Friday, November 05, 2004

Jobs And The Family

The news of an "October Surprise" in jobs hiring is a positive sign - as long as it is not a seasonal blip.

Unfortunately though, this is not enough for anyone trying to make ends meet on a basic wage. The challenge of under-employment is more pervasive. Increased interest rates, rising inflation & oil price hikes can have pernicious effects on the economy that may outweigh gains in job growth.

Policy-induced high interest rates, as a matter of fact are counter-productive to the growth being experienced. They mean a bigger slice of the pie being spent on housing & static costs, and lesser discretionary income. The alternative to cutting back on spending is for most families to work longer hours. The every-day challenges of living in perpetual wage slavery are strongly brought home by Barbara Ehrenreich in Nickel And Dimed and by James Shipler in The Working Poor

What would be more insidious to society might be a return to norms of the early 20th century, still current in some countries, of involving the older children as de facto wage earners. Child labor is a terrible phenomenon, depriving societies of well developed children, and causing innumerable other social distortions. This is not very far from the pre-industrial family or community economy

In Belgium, for example, at the beginning of the century, there was a significant gap between the incomes of textile workers in the Belgian textile center of Ghent. This was primarily due to a low male wage level for textile workers. This was supplemented by increased work by married women and teenagers, thereby bridging the income gap.

Children's wages played a central role in family economic strategies in the late 19th century. The collection of family budgets by the US Bureau of Labor for the last century shows that life-cycle patterns of savings and debt varied by industry depending upon incomes from children. The consumption patterns of families whose expenditures exceeded their incomes do not show signs of economic distress and most families whose annual budget was in deficit could expect larger contributions from children in the near future. These patterns suggest that families used borrowing and saving to smooth consumption over the life-cycle as the earning capacity of the family changed. (JOURNAL OF FAMILY HISTORY,1993 - VOLUME 18, NUMBER 1)

A bad alternative would be to adopt "Creeping Communism" practices like those currently in vogue in New Zealand, where marginal tax rates are as high as 90 cents on the dollar. This coupled with income supplement programs, is aimed at decreasing the income gap, but serves only to weaken the economy in the medium to long term, as well as keeps families on the "income treadmill". Then again, that's what most families are on, anyway.

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