Job search, yet again

I got lots of very helpful responses to my recent post on the search theory of unemployment, here and at Crooked Timber. But it has occurred to me that I haven’t seen any answer to one crucial question: How many offers do unemployed workers receive and decline before taking a new job, or leaving the labour market? This is crucial, both in simple versions of search theory and in more sophisticated directed search and matching models. If workers don’t get any offers, it doesn’t matter what their reservation wage is, or what their judgement of the state of the market. Casual observation and my very limited experience, combined with my understanding of the unemployment benefit rules, is that very few unemployed workers receive and decline job offers, except perhaps for temporary work where the loss of benefits outweighs potential earnings. Presumably someone must have studied this, but my Google skills aren’t up to finding anything useful.

And, on a morbidly humorous note, it’s a sad day for the LNP when efforts to bash dole bludgers actually cost them support. But that seems to be the case with the latest plans, both expanded work for the dole and the requirement for 40 job applications a month. I’ll leave it to Andrew Leigh to take out the trash on work for the dole (BTW, his new book, The Economics of Almost Everything is out now).

The 40 applications requirement has already been the subject of some amusing calculations. I want to take a slightly different tack. Suppose (to make the math simple) that the average job vacancy lasts a month. There are roughly five unemployed workers for every vacancy, so meeting the target will require an average of 200 applications per vacancy. The government will be checking for spam, so lets suppose that all (or a substantial proportion) of the applicants take some time to talk about how they would be a good fit with the employer and so on. Dealing with all these applications would be a mammoth task. One option would be to pick a short list at random. But, there’s a simpler option. In addition to the 200 required applications from unemployed people, most job vacancies will attract applications from people in jobs. A few of them may be looking for an outside offer to improve their bargaining position with their current employer (this is a big deal for academics), but most can be assumed to be serious about taking the job and in the judgement that they have a reasonable chance of getting it. So, the obvious strategy is to discard all the applications except for those from people who already have jobs. What if there aren’t any of these? Given that formal applications are going to be uninformative, employers may pick interviewees at random or may resort to the informal networks through which many jobs are filled already.

Trying to relate this back to theory, the effect of a requirement like this is to negate the benefits of improved matching that ought to arise from Internet search. By providing strong incentives to provide a convincing appearance of looking for jobs for which workers are actually poorly suited, the policy harms both employers and unemployed workers who would be well suited to a given job.

Update I found the following quote widely reproduced on the web

On average, 1,000 individuals will see a job post, 200 will begin the application process, 100 will complete the application,

75 of those 100 resumes will be screened out by the Applicant Tracking System (ATS) software the company uses,

25 resumes will be seen by the hiring manager, 4 to 6 will be invited for an interview, 1 to 3 of them will be invited back for final interview, 1 will be offered that job and 80 percent of those receiving an offer will accept it.

Data courtesy of Talent Function Group LLC

Visiting the TFG website, I couldn’t find any obvious source. The numbers sound plausible to me, and obviously to those who have cited them. But, if the final number (80 per cent acceptance) is correct, then it seems as if the search theory of unemployment is utterly baseless. Assuming independence, the proportion of searchers who reject even three offers must be minuscule (less than 1 per cent).

64 thoughts on “Job search, yet again

  1. John there may be an ulterior motive here – that is to turn us all into sole traders – tradies if you like, not working for a salary but bidding for every job that comes along that we can feasibly do or travel to. I seem to remember John Winston Howard suggesting this was his dream.

    Perhaps we are seeing the future here for all of us – imagine academics bidding each other down to teach different courses. Of students auctioning themselves and their fees a bit like a new age slave market.

    Now before you laugh this off can I say I have actually seen such a system in action. A few years ago my wife and I visited South Africa to see the big animals before they go extinct outside of glycerol amended freezer vial.

    Anyway before we tootled off she broke her ankle and I discovered the ‘quality’ South African medical system. (reportedly the public system involves days of waiting in unhygienic conditions and if you are old you don’t get help at all – thanks to an age triage)

