already. It’s a broken labor market, a distressed workforce, and paper-mache economies. Push hard on any one section and, like the dead plant whose roots long gave way, the whole thing tips over effortlessly.

It’s easy to poke holes in various parts of the economy or labor market. What really needs to be done is akin to the approach we take when doing routine check-ups on our own health — a full blood panel, if you will. One or two numbers slightly above or below the normal range is tolerable, but one area that’swayout of wack or a whole panel that’s not as expected is a different story.

We currently have the latter situation. Our demographic data is getting progressively worse as far as the workforce goes, while the bottom two quintiles or so of the developed world are in total disarray. A plethora of children who followed the recommended path through college has bloated the white-collar fields and driven salaries down, while other fields were emaciated by the pandemic and their now-unvalued workers are in no rush to return.

All the while, threats from automation, offshoring, and AI loom large. Will these items just wash each other out? What other problems do we have? Let’s take a deeper dive and see if we can sort some of this outbeforeit becomes a problem, for a change.

Demographics

A little over a year ago on this platform and, in fact, in this very publication, I wrote a piece on how the so-called “Great” Resignation was the least of our worries compared to other demographic trends in our industries. It did fairly well and, oddly, has been seeing a resurgence lately. I thought it worthwhile to revisit the topic briefly here.

What these particular issues boil down to at their core is that our population is aging. We know that already. But it’s going to create staffing shortages unevenly — not all fields are created equally in age demographics. I’m not against people working well into their retirement years, either — skill, experience, and wisdom seem to be in short supply in many workforces. But a trade or career that skews much older points a career or field that will soon need more help than it can find.

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Nowhere is this more true than in skilled trades. Several generations of children now have been told that college is the only successful option — and they’ve listened. 40.8% of U.S. citizens in the 25–34 age rangehave a bachelor’s degree or higher, compared to 33.2% of boomers. Not a huge change, but 7% of millions of people equates to a whole lot of citizens with entirely different job description expectations.

No one gets a bachelor's to then go on and work a trade. On rare occasions, I’ve anecdotally met someone who quickly learned they hated accounting and became an electrician in their late 20s or something, but they’re few and far between. Most bachelor’s holders I know float around gray and white-collar jobs, even if they’re underpaid and overworked ones.

This is why mechanics, electricians, carpenters, stonemasons, plumbers,and others all have median ages above the population as a whole. Anecdotally, the last three times I’ve needed something done to the house, the guy who showed up was between 55–65 each time and spent a lot of time talking about how “it’s impossible to find anyone to work” now. The demographics back those guys’ stories up.

Are these fields glamorous? Not necessarily. If you run your own contracting company they can certainly be lucrative, but not every tradesperson will. Just as not every white-collar worker will make it to upper-middle or even middle management. At the end of the day, electricians and HR workers make about the same income— just different tastes for different folks. And there’s nothing wrong with that.

But there will be when there aren’t any people to fill the skilled trades. While many will claim these are ripe for automation, I haven’t seen anything on the horizon that indicates they’ll be gone in the next decade or so. AI, on the other hand, seems poised to take out a lot of lower-tier white-collar jobs in the next five years.

While it’s tempting to pass this one off as something solved by automation, I don’t think that’s the case. It’s a problem that maybe only higher salaries and reduced stigma of trades and vocational schools will solve.

The ladder

By far the part of our current workforce troubles that concerns me the most is the potential disappearance of “the ladder” in which the old-fashioned, boots traps-quoting workers of yesteryear climbed to reach comfortable lifestyles. We’ve already seen a few rungs fall off of this old thing, and more and more are getting wobbly.

See, going back to that stat I quoted above, 40.8% of the youngest generation in the workforce has a bachelor’s degree or better. Meaning that the majority, still, do not. Now most of them have some college —high school or less is only about 30%— but still, no bachelor’s. That already puts an artificial ceiling on many careers.

Give me a little leeway here and let’s assume that many of that 60% are not unmotivated, unskilled, or otherwise faulty. Let’s instead assume that, like me, the environment of formal education is preferable to nothing for them, including jail. I’d literally have to think about it for a while if I was offered a choice between minimum/moderate security jail or mandated in-person classroom learning.

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But plenty of them (like me, again) love learning. They just hate formal education. This group, due to the way our society is structured, will have a tougher road to career success, but that’s just the way it is. But if that ladder disappears, our society spins into haves and have-nots in an even more extreme fashion than we already are.

I’ve been surrounded my entire life by these ladder folks in some capacity, and it’s likely that you have as well. It may be the cocktail server who moves to head server, front of house manager, food and beverage director, and then operations director before retiring as an area director on a $200,000 salary. White-collar fields have ladders to some extent as well.

Or it could be me — the bank teller who started opening checking accounts, then loans, then processing loans, then decisioning loans, before starting large commercial financing projects and eventually running the operations of a commercial lender. My better half has, over time, successfully parlayed a high-school service job into upper management and a comfortable salary.

But all of the current threats to the labor market are threats to individual rungs. Automation is the biggest menace toward lower-end service and hospitality jobs such as cashiering, front desk roles, and the like — the very first rungs on the very first ladder that many of us ever encounter.

AI and offshoring, on the other hand, seem ready to pounce on what I call the “some college” jobs— roles where a disproportionate number of workers check that box on their applications. These types of roles with titles that end in “clerk,” “processor,” “assistant,” or “specialist” are often the lower and middle rungs on a corporate career path. They also involve some critical thinking but are usually 75–90% repetitive and routine.

Corporations can easily push the 15–25% of critical thinking up to the next rung on the ladder and replace the remaining chunk with AI or offshore workers. When the options are either “no job” or “senior analyst/manager”, there’s not a lot of wiggle room for class movement outside of college degrees. And sinceone of the biggest determining factorsfor whether or not someone has a college degree is class in the first place, that could be quite a dangerous spiral.

Parting thoughts

It’s easy — and downright tempting — to say that we have workforce shortages right now owing to demographic trends, but that they will self-resolve as AI, automation, and an increasingly global economy eliminate many jobs in the developed world. That’s an oversimplification, in my opinion.

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First of all, some studies suggest AI will create jobs, but many are will be in fields that are already short-staffed and certainly not in the fields where jobs are being lost. This will create an imbalance in the workforce that our current training and schooling aren’t structured to resolve. What’s more, not everyone is cut out to work in IT, UX design, or whatever other fields are poised to grow. Some people will just hate it. And they need options too.

This is to say nothing of the impacts a shrinking workforce participation number might have on nations’ tax bases, budgets, and other items as the population gradually age out of the workforce. Even if our job demand declines to match the number of people in the job market, that doesn’t address the macroeconomic concerns raised by a sharp decline in annual revenue.

There aren’t easy solutions to any of these problems. But we have to start thinking about them. Reactionary solutions are often band-aids placed on wounds that really could use stitches. It might be useful to just avoid getting lacerated in the first place.

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