Home > economics, shorter work time > “Contract out” on America…

“Contract out” on America…


A rather dry and mostly unnecessary passing comment on Barack’s speech today.

From the Associated Press:

“It’s not too late to change course — but only if we take dramatic action as soon as possible,” Obama said. He pledged: “The first job of my administration is to put people back to work and get our economy moving again.”

“We’re not looking to create just any kind of jobs here,” Obama added. “We’re looking to create good jobs that pay well and won’t be shipped overseas. Jobs that don’t just put people to work in the short term, but position our economy to be on the cutting edge in the long term.”

We should point out here Barack’s, “good jobs that pay well and won’t be shipped overseas,” are, by and large, jobs performing personal care of some sort: e.g., nail salons, tanning spas, cleaning hotel rooms, restaurants, day care for dependent children, seniors and the disabled – any activity which requires face to face interaction.

Not that these are not important: A well manicured, tanned pair of hands look very good when cleaning hotels toilets, serving food, or changing diapers.

The reason these jobs can’t be exported is you are not likely to go to Beijing to pickup dinner for the kids on your way home from work.

With this personal care employment exception, and a few repairing roads and bridges, however, it is likely not a single job Washington will “create” with this stimulus plan can escape being exported – and, in even the case of personal care employment, no reason why non-citizen workers can’t be imported to do them.

(Next time you are on vacation, count how many women cleaning the toilets on your hotel floor speak English without an accent.)

The future of work, circa 2000, according to the U.S. Department of Labor:

One force driving the growth in service jobs has been a shift from work done in the home by family members to work done in the market. Families are “contracting out” work they used to do themselves. The way Americans prepare meals provides a dramatic example. Meals eaten at home rely increasingly on the purchase of prepared or partially prepared foods. Food stores have hired more staff to respond to the need for convenience with features such as delis and salad bars. Fast-food and carryout restaurants, as well as restaurants delivering food to the home, have both diversified and multiplied. The growth in meals eaten outside of the home, the result of both a long-term trend and the recent economic boom, has also led to a sharp increase in employment at eating and drinking establishments. This trend can be expected to continue as children brought up in homes where little cooking is done grow up lacking traditional cooking skills.

So we can apparently look forward to a generation of bistro surfers – great! But cooking is not the only skill children will no longer learn at home:

Child care, too, is being “contracted out”—to daycare centers and nannies. The childcare industry is projected to add 164,000 jobs between 1996 and 2006. Similar changes are occurring in the care of the increasing population of elderly persons. Residential care institutions—which provide 24-hour, year-round personal care and only incidental health care—have multiplied, along with nursing homes and home healthcare services.

So, as you grow old, your kids will do to you what you did to them – contract out your care to underpaid, mostly immigrant, stressed out mothers who will leave their children in the care of others to care  for you.

Which is a problem because personal care services not only can’t be exported, it is very difficult to increase productivity. According to the Wall Street Journal:

Sectors where productivity is high and average labor cost low “are those things that can be automated and mass-produced,” Mr. Baumol, now in his mid-80s and still teaching, said in an interview. “And things where labor-saving is below average are things that need personal care — these are health care, education, police protection, live stage performance… and restaurants.”


U.S. job growth has been concentrated in those latter sectors. More than half of the 1.6 million jobs added in the private sector in the past year have been in food services, health care and social services. Food services alone account for more than 20% of all new jobs this year, including government.

Day care for your child can’t be out-sourced to India – yet – but, it is pretty darn difficult to automate and mass produce child care, which limits the ability of a society to reduce the costs associated with this very necessary task.

And, if costs can’t be reduced through automation, nevertheless they can be reduced by paying people less to perform them – ask the Guatemalan housekeeper at the next hotel you visit.

The very same force which produce a too long work week – government spending, which drives up the prices of all goods and services in the economy – also drive working families to “contract out” care for their children, their parents, their meal preparation, etc., leading to rapid growth in those kinds of jobs.

It is unlikely Barack will see much in the way of “good jobs that pay well and won’t be shipped overseas,” since the stimulus he is proposing to fix the economy will instead send still more of those jobs overseas, and burden working parent to the point they turn their children over to day care providers.

Since we don’t want to be accused of having sympathies for the Party of  Wall Street, we will touch on this subject again to explain why the above is true, and why reducing the work week is the only way to address this crisis.

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