    Getting back to privatized atomised employment:
    – In reasonable time we got picked up by a normal looking ambulance but apparently they were operating like a tow truck service – finders fee for the hospital they took her to.
    – they dumped us at outpatients where there was lots of paperwork
    – at 2 am I was non-functional – and went back to the lodge for a little break leaving her in outpatients thinking I’d come back in a few hours and she would be sitting in bed and we would see the operation sorted shortly.
    – an odd thing I noticed before leaving was that when the entry tests were – they asked would it be MC or Visa??!! (Why the rush?)
    – then I get the call – she is still on the outpatient slab (literally a block of concrete) – and no they wont enter her into a ward
    – I need apparently to put down a 30,000 Rand deposit??!! – not easy at 4 am in the morning when you can only take about 1000 Rand from a bank at one time and 30K exceeds my credit card limit
    – I ring the travel insurance company and get a complete run around. They seem to think I’m a Nigerian letter scammer. There is no central hospital system to sort this out and no allowances for a person being sick.
    – Finally I figure out how to sort this via internet banking transfer – repeated top ups of the credit card – meanwhile the hospital only wants money – the black guy on the desk and his white boss who seems to have lost a few neurons show zero sympathy without money when I try the ‘speak to a supervisor’ line.
    – Finally I sort the operation etc. It goes smoothly but then I try to pay – only to find EVERY SERVICE is managed by a different internal provider located somewhere in this termite mound known as a Mayo Clinic. There is no central coordination. Only anarchy.
    – Its so extreme that just as my wife is about to be anaesthetized she herself is asked is that MC or Visa.
    – All providers seem to have these portable radio credit card machines.
    – 6 months later we are still being chased for non existent debts because A doesn’t talk to B.
    – The only good sides:
    * the exchange rate was low and the stay short so we got off lightly – no Medivac of course but thankfully we could land on a friend.
    * I finally found someone who actually understood the system and was helpful. Ever watch Criminal Minds – the US police soap. In it there is a character who sits all their days over a bevvy of computer screens like a spider in their database web in this dark dingy basement room. This person was identical allowing for the somewhat older technology.

    In conclusion I think there may be more to this free ranging of job applicants than meets the eye. It may be mad but the ideology is out there and so are the models for a brave new world where there is no such thing as society – and ‘collective’ is a dim Nimbin memory.

  2. Andrew Leigh talks about how working for the dole activities distract some job search.

    I thought the evidence was people devote surprisingly little amount of time to job search.

    The point of work for the dole is to make entry onto the dole unattractive in the first place. The ex ante affect is the key driver

  3. @Jim Rose
    Jim, you write like a man who’s never been unemployed, and has no empathy.

    The funny thing about all this is that that also describes those in the government who are proposing this scheme, with the additional fact that most of them have never actually had a proper job either.

  4. My experience of being unskilled and unemployed is very limited, but two weeks on the dole was enough to make me decide that begging in the street was a better option. That was a few years ago.

    One huge cost that isn’t mentioned is the required “dealing with the dole” skillset. Some groups in society will develop and share the skills required to deal effectively with the dole systems, and they will respond very quickly to changes in the system(s). I’ve met a few of the “skilled doleseekers” over the years and was impressed not so much by the way they knew what to say to who and where to go, but by the way they were tapped into a network of information sharing such that they had *todays* who what where information.

    The problem is that the government aggressively targets the more visible “skilled doleseekers”, and their efforts make the dole worse (much worse) for everyone else. Collateral damage, in a way.

    The trouble is that people who don’t have “the knowledge” get caught easily and often. If you are naive you will hand over original documents to Centrelink without keeping a copy and getting a receipt, and recording the date and time, the name of the person you gave them to plus the Centrelink office code and your case number. Then a week later when you get next the “we will cut you off if you don’t supply …” letter you have no evidence that you ever produced the documents, plus you have to do whatever it takes to regenerate them. It’s obvious when you hear about it.

    So are the 200 other little “things you have to know”… after you hear them. If you have to discover them all for yourself your experience of “being on the dole” will be hell. I use “being on” loosely, because you’re likely to take a very long time to get on it, and be kicked off quickly.

  5. Surely, job search “theory” is entirely system dependent. What I mean is all the socio-economic and institutional arrangements of the entire political economy affect the entire “job search” phenomenon or even if recognisable job search exists. To go back in history, a slave does not have to search for a job, a bonded feudal serf does not have to search for a job. And today, the son of rich man with a business does not have to search for a job. He might choose to in some cases but he does not have to unless he mightily displeases the patriarch in some way.

    You seem to be positing that there is one natural system (a free market mediated by efficient internet search?) and that particular institutional arrangements or laws (like this “40 job applications a month”) will interfere with the otherwise “natural functioning” of the free market mediated by technology.

    Surely there is a basic fault with this a priori assumption that there is a “natural” free system? There is no natural free system as a million and one insitutional arrangements and mechanisms of the entire political economy impinge on the issue all the time from all angles. This even extends to the basic legitimising parameters of the entire political economy, for example the permitting and facilitating of the ownership and management of the means of production by a tiny rich elite as compared to say the owning and management of the means of production by the workers themselves.

  6. The more I think about the huge effort involved in administering the various poverty-level benefits, plus the effort spent applying for and staying on those benefits, the more I think universal basic income systems are the way to go. The current system doesn’t even reach the level of “digging holes and filling them in again”, because it’s aimed at immiserating two groups of people – the front line administrators of the system and the beneficiaries. The various hole schemes are at least designed to feel like work, whether it’s being an assistant to the guy leaning on a shovel or the clerk in charge of receiving job applications in Abetz’s electorate office.

  7. In the UK, we have something similar.. you are now expected to look for a job for at least 30 hours a week, make a ridiculous number of applications, and so on or face the thread of sanctioning. As Moz says above.. the more Kafkaesque the system, the more you have to be a ‘professional’ to work it.

    And people who are in part time work (but still receiving benefits due to low pay) can be ‘sanctioned’ if judged to be not trying hard enough to look for extra hours.

