World Bank solution for lack of jobs: Cut worker protections

The World Bank is in the process of completing its “World Development Report 2019: The Changing Nature of Work” and, surprisingly, the latest draft version opens with quotes from Karl Marx and John Maynard Keynes. Has the World Bank suddenly lost sight of its purpose and will now take up the cause of working people?

Well, you already know the answer to that question, didn’t you?

Only a few paragraphs down we begin to see where this paper is heading. After a bit of perfunctory hand-wringing over disruptions caused by robotics, we read the problem is “domestic bias towards state-owned or politically connected firms, the slow pace of technology adoption, or stifling regulation.” And although some jobs are disappearing, fear not because “the rise in the manufacturing sector in China has more than compensated for this loss.”

Oh, so we should all move to China to get new jobs.

Never mind that the highest minimum wage for Chinese workers, that mandated in Shanghai, is $382 per month. In some places the minimum wage is half that, if workers are fortunate enough to be paid regularly. And that millions of rural Chinese are being driven into cities to become sweatshop workers, so for now there won’t be enough work for the rest of the world. Then again, letting bosses have the upper hand is what the World Bank has in mind. No, its economists haven’t forgotten what the institution’s purpose is nor why it exists.

A Chinese-owned factory in Lesotho (photo by K. Kendall)

So what to do? The World Bank report does suggest not allowing corporations to dodge taxes to the degree that they do. Very well, but even if taxes were collected at the statutory rates, that would still leave corporations vastly under-taxed. No suggestion by the bank, of course, that corporations actually pay a fair tax rate. Corporations currently account for a paltry nine percent of U.S. tax receipts; in the 1950s, they accounted for 30 percent or more. Similarly, in Canada personal income taxes account for three and a half times more revenue than do corporate income taxes; these were equal in 1952.

There is much discussion of “investing in human capital,” a particularly favored mantra of the World Bank. What does that mean? Capitalists are likely to interpret such talk — rather common in NGO circles these days — to mean demanding more skills or degrees from prospective workers, but in the United States graduates with doctorate degrees are being forced to take jobs in academia as part-time adjuncts, and plenty of folks in other fields are “over-educated” already for the jobs they hold. This concept comes from the idea that the problem is that there aren’t enough skilled people for all those wonderful jobs that are out there, just over the rainbow. But in the real world, as opposed to Right-wing think tanks, that is not so.

A 2014 report issued by the National Employment Law Project found that higher-wage jobs were created at a much lower rate during the “recovery” from the 2007-08 economic collapse than had been lost; conversely, low-wage jobs (paying less than $13.33 per hour) were created twice as fast as they had been lost. In separate studies, the Economic Policy Institute found that long-term unemployment is elevated for workers at every education level (and was increasing at a somewhat higher rate for those with some college or a four-year college degree than the average), and that the so-called “skills mismatch” is a myth.

So we come to the real “solution” in the minds of World Bank officials: Cut worker-protection laws.

Aw, you really aren’t surprised, are you?

(Graphic by Real-World Economics Review)

Here’s a key passage in the report: “Rapid changes to the nature of work put a premium on flexibility for firms to adjust their workforce, but also for those workers who benefit from more dynamic labor markets.”

Dynamic for who? What we have here are code words meaning make it easier to fire people. And that’s the real takeaway message, no matter the lofty rhetoric about governments creating a new social contract. “Creating jobs” and “investing early in human capital” are two elements of the World Bank paper’s suggested new social contract. Unfortunately, there are no thoughts on how new jobs might be created when capitalists are in a frenzy of eliminating jobs to maintain their profit rates and survive relentless market competition. More schooling, which is what “investing early in human capital” amounts to, is fine by capitalists, as long as they don’t have to bear any of the costs. It’s up to students to take on more debt to create this new “human capital.”

Contrast this happy talk with the reality of the capitalist workplace. A report just issued by Democratic U.S. Representative Keith Ellison found the average ratio of CEO-to-median-worker pay is 339-to-1. That ratio among the 500 biggest U.S. corporations is as high as almost 5,000-to-1. Nope, I don’t think the boss works thousands of times harder than you do. At McDonalds, for example, the CEO’s annual salary could be used to pay the yearly wages of 3,101 workers making the chain’s median pay.

The sort of societal priorities and imbalances of power that enable such appalling inequality might be summed up by the uses to which money is put. In Los Angeles, a new football stadium is being built and the estimated cost of it is now estimated at $4.9 billion. That figure has risen considerably and likely will again. Given all the homelessness in Los Angeles, and all the other social problems, what could have been done with $4.9 billion?

The number of homeless people in California is estimated at 130,000. Doing something about that might be one way to “invest” in human development, and doing so might even save money. A Rand Corporation study carried out for Los Angeles County found that homeless people who are provided stable shelter make fewer trips to the emergency room and are arrested less frequently, to the extent that the cost of the housing is more than offset.

