Making Work Work in the 21st Century
"These new forms of work are going to continue to expand, and under the right conditions they can mean more flexibility for both workers/contractors and the businesses that bring them on. But we still have a system of benefits and regulation based on the old model—the paternalistic corporation. Benefits ranging from health insurance to retirement savings to unemployment and disability have yet to be established in a sustainable way for this new class of workers. There’s an opening here to create a new kind of financial services firm that can process payments and manage benefits for contractors and businesses in the gig economy, but this will be difficult to accomplish without changes to state and federal employment law."
The fault line breaks between the Millennials and the Boomers. Ask a Boomer and he will tell you how everyone wants to work an 8-5 job 40 hours per week. Ask a Millennial and she will tell you she wants more flexibility, not a rigid 8-5 routine, but hours which suit her schedule, and days too, and she might not want to work the full 2,000 hours per year. Instead she might want to spend 6 weeks in Europe.
"Over time, more and more Americans will likely operate in the gig economy, mixing part time and temporary employment with independent contractor jobs. People who work in this world should not be second class citizens, and they should not be inundated with the crazed paperwork requirements of an employment system that is oriented to old-fashioned long-term employment. Taxes need to be collected, retirement savings need to be accumulated, and people have to be included in disability, healthcare, and unemployment insurance programs, some of which will need to be redesigned to accommodate job-hopping and gig work. And that structure needs to be flexible and cost effective enough to make it easier for businesses to create jobs and for people to piece together a living from several different activities."
The big change here is the need to apply creative destruction to the entire employment safety net. The Boomers will be shocked by this, but the Millennials will understand the need, and with a small amount of prompting will be willing to indulge these ideas.
These changes do not need to alter the outcomes for people still in the old programs, although it would be appropriate to offer them buyouts to move to the new replacement programs, which will be, without doubt, better.
Many of these changes will likely create strong pressure to eliminate the income, corporate, estate/gift, and payroll taxes, and convert them into some sort of consumption/sales tax. This would be a positive outcome. On the safety net side, the individual should be able to own, and control his own safety net assets, although among the poorer we will likely need to continue some sort of government assistance. The Third Way offers some answers to these issues, and I am sure we will find new arrangements once we begin to discuss these issues more deeply.
"All this is part of one of the most important and complicated tasks our society faces: creating an institutional and legal framework for an information economy that will be as different from the industrial economy as that economy was from the agricultural economy that came before it. At the moment, both political parties seem more interested in peddling competing brands of nostalgia than in promoting a workable vision for the post-industrial economy in which millions of Americans already live and work."
Yes, and failure means something more like this, Japan’s elderly turn to life of crime to ease cost of living - FT.com
Japan has a debt of approximately 240% of GDP. What they spent that money on is unclear, but it is clear it was not on retirement funding for the elderly.
"Japan’s prison system is being driven to budgetary crisis by demographics, a welfare shortfall and a new, pernicious breed of villain: the recidivist retiree. And the silver-haired crooks, say academics, are desperate to be behind bars.
Crime figures show that about 35 per cent of shoplifting offences are committed by people over 60. Within that age bracket, 40 per cent of repeat offenders have committed the same crime more than six times.
There is good reason, concludes a report, to suspect that the shoplifting crime wave in particular represents an attempt by those convicted to end up in prison — an institution that offers free food, accommodation and healthcare."
Yikes, Japan's oldsters are breaking into prison?!
"The mathematics of recidivism are gloomily compelling for the would-be convict. Even with a frugal diet and dirt-cheap accommodation, a single Japanese retiree with minimal savings has living costs more than 25 per cent higher than the meagre basic state pension of Y780,000 ($6,900) a year, according to a study on the economics of elderly crime by Michael Newman of Tokyo-based research house Custom Products Research."
The solution for a fiscally healthy society would be to calculate the real cost of living for these retirees, and then provide financial assistance to alleviate this poverty problem. Prison is a very expensive alternative. But Japan is not a healthy society. It is a society with the worlds largest government debt, and an unbalanced budget which requires the government to borrow more each year. There is simply no more money for such trivialities as old age welfare pensions. Or something.
To avoid a similar outcome the US needs to rethink our welfare state, reform our welfare state, and build something better. The progressives on both sides of the political isle will fight this tooth and nail!
Mish has a nice piece on the gig economy . . .