Contraction

I'm no economist, but my understanding of the recent analysis of employment data from Dean Baker is that the contraction in the labor market is structural. That is, the problem is not just that companies are getting workers to do more or work longer hours. Companies are also not just switching their labor force to temporary workers. Rather, companies are doing less and need fewer people. The contraction is real; the economy is actually smaller.

The repercussion, then, is not just that capitalism in the US is experiencing a crisis (since capitalism always experiences crises). It's that capitalism in the US is changing, devolving. It is ever more a system that not only treats people (in production and consumption) as disposable in the sense of replaceable, but that disposes of people in the sense that it can do without more and more of them.

At the same time, Baker notes the addition of jobs in the goods producing sector (mining, construction, manufacturing). This suggests that "really making things" still matters, that it's a dimension of the economy that hasn't been "postmodernized" away. It suggests in other words a continuing core of economic activity that persists even as service and knowledge sector positions in the post-Fordist economy fade away because they don't make anything real.

From Dean Baker:

The temp sector added just 300 jobs in July. Employment in the temp sector is down 17,700 jobs since March. This is noteworthy because it directly contradicts the business uncertainty story. If businesses are holding back on hiring because they are worried about regulations, taxes, or debt default then they would be hiring temps in large numbers; however, temp employment is still down by almost 16 percent from its pre-recession level.

 In the same vein, employers should be increasing the length of the average workweek as they work their existing work force more hours in order to avoid hiring new workers. (This would also be the case if there were a problem of structural unemployment due to a skills/job mismatch.) In fact, the length of the average workweek has been essentially flat over the last year and is still below the pre-recession level.