Oops, but that’s not profitable for the well-connected as throwing money at stadium boondoggles or cutting jobs. But if you earn enough degrees, perhaps you’ll fulfill the World Bank’s prophesy by landing a job at a Chinese sweatshop.

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10 comments on “World Bank solution for lack of jobs: Cut worker protections

  1. Alcuin says:

    The art work on the cover of the World Bank report looks suspiciously like the work of Diego Rivera and his wife, Frida Kahlo. I’ll bet it came from his Detroit Industry murals, commissioned in 1932 by Edsel Ford. They were installed on the walls of the Garden Court of the Detroit Institute of Arts. You could do entire post on how the World Bank capitalists co-opted the work of Diego Rivera, an ardent communist, to support their agenda.

    • I searched the report in vain for credit; none is given. Although you might be correct, my guess is that the cover art is the work of Ben Shahn; it seems more in his style than that of Rivera to my eye.

      Either way (or if the work is someone else), World Bank capitalists are indeed co-opting work meant to uphold the dignity of working people, particularly manual laborers. I did touch on capitalist co-optation in this article a few years ago, a topic that, as you suggest, merits more discussion.

      • Alcuin says:

        Look at the man and woman in the lower right corner – that is Diego Rivera and his wife, Frida. Frida had very distinctive eyebrows.

    • It is from the Diego Rivera Mural:

      Diego Rivera mural

      • I stand corrected. My partner, who holds an arts degree, had also thought it was by Rivera, and if not by Rivera then by another Mexican muralist. I’ve used Shahn’s work to illustrate posts on occasion, so perhaps I was biased in his direction.

        • Alcuin says:

          The stunning shame of it all is that the World Bank can get away with this heist. Who now, outside of art scholars and leftists, knows who Diego Rivera was or that Leon Trotsky was murdered at Kahlo’s house?

  2. Low wage employers are crying the “I can’t find stupid teenage workers who will break a sweat for $7.25 an hour!” blues. They can cry me a river!

    I read an article last month about how fast food employers were upset to say the least about the fact that they can no longer treat their employees any kind of way because they are scared that they’ll up and quit and go next door to work. The employers complained that they have had to bite their tongues on multiple occasions over the fact that their employees often show up late for work or don’t come in at all and they are left to flip burgers and make subs.

    The other day, a friend of mine told me that she was in Long John Silver’s ‘greasy seafood’ restaurant and the lady who was taking her order had to have been close to 80. She told my friend that she USED to work at Long John’s but that the teenage work force were too inclined to not show up for work or when they do show up, they’re useless, that this led to the manager calling her, begging her to come back to work.

    So yeah, there are low wage jobs aplenty to the point where employers are afraid to take their employees to task, but good paying jobs are as scarce as civility in America.

    • In a rational or socially conscious system, nobody 80 years old would have to work low-paying fast-food jobs to survive. I would imagine the woman in question here agreed to return more out of financial necessity than the pleading skills of the manager.

  3. Donald K. King says:

    “…their employees often show up late for work or don’t come in at all and they are left to flip burgers and make subs.”

    In other words, they get what they pay for, just like any consumer of goods and services.

    In the Bay Area it’s become impossible to live on the $15-$20/hour employers grudgingly pay, and for at least a decade now employers were spoiled by being able to flog their employees harder and harder and effectively pay them less and less as the cost of living eroded their stagnant wages.

    Higher wages would have to come out of their profits, and the first rule of capitalism is to never give an inch.

    With the Boomers retiring in large numbers there are now more jobs than qualified employees; educated employees have student loans and must pay rent bloated by speculators from all over the world; and few can afford to commute on crowded freeways from up to 100 miles away where rents are still barely reasonable (might as well get the burger flipping job close to home).

    More than half of the Boomers have yet to reach the age of full Social Security benefits, so employers are likely going to get more desperate. Probably they’ll push harder to automate everything.

    • Greetings, Donald. Because labor power (in other words, human beings) is a commodity in capitalism, employers tend to get what they pay for.

      Unfortunately, it is not so that there are more jobs than qualified employees; wages would not be stagnant for so long if there was a shortage of workers. Most everyone I know is barely hanging on, and in New York City people who make a median wage can’t afford to stay in apartments they have lived in for 10, 20 or more years because of runaway gentrification.

      If more work is being automated, it is because of the relentless pressures of competition, in which a capitalist must reduce costs to stay competitive. Reducing the payroll (while taking advantage of generous depreciation tax allowances for new equipment) is the surest way to reducing costs. For the same reason more production is transferred to places with the lowest wages and weakest regulations. You can’t have a functioning economy if the only jobs left are flipping burgers and serving drinks to each other.

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