    Again as Moz says – a Citizen’s Income is a far better way to go. At the very least it removes all elements of welfare-traps and ‘gaming the system’ from the equation.

  8. @Jim Rose

    So Jim @2 you believe the supply of jobs is controlled by workers? In other words a worker will avoid “entry onto the dole” if sufficient disincentives are in place? And unemployment will magically come down if only the unemployed devote more time to “job search”, regardless of the fact that the job vacancies don’t exist?

    I know you and I share few ideological beliefs, but at least you normally manage to make reasonably rational comments. But this one is just moronic.

  9. All designed to try and obscure the failure of market fundamentalism to provide enough jobs and the failure of market fundamentalism to cope with market failures.

  10. There was an article in the age saying the proposed changes – particularly those affecting people under 25 – are likely to cause people to turn to crime or sex work to survive if they can’t find a job.

    “David Thompson, the chief executive of Jobs Australia, which represents non-profit employment services providers, said he could not see how some young job seekers would be able to survive, let alone meet the additional costs of finding out about and applying for jobs.

    ”For those people who don’t have access to other forms of support like from their family, I just don’t understand how anyone can imagine it’s going to be possible for them to do these things.

    ”Some of them presumably will do things like steal things, do burglaries, maybe sell drugs, and maybe sell themselves. I just don’t think we should be contemplating anything like that in this country.””

  11. I’m not into conspiracy theories (at least not in this case) but the confluence of the government’s $5.1 billion spend on job services and the current attempt to abolish the Australian Charities and Not-for-profits Commission, to whom a large portion of this spend will be directed, leads one to think there is some intent, particularly when one of the major beneficiaries is the Catholic Church.

    To go back to @Ikonoclast’s comment that a feudal serf does not have to search for a job, the role played by the protectors of moral integrity (that is, the championing of the poor and disenfranchised), which in the Christian tradition has been the church, has been subverted to support the interests of the state since the times of Constantine.

    We like to think that the Enlightenment broke this nefarious relationship, and perhaps for a short time it was possible (think 19th century poor house), aided by the reformation and the splintering of Christendom, but from the late 20th century there is much evidence that both the Christian charitable sector and their agnostic cousins, the not-for-profit sector, have again become increasingly entangled.

    The not least of these indicators is the rise of prosperity doctrine in the church, where even the most non-conformist sects, the Methodists and Presbyterians, have succumbed to running elite schools and services for the poor and sick that emulate the prerogatives of the dominant paradigm.

    That is not to say that there are not many genuine and generous workers within these organisations, but the systemic subduction of these institution invalidates their contribution and exposes them to the serious charge that they have sided with the extortionists against the very people they profess to champion.

  12. I agree with the points made about serfs not having to look for jobs, the age-old co-option of the church, and the necessity of turning to crime for people who don’t have the professional skills to look for the dole. The rich also seem to be turning more to crimes like arms, war, illegal drugs, prostitution, pornography, piracy and off-shore slavery, now that the costs of digging up resources often outweigh the profits. I am so glad that – fingers crossed – I don’t have to chase the dole. I don’t think I could survive.

  13. I guess there are places in Australia where there aren’t forty different employers, or even twenty. What are the unemployed who live in those places supposed to do? ‘Remember when I wrote to you and asked if there were any jobs going, and you said there weren’t? Well, that was four days ago, so I was wondering if anything had come up since then?’

  14. @J-D

    You aren’t restricted to employers in your area. You can apply to employers outside your area, while drawing their attention to the constraint and the compensation you’d anticipate for the extended travel.

  15. @Fran Barlow

    I appreciate the extra information, and on past form I’m confident that you’d agree with me that it doesn’t make the policy any more sensible.

    ‘I’m interested in the position you’re offering, but I’d need you to pay for me to commute from Burketown.’

  16. @J-D

    J-D the Abbott answer would surely be that the unemployed should move to places where there are more employers. Get off their butts and go find jobs in the mining towns – the fast food places are probably short of a few casuals. Market fundamentalists who privilege production above any human values believe that the first duty of the individual is to contribute to the capitalist economy, no matter what this might entail by way of abandoning ties of family and community.

  17. @J-D

    Yep in my small town there are two business, the Post Office and the Pub. Both of these are only just surviving and the idea that every one of the 8 or 9 high school kids in town and the large numbers of underemployed older people who would love a job, will all be sending them resumes is very funny.

    The idea had several people laughing and crying at the same time at the PO yesterday. People from both – or all sides of politics – were agreeing that Twiggy seems to have become a ‘bleeding heart’, even a ‘do-gooder’ or else he is setting things up so that he can’t fail.

    The latter motive – that making a profit is the only thing Twiggy understands – was the conclusion we came to after I explained the way that being rich changes the way one thinks. It seems to me that there are a surprising number of people that others would say were unintelligent, that very quickly understand this sort of human behaviour and then things start to make sense to them.

