Sunday, September 8, 2019

Many Services Need Better Market Coordination

In spite of regular reminders to improve our skill sets as we go through life; the fact remains, as Karen Weese notes in "America's Fastest Growing Jobs Don't Pay a Living Wage", that some jobs don't translate into fully compensated human capital. How to think about this paradox?

For example, a community worker discovered in one locale that women were mostly working full time with wages at approximately $24,000 a year. Alas, even though this sounds like reasonable wages to old folk like me, it's not sufficient to cover much more than basic bills in many instances. How on earth do these individuals successfully coordinate their services with those of others? And since many of these women worked as home health aides and personal care aides, they were actually seeking assistance in the form of uniforms or scrubs. Ouch, these don't cost much. I priced them at $10 at the local Dollar General after reading the above linked article, and that's when they're not on sale. Weese continues:
Over the next 10 years the occupations with the most job growth in America will not be the techy jobs that most of us think of as the jobs of the future, like, say, solar-panel technicians or software engineers. Instead, they'll be the jobs held by the women in Hyde-Miller's community center neighborhood: home health aide and personal care aide. More than one million new aides will be needed over the next decade, in addition to the 3.2 millions already in the field, the Bureau of Labor Statistics reported Wednesday. What's more, six of the 10 occupations providing the most new jobs over the next decade will pay less than $27,000 a year. That's more than 15 million people, working hard at jobs that simply don't pay the bills.
There's another problem regarding this reality which is not always taken into account. She asks: What about those who do gain the needed education to exit this kind of work, for better wages? More to the point: what if everybody did so? Who would be left to tend to those who are in need of additional assistance from others?

Like many, Karen Weese argues for higher wages for low skill work, which is understandable. Nevertheless, even when workers benefit from nominal gains, those gains are temporary. Only the real economy can create the supply side conditions which make multiple wage levels relevant. As a quick aside: Without production reforms, UBI could become a particularly thorny taxpayer burden, as its recipients find themselves in similar circumstance to today's low skill wage levels. All the more so, if UBI or perhaps government guaranteed work is implemented as means for policy makers to relieve themselves of time based service responsibilities. One can only hope, they might see to it that new service market options are in place first.

More progress can be made, by creating better services coordination and innovating our way out of the present hurdles of today's building and infrastructure requirements. A more pragmatic approach is needed - one capable of creating good deflation for a wide array of non tradable sector product and services. Only after new equilibrium is explored, would societies find it realistic to build knowledge use systems which don't fully compensate at the expected monetary levels of the present.

Fortunately, there are ways that basic skills sets can be shared with more challenging skills sets, for all concerned. Besides the normal voluntary matching of time arbitrage, time based service product could also be coordinated via local community "service taxes". Another useful approach would be time value insurance, which creates market space for individuals to "pay it forward" for those who can't reciprocate. For instance, should someone stop and do yard work for an elderly person on a hot summer day (does he really need to be out there pushing that mower?), their activity would also become part of a local public record, ensuring someone remembers to do the same for them, later on.

When we purchase insurance essentially of a social nature via money, the results are not always efficient, particularly when what we really seek is the time and attention of others. By way of example, in the U.S. we are encouraged to wait as long as possible, to tap into the insurance of Social Security. And while Social Security is primarily a matter of monetary security, the Medicare aspect of this form of social insurance, is mostly about access to the time of others when we need it most.

Here's the problem. Even though Social Security can no longer be taken at 65 without penalties, we still need to start monthly payments for Medicare at age 65, regardless. And if we don't, there's a ten percent penalty for monthly Medicare payments which grows an additional ten percent each year. How is one supposed to come out ahead by delaying their Social Security as long as possible (when they don't have other sources of income), if the previously required Medicare time frame still applies? The head scratching discrepancy between Social Security and Medicare requirements, makes all too evident the fact that money does not represent our aggregate time value as well as one might imagine.

Time arbitrage could help create markets for time value, which are more direct, representative and efficient, than what money is currently able to provide. There are ways to create better coordination, for vital and useful services of all kinds. We just need to begin the process of exploration, to discover what is possible.

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