The Jobless Rate

by Jeff Miller of Artisan Family of Wines (Seven Artisans, Sly Dog Cellars, Red Côte)

jeff-smAs I write this, the day after the latest jobless report came out, I could not help but think that we are facing a long term jobs problem. The economy produced only 88,000 new jobs last month, which is pretty disappointing when the “experts” were predicting something closer to 200,000.  I have no doubt that, on a month-to-month basis, this jobs report is more reflective of the events of the day, things such as the sequestration.

But, while each month is something of a blip, I think this jobs report is taking place against a backdrop which represents a sea change in our labor force which is not going to reverse itself.

If you just focus in on the grape growing business (the business I am most familiar with), you will see that, as conservative a business as we are, the changes over the last decades have been huge. Perhaps most obvious is harvest. While it is still common to see hordes of workers go out into the field at harvest time with knives in hand, it is becoming more and more common to see a tractor driver and a mechanical harvester perform the same work.

So what took tens or hundreds of workers is now done by a number of workers you can count on one hand. Not only that, in many ways the mechanical harvester does a better job. You can argue both sides of this, but the bottom line is that unless hand harvesting is clearly superior (which it is not), the economies of mechanical harvesting will overwhelm any effort to perpetuate hand harvesting (except in the most artisan of artisan vineyards).

While harvesting presents the most obvious, “in-your-face”, example of mechanical replacing human labor, it is just that, the most obvious, but hardly the only, mechanization in the vineyard. Take pruning for example. I think it is only the dyed in the wool nature of our business that has perpetuated hand pruning. In Australia, where the human workforce to tend to the vineyards is lacking, they have managed to mechanize this, along with many other, vineyard tasks. Minimal pruning, which involves creating a hedge with a mechanical trimmer, works very well in many, if not most, vineyards. It particularly lends itself to very vigorous vines better than the “normal” hand pruning.  However resistant to change our industry might be, the inexorable demand for more efficiency is going to greatly reduce the amount of human labor necessary to tend the vine.

But what holds true in the vineyard holds even more true in other industries that are more cutting edge. I hope that with the recovery taking place, we find ourselves in a situation approaching full employment. But we are paddling upstream. As workers without specialized skills become less and less able to hold their own against mechanization, each recovery following a recession is probably going to exhibit less and less opportunity for those of only average abilities.  Business is becoming more and more efficient, which is a good thing. Right now, we are producing more than we were pre- recession, but with fewer employed. Increasingly large portions for labor force are becoming irrelevant.

What to make of this?  You can certainly view this as a kind of utopia, a world where we are released from the burden of mindless physical labor. Machines, fairly stupid at the moment, but destined to be replaced by more and more intelligent robots, will be able to do much of what people have done since the dawn of human time.

This utopia is a wonderful thought.  But it’s not happening. Those possessed of the intelligence and skills to succeed in our hyper technical economy are doing extremely well. Those lacking those skills struggle.  With them, this revolution in the means of production is not freeing them from the burdens of mindless labor, but relegating them to the unemployment line. As the demand for unskilled workers declines, while their numbers remain steady, or even increase, the law of supply and demand tells us that what they can demand for their labors will decline as well. Anyone who doesn’t like it is welcome to leave, as there are many more than willing to take his place. The cost of many things will plummet as the labor necessary to produce them is replaced by a machine working for pennies instead of dollars. For those with secure employment, this is great. For those without the skills to obtain a good job, it’s hard to see how things aren’t going to go from bad to worse.  Are we going to end up being a society that looks a whole lot more like the one Marx predicted than we would have ever imagined?

In the past, at least in the long term, the advance in technology has resulted in development of new types of jobs sufficient to keep the labor force fully employed, or at least within shouting distance of it. I have my doubts that this is going to continue to be the case. I hope I am wrong, but at this point the development of technology to replace relatively unskilled workers is taking place at a breakneck pace.  I doubt that the expanding economy, the thought that a rising tide raises all boats, can overcome the sharp decline in the need for relatively unskilled labor.

My guess is that the average reader of this post has an IQ of 120 or higher. But for every 120, there is an 80.  These “80’s” shouldn’t just be fodder for the more well-to-do, for those more fortunate when they were passing out genes. The vast majority of these “80’s” are decent, law-abiding, hard-working people. They deserve better than to have to live on the table scraps of the more fortunate.

So we have two alternative visions of the future. In one, the utopian one, we all are free to spend more time doing what we want, as opposed to having to produce what we need to live. The second alternative is a darker one. Those who have the good fortune to possess those skills that machines do not may well live in that utopia. But for those who lack those skills, is their future going to be a miserly existence on the edges of society?

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2 Responses to “The Jobless Rate”

  1. [...] Grape Growing & The Jobless Rate [...]

  2. Matt says:

    As a small business owner I have to say I completely agree. Things aren’t looking great for the US right now but our little business has been growing. At http://www.angle33.com we still make our wine chillers (we call them thermals) by hand but we are expanding and are bringing on more people as we extend our product lineup. Fortunately our process isn’t extremely complex and can easily scale well with manual labor. So when you think about the wine industry you also have to consider all of the ancillary industry that is created as well. Thanks for this in depth article!

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