    There was also some discussion of Clive Palmer’s character and someone said they didn’t think he was the same sort of rich person that Twiggy and Gina are. Someone else disagreed strongly and thought that Bob Katter had better ideas. It has become so much more interesting talking about politics lately.

    As far as moving to the city to get work, so many people out here are here to keep their kids away from the type of life that is available to them in the city so it’s particularly distressing for them to understand that there is no alternative, no choice for their kids and that all the policies that are on offer are those that force people to participate in a system that creates more inequality, not less.

  18. Now for some simple numbers;

    1. Jul 10, 2014 – Unemployment increased 20,300 to 741,700.

    2. Job Vacancies in Australia increased to 132916.60 in June of 2014.

    So, about 740,000 unemployed are required to make 40 job applications a month for about 133,000 jobs! How does forcing people to apply over and over again for non-existent jobs constitute a genuine policy? Of course, it does not. This is very clearly a policy that is not serious other than in its intent to punish and mortify the unemployed and use unemployment as a lever to suppress wage demands and suppress goods and services inflation. (However, it’s quite okay for banks to over-lend, creating stock market bubbles and asset inflation).

    There is in fact no intent to solve unemployment. High unemployment is very deliberate and fully intended policy. We have in this country and other Western countries a set of policies designed to create unemployment.

  19. @J-D

    Precisely. It would make you (ceteris paribus) less appealing as an employee, butit would satisfy the test.

  20. @Ikonoclast

    I wonder whether the intent is to punish employers in small towns as well. Imagine you’re the pub operator in a rural town, so you know 90% of the people forced to apply for the job you don’t have. You’re probably going to feel horrible about turning people down, at least at first, and quite likely feel obliged to answer at least the first few (hundred) applications. It’s a waste of time and it’s not going to make you feel good about your role.

    Now multiply that by every small business owner in Australia.

    I can only hope that this counts as “shooting yourself very firmly in both feet”.

    And I repeat, if I was job seeking I would be applying to every MP every month. Or maybe not that often… 40 per month, there are 150 lower house plus 76 senators in federal parliament. In NSW we have another 93 members and 46 upper house occupants, for a total of 365 parliamentary representatives. Conveniently, that’s one per day, every day, for a year (I don’t think I could eat that much, though). More than enough for me to bulk up my job application list with, though.

  21. I think, @Moz, that they’re expecting a significant number of employers, who in the main are coalition supporters, to not blame the government for the impost but the unemployed themselves. Particularly the unemployed who are not a good fit for their business, and have asked for a job on more than one occasion.

    Also, in response to JQ, since the GFC recession hit employment in the US there has been a tendency to install ‘must be currently employed’ tags in job ads. The US discrimination framework is different to Australia (mainly focusing on discrimination against minorities, as opposed to our more general framework) so there is some discussion of whether this is legal.
    Also in the US there is an increasing use of credit checks, the assumption being the unemployed are trashing their credit rating. And here in Aus, the company I work for is putting a lot of store in psych testing for professional positions, which just happens to weed out older and more introverted applicants for no apparent reason.

  22. If unemployment is caused by deficient aggregate demand, and otherwise is involuntary, how can work for the dole increase unemployment or reduce the rate at which people exit unemployment?

    Under the deficient aggregate demand theory of unemployment, people have no control over why they are unemployed – that’s why their unemployment is involuntary.

  23. Much of the discussion in this thread seems to me to proceed from an erroneous premise – that the objective of the imposition of onerous conditions on the jobless is intended to improve the likelihood of their moving into employment.
    The likes of A Current Affair and the late unlamented Today Tonight have created a widely-held belief that there is no real unemployment, merely large numbers of workshy bludgers. The present Government is determined to prove its mettle to those who hold this risible and demonstrably false assessment. Sadly, such prejudices are impervious to facts and reason. Indeed, attempts to break through this wall of ignorance, serves only to reinforce such attitudes.
    The modest promise by the PM in his Leader of the Opposition role to create 1 million jobs in five years seems to be off to a pretty poor start.

  24. I was voluntarily unemployed in my youth. I found rejection difficult to handle, and so only tended to apply for jobs I knew I would get, and then I’d accept them. I argued that if I didn’t have a job, someone else would. I still can’t see what is wrong with that argument.

    I did once quit a temporary public service job to go back on the dole because I just couldn’t stand it any more. They were kind and wrote that my employment ceased because my contract ended.

    I’m older now, and do work I like. But at some stage, I should stand aside and give someone younger the chance. Shouldn’t I?

  25. And @PJF , you have nailed it. ACA and TDT could always find some employer who couldn’t get anyone to work 12 hours a day picking fruit in the hot sun for a pittance.

  26. @PJF

    I am one of the commentators who has stated it is clear that maintenance of unemployment above the frictional rate is deliberate policy. It is done to discipline the employed, suppress wage demands and suppress inflation.

    Related to that, the imposition of onerous conditions on the jobless satisfies a number of needs and purposes.

    (1) The psychological need for punishment of a scapegoat.
    (2) Distracting the population from the real causes of unemployment.
    (3) Pushing people out of the labour force altogether.

