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Pittsburgh Tribune-Review: “What are jobs?”

In this March 6th, 2005, column for the Pittsburgh Tribune-Review, I asked “What are jobs?” The full column is below the fold.

What are jobs?

The issue on which economists’ thinking differs most from that of noneconomists is jobs.

The economist understands that jobs are always available. In fact, each of us has so many potential jobs that we can’t possibly do all of them. Paint the house, clean the garage, drive grandma to the supermarket. The list is endless. Trouble is, few of these jobs pay very much.

The economist understands also that jobs are a cost, not a benefit. That is, what each of us wants is not the job itself — the obligation to toil and sweat and agonize — but, rather, we want the income available from working the job.

In short, we want income-earning opportunities.

The economist understands, therefore, that the value of paid employment depends on the economy’s productivity. If the economy is producing lots of goods and services that people find attractive, then each paying job will be worth more than if the economy’s output is meager or unattractive. Even the best jobs in a primitive society afford a level of well-being that every modern American would find unbearably deficient.

In fact, we Americans of 2005 would be horribly discontented if we were suddenly transported back a mere half-century and employed in that era’s high-wage sectors. What did even the best-paid workers buy in 1955?

Cadillacs — without air bags, anti-lock brakes, CD players or tilt steering wheels. AM radios, however, were standard.

Black and white television sets — that received three or four channels, few of which broadcast ’round the clock; these TVs also broke down frequently and had no remote controls.

Refrigerator/freezers — that did not automatically defrost or make ice.

Rolodexes — which did not fit conveniently in your coat pocket or purse.

Turntables and LPs — that often would ge would ge would ge would ge would get stuck.

Telephone service — with a rotary dial and the privilege of paying a small fortune for each long-distance call. None of the phones was cordless or useful for taking along in the car or to the supermarket.

You get the point. Ordinary Americans today enjoy access to a range and quality of goods and services that were undreamed of by our grandparents. We enjoy this access because our economy is so dynamic and productive.

Unfortunately, economic dynamism is commonly condemned. When a new spark of dynamism enables machines to perform tasks once requiring human muscle, or when an overseas source of supplies opens up, politicians, pundits, and reporters focus on the resulting loss of domestic jobs.

“It’s awful!” some cry. “We need tariffs and other policies to stop this sort of thing!” demand others.

Although understandable, these reactions miss the big picture. Only by finding more productive ways to use resources (including human labor) does our standard of living rise. For example, it’s only because of the colossal growth in agricultural productivity that fewer and fewer people need to farm. Today, children and grandchildren of farmers are programming computers, managing stores for Target, performing Lasik surgery, and on without end. As consumers, our standard of living would be much lower had no agricultural jobs been ‘destroyed.’

And so, too, are our lives better as workers. When decades ago the prospects of earning a good living on the farm fell, the farmer wondered anxiously how his grandchildren would earn their livings. He could not have known that some would work for companies called Dell, Cingular and Ikea, while others would be free-lance Web designers working out of their lofts in SoHo. These jobs would never have existed had not human creativity and energy been freed from older occupations. Which gets us to the most important thing that economists know about jobs.

In a free economy, we have jobs that we don’t want to lose only because we are free to lose our jobs.

The jobs that permeate the modern economy are created by our freedom as consumers to spend our money as each of us sees fit — including our freedom to change how we spend our incomes — combined with our freedom as entrepreneurs to create new spending opportunities.

If this dynamic process of consumer freedom and entrepreneurial experimentation were stopped in an attempt to freeze all existing jobs into place, the very logic of our economy would go haywire. Rewards to entrepreneurism would disappear and consumers would be locked forever into an unchanging pattern of buying the same things year after year, decade after decade.

With profit-seeking and consumer sovereignty abolished, our jobs might be more secure. They also would be pitiful.