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The Great Decoupling: What 17 Million College Graduates Working Menial Jobs Tells Us about the True State of the American Economy

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There is one number that is worse than the number of the currently unemployed or those underwater on their mortgages. It is the number of those who have college degrees and are, despite their credentials, working menial jobs – cleaning, cooking, and doing other labor. Richard Vedder at The Chronicle of Higher Education revealed last year the stunning statistics,

Over 317,000 waiters and waitresses have college degrees (over 8,000 of them have doctoral or professional degrees), along with over 80,000 bartenders, and over 18,000 parking lot attendants. All told, some 17 million Americans with college degrees are doing jobs that the BLS says require less than the skill levels associated with a bachelor’s degree.

This is even true at the doctoral and professional level – there are 5,057 janitors in the U.S. with Ph.D.s, other doctorates, or professional degrees.

Few have unpacked the implications of this catastrophic state of affairs, but the statistics point to one inescapable conclusion: not only is the American economy in worse shape than the unemployment numbers would lead anyone to believe, it was in quiet crisis long before the Great Recession began, and it will be in crisis long after the mainstream media celebrate economic recovery. The reason? Growing productivity. As the economy has been growing more productive, its labor requirements have been falling. Millions of college graduates are working menial jobs because the economy is unable to create enough jobs for them – a leaner, meaner economy needs fewer workers. The consequences of this will be more poverty for more Americans along with the evaporation of civil liberties while the top earners become richer than ever.

The American economy has been in crisis long before the Great Recession. In fact, it was the quiet crisis that caused the Great Recession: Americans were seeing their wages decline for years and were in no financial position to absorb the sudden economic shock that precipitated the Great Recession. As early as the 1990s, graduates of low-end colleges were heading into menial jobs. But then none of that mattered because those who graduated from low end colleges were, in a sense, throwaway people to the mainstream media – they did not make for good victims, people with whom the average reader could easily identify, and so their plight didn’t register.

It was only after the Great Recession, when those privileged youth of the upper classes experienced what their poorer, invisible peers had been living for years, that the questions of the worth of a college education and, by extension, the underlying long-term economic problems in America came to prominence in the public debate.

The crisis gave people like Peter Thiel an opening to question the dogma and sacred creed of a college degree as palliative for the fundamental socioeconomic problems of American society. Thiel recently almost caused a scandal by calling an investment in a college degree speculative and ill-advised. Thiel has, of course, been criticized for not getting the secret – college education is not an investment, it is something more mystical and therefore priceless.

Even now, as Ph.D.s toil behind lunch counters, waves of gold-seekers descend on the nation’s campuses. The idea that a college degree can cure all social ills is powerful indeed. To question it is to question the centerpiece of political and social stability in the country, because to say that a degree doesn’t mean much is to say that America has become a nation where it is impossible for most to meaningfully change their lives for the better. No politician can admit this openly. And so the fantasy persists.

But the economic reality responsible for the thousands of graduates with advanced degrees working menial jobs supports not the delusion that we need more accessible higher education for more people, but the conclusion that the American economy has, for the last two decades, been actually shrinking. Not only has the shrinking economy been shedding jobs for years and causing the incomes of most to remain flat, but a shrinking economy will be unable to supply the kinds of jobs in the numbers required for many Americans to maintain a middle class lifestyle, auguring rising poverty and diminished means for many formerly of the great American middle class.

A shrinking economy also means that even if the economy gets “better” for those on Wall Street and the rest living at the very top of the ladder, it won’t get better for those on Main Street, for the shrinking economy has decoupled from the rest of America, leaving millions permanently stranded in the periphery of stagnant or falling wages and few prospects.

An economy could be shrinking for two reasons: productivity and globalization. It is its greater productivity that causes an economy to shrink in terms of its workforce size needs. A simple example shows the process at work: Instead of many secretaries and office clerks there are computers and software that allow only a handful of office workers to do the same amount of work. The principle applies across most industries.

This technology-inspired rise in productivity is only part of the equation, however. In similar ways as technological innovation, globalization makes economies more productive in the sense that it allows for the outsourcing of jobs to sites where more work can be done for less. Traditionally, the media has focused on the outsourcing of blue collar jobs and plants being shipped abroad. But even white collar jobs can be outsourced: legal documents can be prepared in India, and much other similar skilled work can be outsourced as well. As a result of globalization, perhaps the entire law office, not only secretaries and clerks but paralegals and even attorneys, has itself been outsourced, leaving only a handful of partners. While in a previous era that law office could hire several college graduates to work as paralegals, the outsourced office has no such needs. In fact, it doesn’t really need to hire new law school graduates either. The only place those college graduates can end up is behind the lunch counter.

The consequences of the shrinking of an economy are simple yet paradoxical – such an economy is often richer, while, at the same time, it has high general unemployment and rising poverty rates. So much so that such an economy seems to be decoupled from the rest of the country, as it often relies on foreign capital flows and the importing of labor by outsourcing jobs, high-skilled and low-skilled alike, abroad, while having few connections to the rest of the country. The reason for this paradox of great wealth and the great misery of a shrinking economy is simple: those who have access to the cash-generating core of this economy get richer while those on the periphery grow increasingly poor.

This growth in income inequality has indeed been a general trend in America for the last two decades as more and more Americans have been left out on the periphery, where wages have been stagnant and college degrees have paid few, if any, dividends. The reality of a shrinking economy can also be seen in the statistics that point to the fact that fewer people have returned to the workforce following recent recessions: fewer have returned to work because there simply aren’t jobs there for them – the economy’s labor force needs have shrunk!

These jobs can’t be legislated back into existence, which means that no incentives will coax global corporations to hire people they don’t need. It also means that going to college, for most Americans, really does make no sense, as Thiel suggests, for the simple fact that there are too many colleges producing too many graduates in the face of a constantly shrinking demand for college-educated labor.

The decoupling of the economic core from the rest of society has political implications as well: those in the core refuse to pay taxes to support those in the periphery because they don’t feel the connection to those in the periphery. Such a disconnect has indeed been present in American politics. Major corporations, according to a recent article in Bloomberg, use various means, such as Double Dutch, to pay little, if any, taxes. Corporations are not alone in trying to sever ties to society at large, of course; tenacious defense of the Bush tax cuts is part of the process of decoupling of the core from the periphery as well.

There are lesser known consequences of this decoupling too, mainly in the legal sphere: increasingly corporations have been relying on a private legal system that exists outside of the control of traditional courts. It’s called arbitration and the Supreme Court has abdicated oversight and control of this shadow court system in recent decisions that give arbitration tribunals nearly absolute power subject to no review. More than any other development, the rise of shadow courts where citizens have no rights is a telling signal of the giant shift of power in American society and a telling sign of a great decoupling underway. Not only does the elite wish to pay no taxes, it has now managed to create its own private court system where it can discipline the average American without consequence or accountability.

The implications for the economic prospects of many in America are not good. Millions will remain in poverty and many millions more will remain in the economic periphery for the foreseeable future even as the mainstream media trumpets economic recovery and the growth of the wealth of the core of the economy. As the income gap grows, as more are stuck doing menial jobs after receiving their college diplomas, civil liberties along with basic legal rights will be slowly dismantled and evaporated while the country descends into authoritarian rule – such process has been the historical fact in many countries where growing income inequality has been observed – as the core seeks to manage the growing army of the discontented and the poor.

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About A. Jurek

A. Jurek is one of the editors at Blogcritics. Contact me at: a.jurek@blogcritics.org