    People who are dissatisfied with their life and their personal and economic outcomes (a common enough psychological state under exploitative capitalism) like to see someone blamed and punished. The unemployed are scapegoated and blamed for taking taxes out of the pockets of workers etc. etc. The implication is “If it weren’t for these bludgers the economy would be running fine and we could pay you higher wages and levy lower taxes.”

    Blaming the unemployed for unemployment also serves the purpose of distracting the population from the real causes of unemployment. The real causes for unemployment are systemic and complex in our late stage global capitalist system. It would take more space than I should use here to lay them out. Suffice it to say that as the causes are complex and inherent to the entire political-economic system, it serves the purposes of the powers-that-be to replace the complex truth with a simplistic lie blaming the unemployed.

    The onerous requirements are also designed to push people out of the labour force altogether. That is, they are designed to get people to give up job search and no longer be counted in the official labour force. This gets people “off the books” i.e. off the official unemployment rate. The unemployed are the detritus of capitalism who get swept under the carpet and ignored. Meanwhile, misery goes up, crime goes up, disease goes up, the waste of human potential goes up and so on.

  27. @John Brookes

    I agree. I’m totally OK with people declining to continue work they find odious or declining to apply for positions they are unlikely to be awarded or like or perform well in if they get them. It’s undignified to individuals to pressure them to violate these rules and very probably more costly to the community as a whole to require this of anyone.

    There’s no shortage of people seeking the work that some might decline. Self-evidently, if the people doing this work don’t find it unduly onerous it is better that each of them does it because the costs to them are lower. In a world closer to the ideal than this one, nearly everyone would spend their time in meaningful and productive work from which they drew satisfaction as well as the means to live in dignity and those who could not achieve such would be regarded as in need of the support of those of us who had.

  28. I’m reminded that so far every job I’ve been reluctant to accept has turned out poorly. If even someone as socially blind as I am has a bad feeling about working for someone it seems pretty safe to say that that job is not for me.

    The “take the job of lose the dole” rules seem very much designed to force people to accept abuse from employers. And it’s always going to be the nasty employers who refuse to write “job finished” letters for people who are leaving. And AFAIK there is no flagging system used by Centrelink to say “gosh, this employer fires an awful lot of people”.

  29. @John Brookes

    The inevitable consequence of one of these TDT reports is a complaint (much less visibly reported) from local farmers that they are being inundated with jobseekers.

    In this context, I recently saw, for the first time in years a “No Jobs Here” sign, outside a farm which, due to its location on a highway, probably got more applicants than most.

  30. I wonder how the Green Army “volunteers” are going to be found? If you are on the dole and long-term unemployed, no doubt the slave wages will look an awful lot better than the dole–until getting bitten by a snake and discovering no Workcover, a lack of appropriate clothing (unless supplied by the money-starved volunteer), etc. Perhaps I’m being a tad cynical, but I suspect an awful lot of “volunteers” are going to discover that the rules and conditions weren’t properly or completely explained before they jumped at it. And what if they find they can’t cope with the physicality of it, needing to return to the dole; will they be sent back to the start of the dole application process, complete with six month wait for benefits (if they are young enough to fall prey to that rule) and a 40 a month application rate? Man, this is going to be complicated…

  31. Also, the dole should pay super — pretty obvious, that one, when you think about it — and also should give annual leave.

  32. Seems to me the purpose is to increase the chances those on the dole will be forced into applying for unattractive jobs, fruit picking springs to mind, as they have to cast the net wider. Anecdotally, I’ve know many (mainly young) who just won’t apply for such “awkward” work – bad time of day, need to catch public transport long distances, get dirty, need to obtain appropriate clothing, and all for min wage. This is simply an observation to back my theory, not a description of all dole recipients.

    What I suspect will happen is dole recipients simply record they have cold called various large institutions who are never going to keep records. “Hey look, I’ve cold called 40 places and no one had a job.”

  33. @Mathew

    Picking work can be enjoyable and satisfying work, and for those with the right skills and attitude the money can be pretty good. I have done a bit of picking and I would recommend it for young people if the conditions were always as good as those provided by the best of the farmers I worked for.

    Picking onions though, is not much fun, as the smell infiltrates everything; skin and clothes, the car and anything in it. Cucumbers are very prickly and one needs to be covered from head to foot not to be scratched.

    But our young people have not been socialised to accept that they should have to do work like that; not in this age of wealth and entitlement.

    Quite reasonably some uppity poor kids are assuming that they have the right to compare themselves with the likes of Frances Abbott and having seen the quality of the work that earned her a scholarship these kids accurately judge that they are equally or more talented and so why should they have to apply for rubbish work when she gets things handed to her on a platter.

    Interestingly, I have heard some stories that would suggest that it is not only the poor kids who are not willing to work. It seems that the children of the aspirational class, those people who chose to go without holidays and such to send their kids to private school, are also having difficulty encouraging their kids to accept work that doesn’t suit the aspirations they have.

