The Remainder

The main reason why fewer men are working is that sweeping structural changes in rich economies have reduced the demand for all less-skilled workers.
"Decline of the working man" The Economist 30 April, 2011.

These structural changes are, I think, unlikely to go away anytime soon. In part, I suspect,because we're reaching a saturation point brought on by increasing productivity. (Now, for the record, I'm not an economist, so I have to base at least some of this on random guesswork.) The basic idea is this - imagine that someone rolled up to your home with a semi-trailer full of random stuff - goods and/or services that you don't already have or make use of. Could you see yourself buying all of the stuff in that trailer, under the assumption that whatever it is, it would improve your life enough to be worth however much it costs to make? Or to put it another way - is the supposed supply-side economic mantra that "supply creates its own demand" true for you?

Here's my theory - Let me pose a hypothetical worker, Alice. Alice is in a situation where she is basically alone in a factory that can make any and everything she needs or wants. Effectively she produces all of her own goods and services (a.k.a.: stuff). I suspect that as Alice's productivity rises, she will eventually get to a point where rather than work the same amount and have more stuff, Alice will start taking more leisure time, and allow her output of stuff to remain constant. In other words, Alice has a demand ceiling, where the value of work drops to less than the value of leisure.

But the way business is structured, it's almost always more efficient to use fewer people, working full time, than to give all workers more leisure time, because each worker tends to carry certain fixed costs.

And the combination of these two factors can lead to a situation where you have, basically, excess workers in the workforce. If you image that you have ten people, each of whom reaches their demand ceiling at 32 hours a week of work, the most effective way to structure production as a business is for 8 people to work 40 hours each. So... what happens to the other 2 workers? They become a structural unemployment problem. Now, in older agrarian societies it was something less of an issue - the 2 "leftover" workers could retreat to a farm and support themselves, applying their own labor to the task of meeting their needs. But in more modern societies, that's not always an option - farming requires skills, land and so on, that not everyone has access to.

And this is where I suspect that part of our current economic trouble comes from. We're at a point where between productivity and trade, we've hit sort of a demand ceiling (which might also be exacerbated by wealth inequality - those people who want to have more stuff don't have the money to justify the costs of producing it). That pushes lower skilled people (who are also generally considered to have lower productivity) into an area where there is no demand for their labor, and an incentive to shed the overhead costs that come with employing them.

Like I said, I'm not an economist, so while this all makes perfect sense to me, it could very well have more holes in it than a Swiss cheese factory. So I'd like to actually run it by someone who knows what they are talking about. I wouldn't be surprised to find that it's at least barking up the right tree.