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Originally published Saturday, August 31, 2013 at 8:05 PM

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Challenging times for nation’s workers

All Americans who depend on wages for their livelihood are facing profound transformations, some longstanding and some new and disruptive.

Special to The Seattle Times

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As Labor Day comes around, the most recent reports tell us that 11.5 million Americans are out of work and the national unemployment rate is 7.5 percent.

That would be considered at or near a peak of joblessness in most post-World War II recessions. Now it’s seen as progress, a recovery.

Most places are not metropolitan Seattle, which has reached close to what economists consider full employment and also enjoys higher-than-average wages. We have an unusual set of assets in aerospace, technology, trade and health sciences.

Interestingly, we also have a significant union presence.

Yet all Americans who depend on wages for their livelihood are facing profound transformations and challenges. Many of these have been coming for some time, but were cloaked by bubbles, notable the housing boom. Others are new and promise historic disruption. Here are a few:

• Workers have weaker bargaining power than any time in memory. About three people are seeking every job opening. That compares with 1.2 in 2001. Companies can be picky. They also showed during the recession that they could get by, and even amass record profits, with fewer employees. In addition, many industries are highly concentrated now, where once they had many more competitors and need for workers. No wonder the share of national income going to labor has fallen to record lows.

• Part-time and temporary employment have become standard practice. Companies benefit from flexibility and lower costs. The downside: These workers tend to make less money and get few, if any, benefits. In July, 8.2 million Americans were counted as “involuntary part-time workers.” As the U.S. Labor Department explained, “These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.”

• Education matters more than ever. The economic condition of people with a high-school education or less has been eroding for decades, thanks to the decline of manufacturing and unions. This trend accelerated during and after the recession. College graduates are more likely to be employed and have opportunities. Unfortunately, higher education is more costly than ever.

• Jobs in the middle are most at risk. Didem Tüzemen and Jonathan Willis of the Federal Reserve Bank of Kansas City studied this “job polarization.” High- and low-skilled jobs are growing. But those in the middle are being destroyed by technology and offshoring.

• The rise of the machines. Earlier this year, I wrote about a coming wave of advanced automation and robotics. They will likely take over work now done by humans at a rate, and level of sophistication, that surpasses the automation seen in most of the 20th century. One parallel may be the mechanization of farming, which was closely tied to the employment shock leading up to the Great Depression.

• Humans will be pushed harder. With labor’s bargaining power weak and many worried about losing their jobs, employers can demand higher productivity and extra hours (paid or not). Higher earnings and a rising stock price, rather than employee loyalty, is what matters most. In this job market, you can be easily replaced. Morale suffers. A Gallup poll showed 70 percent of workers “disengaged.”

• Retirement will be different. More people are continuing to work after age 65. Some are doing this by choice. Americans, particularly in better-off socioeconomic groups, are living longer. But others, particularly baby boomers who have insufficient 401(k)s instead of the pensions of their parents’ generation, will have to work on. If they can get work; older workers who are laid off face a much tougher time finding a new job.

• Job quality is iffy. For every newly minted software engineer, there are far more people entering the low-paid services sector. Often their move is not by choice, but their old job, or even industry, is gone. According to the Economic Policy Institute, one-third of those making minimum wage are at least 40. We have yet to build a ladder up in most service sectors to better-paying jobs.

• Beware of fads. Notions of the “gig economy” or “share economy” are tossed out, usually by people who themselves have well-paying, secure jobs. But the dream of everyone as an entrepreneur isn’t practical for most. One big impediment is the lack of universal health insurance. Also, most lack the nest egg or well-off parents to start a business.

So this is our predicament. High unemployment is accepted on the hope that the labor market will eventually heal. But considering that a recession comes along about every seven or eight years, that may never happen.

Life goes on. Times change. Much of the trouble for American workers has come from public policies decades in the making, not just unavoidable economic forces.

A century ago, the Gilded Age gave way to the Progressive Movement and the rise of organized labor as a major force. New, job-creating breakthroughs happen, even though some influential economists worry that we’re past that era. Lack of investment in education and bad trade deals can be changed.

Until then, most working Americans are in for a rough ride.

You may reach Jon Talton at jtalton@seattletimes.com

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About Jon Talton

Jon Talton comments on economic trends and turning points, putting them into context with people, place and the environment in the Pacific Northwest
jtalton@seattletimes.com

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