  34. @Mathew

    If the job is unattractive, the prime reason for its unattractiveness is the low level of its pay compared to the disutility (difficultness, danger, unpleastantness etc.) experienced by the worker.

    The simple answer for these capitalists who can’t get workers is to pay more. Keep increasing the pay until all unfilled vacancies are filled. If the capitalist can’t afford this then one of two things will happen. Either, the business will function at a lower level of productivity with some unfilled places or it will go out of business. Tough! I have zero sympathy and indeed utter contempt for capitalists who whinge about not being able to get labour but are too stingy or too unviable to pay the rate that will attract labour.

    If a business cannot pay the reproductive cost of labour then it is clearly unviable in itself and for society as a whole.

    “The maintenance and reproduction of the working-class is, and must ever be, a necessary condition to the reproduction of capital. But the capitalist may safely leave its fulfilment to the labourer’s instincts of self-preservation and of propagation. All the capitalist cares for, is to reduce the labourer’s individual consumption as far as possible to what is strictly necessary…” – Marx.

    In our advanced society, payment sufficient for reproduction of labour must include enough wages for food, accomodation and the raising and educating of at least 2 children per couple or 1 child per working single. These costs are now not inconsiderable. If an individual capitalist wants to pay less than the reproductive cost of labour then other capitalists and the higher rungs of middle class workers must subsidise this unviable cheapskate capitalist through their taxes. Why should the stingy or inefficient capitalist batten and free load on efficient, viable capitalists? Viable capitalist who pay at or above the reproductive cost of labour and still make a profit should be the first to decry the cheapskate capitalist who wants a subsidy from their taxes.

    So it is not just in the interests of the worker to see univiable “cheapskate capitalists” go out of business. It is also in the interests of viable capitalists to see this happen.

  35. My observations are based on living near a wine region and friends with a large number of unemployed peoples over a period of a few years (about 10 years ago), all the personal knowledge I have is positive, but I’ve never done picking myself.

    The point remains tho, there is general agreement there exists a subset of job seekers who are only looking for jobs they’d like (hell, I want to be captain of the Oz cricket team!), or can see themselves comfortably doing. It’s not only a matter of matching skills to the prospective jobs, there does exist conditioning to not seek out jobs they feel “uncomfortable” with.

    I have no doubt this policy is aimed at these people, similarly I have no doubt such people will continue to find a way to game the system and it will largely fail while imposing costs on business they could do without. But maybe it is aimed at building confidence in the system? (Unlikely, I know)

    I’ll leave the Abbott bashing alone, else I’m sure to draw in similar examples of union/Labor favors/jobs-for-the-boys and it will get petty and unconstructive 😉

  36. @Ikonoclast
    But they’re not just having to pay the reproductive costs of labour are they? They’re also competing with a social safety net that makes seasonal or casual work unattractive, including risk of loss of said safety net. Throw in public housing and other benefits with complicated thresholds and the taking of these jobs can get pretty unattractive pretty quick. I know I’m drawing of personal experience too much here, but those I used to associate with managed to have a comfortable and secure, if materially poor, existence. The idea their cash flow would be interrupted by seasonal work, then the compliance costs of getting back on to the dole made is sort of thing very unattractive. Maybe it is a little different here in SA, newstart’s $500/ fortnight prob goes a little further than on the east coast.

    And by your logic that business should just raise the payment until enough workers wish to fill the spots, by what mechanism do you claim to know what a “living wage” is for all workers? Surely what someone wants to work for is a private decision, just as the setting of wages is?

  37. “there exists a subset of job seekers who are only looking for jobs they’d like (hell, I want to be captain of the Oz cricket team!), or can see themselves comfortably doing.”

    This is only one way of conceptualising the problem; there are other ways that you could state the problem that would make it clear that this ‘subset of job seekers’ are not simply choosing to only look for jobs they would ‘like’ because they are defective personalities or have cognitive deficits.

    As Ikon explains from a different perspective, the problem is the way the system is structured; the problem is not that certain individuals choose to behave badly.

    These job-seekers who seem to be such a problem for our government are attempting to make sense of all the ‘messages’ their society or economy gives them. The most intrusive of these messages that our young people have been hearing over the past 2 decades is that the only behaviours that are valued are those that lead to an individual acquiring at whatever cost wealth and status.

    Do you see any positive messages for this subset of job seekers about how menial jobs are an admirable thing for a person to do? Where is the message that doing these jobs would be creating something valuable for their community?

    These people will continue, not to “game” the system, but to insist on their right to be individuals who are not going to be forced to do what doesn’t make sense to them and it does not make sense to work ones’ arse off for nothing when others do not have to do those things.

    I am not Abbott bashing; he is looking increasingly pale and is clearly loitering with bad intent so I’ll leave him alone.

    The comparison between the fate or outcomes of spoiled rich kids and spoiled poor kids though is not necessarily petty and unconstructive; it is absolutely the key to understanding how inequality does negatively affect human behaviour to the detriment of most people in an unequal society.

    This bloke might be one of the sub-set that you refer to?

