Sunday, October 22, 2017

Why part-time jobs are good and full-time jobs are harmful

In Thursday's debate between Senators Ted Cruz and Bernie Sanders, an erroneous bit of conventional wisdom was invoked as usual without challenge. The idea is that part-time jobs are of low quality and full-time jobs are the desired norm. Only the unfortunate work multiple jobs. Some of our laws have been written to reinforce this norm. But the evil underbelly of this tenet is the persistent legacy of low wages.

We all think we know all about low wages. Just as any good Republican knows that price fixing (of which minimum wage is a variation) is harmful market intervention, every good Democrat knows that without minimum wage laws there is widespread persistence of undesirably low wages. But honest Republicans and Democrats should be able to agree that minimum wage laws are a necessary Band-aid. It is neither acceptable to ignore widespread low wages, nor is it acceptable to believe that minimum wage laws are the right solution. As soon as we can figure out the real problem and solution, we won't need minimum wages laws any more.

But merely agreeing that minimum wage laws are a harmful Band-aid for an even more harmful problem frees us to leave them in place temporarily while we apply our reasoning powers to finding a more satisfactory solution. We make a compact on the one hand to believe there is a real unsolved problem they cover and leave them in place until they are no longer needed and on the other hand to believe they are harmful and to find the right way to make them obsolete.

Once this happened to me thanks to some great discussion I had with Pam Borden, I developed a hypothesis that there must be something preventing efficient pricing in the labor market. I had always had an implicit understanding that the power of employees to bargain with employers was limited. And I began to develop that understanding more fully.

First, movers and shakers tend to be self-removed from the pool of full-time employees. This leaves the pool of full-time employees full of people who are most comfortable leaving the status quo undisturbed. They tend to stay for long periods at any job, and they tend to prefer staying in the same home. This strongly dilutes their propensity to provide meaningful bargaining power for the wage market.

Second, the absence of diversity of wage providers in the life of a full-time worker makes it extremely expensive for them to say "I don't like this bargain." So week after week they keep selling their labor to the only buyer they have at the moment. The full-time job social contract starts to look like a monopoly of the employer on the employee's time.

Third, by design or coincidence, factors are piled onto the employer/employee relationship that further strengthen the monopoly. An employer may be the only game in town. The employer may offer "perks" that dissolve the employer/employee boundary: a salary, a "vacation" or "sick time" package, a health plan, a key to the company spa, shopping privileges at the company store. Soon the employer and the employee start to look and think and talk like "family" (a cooperative relationship). And this is encouraged while we keep telling ourselves there is a labor market (a reciprocal relationship).

But the boundary between employer and employee is so effectively dissolved that the ability of the employee to negotiate hour by hour, week by week, or task by task is effectively zero. The ability of the employee to say in a meaningful way "I don't need this!" is gone because the employer has a monopoly on their time and life.

Part-time jobs prevent this monopoly condition. And that is why part-time jobs are good and full-time jobs are harmful.

Epilogue:

Once this pervasive monopoly condition became clear to me, it was obvious I had to do something about it. And encouraging multiple part-time jobs seemed the obvious necessity. I toyed with model laws to strengthen boundaries and part-time work. But I am no political theorist, and my political influence is zero. So I decided to implement monopoly prevention into an experimental form of business that was coalescing at the beginning of 2017 and that would become the NPS experiment.

NPS stands for No owners, Part-time freelancers, Small self-managing teams. And this post explains the importance of Part-time freelancers. NPS has no employees and no salaries.

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