  38. Then we’re back to the problem some people feel they have a right to be supported by the fruits of other’s labour until someone offers them what they want. Let’s say I really fixated on being captain of Oz cricket team. Is it a realistic scenario the social safety net supports me until I (never) achieve that goal? How much lower would I have to set my sights before it becomes acceptable?

    I have no issue with people holding out for the job they want, I’m just not convinced that’s something society at large wants to support by lowering their own standards of living. If you want to play in society, you pay your way.

    And just be be clear, I’m not suggesting this is all job seekers, or there aren’t other factors at play, but claiming “conditioning” as justification not to be willing to seek out un appealing jobs doesn’t sway me. I think this policy is destined to fail, but this discussion is far too much on how horrible the people designing it are and not some of the, admittedly small, aspects of a real issue they may well be seeking to address.

    Obviously my politics aren’t aligned with the majority on this blog, but the discussions are no less interesting for that.

  39. @Mathew

    For sure, having a social safety net complicates the issue economically. But not having a social safety net causes severe human, social and economic problems. Let’s look at the problem from this other end for a space. What would happen if we had no social safety net, no minimum wage and only very inadequate charities? Well, what would happen (and history attests to this) is that we would have a significant roving, homeless population, a sub-group of people would starve and die on the streets and crime and disease would rise exponentially. This is the world of laissez-faire capitalism (and of fuedalism and several other systems).

    In answer to your specific questions, someone must be paying for the reproductive costs of labour, otherwise the population would be shrinking (excluding migration effects). In my previous post I showed that if some capitalists are not paying the reproductive costs of labour (by not employing or paying wages below the minimum repreoductive costs) then someone else is picking up the tab. That someone else is the group that includes all capitalists and workers who pay positive tax. Government collects the tax and redistributes some of it as welfare payments.

    You ask “by what mechanism do you claim to know what a “living wage” is for all workers? Surely what someone wants to work for is a private decision, just as the setting of wages is?”

    Society does in practice now set a minimum wage. Historically it was called a “living wage”. This minimum wage is set by government through its courts or agencies and various methods are used to calculate this wage. Attention is paid to poverty level estimates and livable income estimates. It is not a perfect science and some like me might argue the minimum wage is still set too low but nonetheless estimates are arrived at in practice and applied in practice.

    What someone wants to work for is a private decision but it has a lower practical bound. If someone poor, proud and libertarian (for example) accepts an illegally low wage and spurns all welfare and charity, what happens next if the wage is too low to live on? The person finds they can’t find accomodation and can’t buy enough food to survive. The person weakens and starves on the street. The person gets pneumonia (quite likely for example) and collapses (losing their job because they don’t turn up). This person dies unless the state or a charity or a caring individual scoops this person up, treats them, feeds them up and gets them well at society, community or individual cost as it might be.

    There is a lower bound to the minimum living wage. It is a grey band of some width (not a single precise value) affected by a myriad of factors and individual circumstances but it is still real. Below the grey band is the black band of immiseration, decline and death. Above, the grey band is the white band of a livable life most likely with some enjoyment, fulfilment and hope.

  40. If you want to play in society, you pay your way.

    Goes both ways, doesn’t it. Property comes with obligations, nothing is the fruit of your own labour alone.

    Anyway. There are actually very very strong macroeconomic grounds for letting workers exert a certain degree of picking-and-chosing rather than literally — monopoly on violence — holding a gun to their head. Making highly-skilled people take a low-skilled job:
    + reduces the supply of jobs available to low-skilled people [reducing the ability of low-skilled people to become higher-skilled, also]
    + reduces the supply of highly-skilled people, through skill erosion, lack of time to job search, chances of various highly-skilled-career-ending injury, and other reasons.

    So we need a certain degree of leeway. Exactly how much is a deeply empirical question, so my confidence that the coalition have the right answer is essentially 0%.

  41. There is a large gap between newstart and the min wage however. If people aren’t dying on the dole, why would we accept they’re at risk working for less than current min wage but more than the dole?

    Possibly that is a tradeoff that can be made in future? Raise newstart to match pension, lower the min wage to the new level of newstart, reform associated benefits to remove punishing effective MTRs and base them on income, not if someone receives some other benefit. Then remove all the “mutual obligation” fluff and people can work for whomever they want and those nasty capitalists can offer real jobs in lieu of work-for-the-dole schemes. Be disruptive to current arrangements, but hey, no one ( except those getting paid to administer) likes the current system.

    And why do you assume inadequate charities? Surely our current technologies enhance charity communications and collections beyond what they were in the past, and that’s with the government “messaging” people charity is unnecessary as govt will pick up the slack.

  42. Note that for the purposes of the above analysis we can bundle “wanting to do [certain job]” in with “skill”. Desire, like skill, has different value: supply of “want to be a web designer” matches more closely with demand for that “skill” than “want to be captain of the australian cricket team”.

  43. Or Mathew, you could simply leave Newstart where it was but allow people who took a minimum wage job (or a part-time job earning as much as the minimum full-time wage) to keep all their earnings for up to 12 months. After that (in the case of the full timer or a part timer earning the equivalent of the full time minimum wage), Newstart is phased out smoothly over a 2-year period. Total income is still assessable for tax purposes throughout the period.

    Those earning less than the full-time minimum wage in income for any reason would continue to receive NewStart in full until such time as they earned income equal to or greater than the minimum wage. Each dollar above the minimum wage would reduce their Newstart provision by 25cents. Given that the combination of NewStart and their minimum wage income would put them in this tax bracket, the net effect on after tax income should be small.

    As things stand though, NewStart ought to be about 25% more generous (both in terms of the benefit and the income allowances) than it is, IMO.

  44. @Mathew

    As most regs on this blog know, I am right wing on some issues and left wing on others. On the points you make I’m more left wing.

    I did one of those laboring jobs that employers sometimes find difficult to fill, straw carting, during summers when I was in university. The baling twine cut off circulation to my hands which would be numb and swollen the whole time I worked. I made less than min wage and now I’ve got arthritis in most finger joints.

    Fruit pickers have to work at an insane pace to make money and they’re almost certain to end up with crook backs and arthritis some years down the track. It isn’t surprising that ruly skint folk like backpackers usually end up doing these jobs.

    You say:

    I have no issue with people holding out for the job they want, I’m just not convinced that’s something society at large wants to support by lowering their own standards of living. If you want to play in society, you pay your way.

    I wish I had a dollar for every time I’ve hear someone say that. I think the reality is actually almost the polar opposite. Capitalism, which I unabashedly support, hasn’t been able to provide anything like full time employment since the 1960s.

    At the moment there are something like 4 unemployed persons for every single job vacancy and the dole pays a pittance. This ratio is probably close to the average since the 1970s. The fact that a small number of people on the dole have given up trying to find jobs does not change this fact or change how much the government forks out in dole money.

    Further, the “reserve army of the unemployed” has helped break the back of unions and push down wage demands and strikes and this has almost certainly contributed to long term economic stability and growth that has lifted living standards for most of us.

    Finally, the pittance that is the dole stops the people on the lower rungs of society from rebelling either “personally” as criminals or “collectively” as agitators to overthrow the existing order. Both types of rebellion cost teh taxpayer big bucks.

    The next time you see a bum on the dole you should thank him for his sacrifices 😉

  45. > There is a large gap between newstart and the min wage however.

    Working imposes measurably higher direct-financial costs than unemployment. Clothing and transport are obvious, as is childcare, but there’s lots of other stuff like “less time to bargain-hunt” and “lunch costs increased”, not to mention some second-order things like a reduced availability for socially-valued-but-unpaid work [that will have to be made up for with… financial contributions?]

    [this is something you should have realised unprompted]

    > And why do you assume inadequate charities?

    Well, they’ve always been inadequate before. We’ve got reasons to believe that it’s not possible for them to ever been adequate, but past experience is pretty solid.

    [note that a “charity” funded through a government land grant doesn’t count, here: the state land grant comes from state [coercively-acquired] property. This is something that it’s OK to have pointed out to you.]

  46. And, as Watkin points out there are medical costs from working too. Stress, as well: real cost, here.

    Being unemployed doesn’t impose much stress on the body.

  47. @Mathew

    “Let’s say I really fixated on being captain of Oz cricket team”

    It is doubtful that with such an ambition and a fixation – is your “fixation” a diagnosable condition or are you just making it up? – you would qualify as a serious job seeker. If you answered the questions on the forms honestly you would not even get an interview.

    So I guess you would be your family’s problem or if you have no family, you could couch surf with friends for a while and then perhaps you would become a homeless person.

    You really don’t know much about the reality of looking for a job if you think I am talking about people holding out for the job they want, like capt of a cricket team and you seem to know nothing about human psychology – and you didn’t read what I wrote – if you imagine that I was “claiming “conditioning” as justification not to be willing to seek out un appealing jobs ”

    lol I am not attempting to sway *you*.

    And, I am not pointing out how “horrible’ the others are. Is that you projecting onto me, the tendency you have to ‘judge’ and ‘name-call’ when you critique other people’s behaviour?

    Pointing out how hypocritical the rich are, and how this affects the way that some other people in this society respond, is a valid way to understand that human behaviour is not just individuals making choices but a very complex web of interconnected relationships.

    Whatever your politics are, if you want a society in which most people can and will choose to take responsibility for themselves, you need to understand what motivates people to choose not to participate.

  48. I wonder if I’ve missed something in the Comments? I can’t seem to find any acknowledgment of what Abbott seems to be saying to the effect that people who pay taxes are entitled to regard people who are supported by them as owing in return a full time effort to get off the unemployment benefit (or work for the dole for part of the work week). There are plenty of responsible parents who take the equivalent position with their iwn children and, as well, responsible citizens who are net taxpayers might well think their marginal dollar should go to heloing desperate refugees before it is appropriated by government to support those who choose to avoid employment in the (capitalist or any other) economy that they live in.

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