Junk Jobs

“(W)e used BLS stats (US) to estimate the extent to which the
structure of the labour force is shifting towards the modern equivalent of ‘lumpenproletariat’ or more contingent and least-paid occupations. Our estimates indicate that its modern equivalent in the US could account for as much as 40%-45% of the labour force; around half of incremental growth and low productivity occupations constitute ~70% of employment.

The same trend is evident in most other developed economies. Indeed these estimates understate the real impact due to lower benefits attached to these occupations; inability to secure jobs in line with qualifications or erosion of job and income stability.

Investors might argue that this is just a reflection of an accelerated shift towards services and that new higher value jobs will eventually emerge. We agree but as societies in the 19th century discovered, eventually could be a very long time.

What are the investment implications? As discussed in our prior notes, we believe investors are entering a world where the pendulum is swinging rapidly in favour of the state, as a multiplier of demand, provider of capital and setter of prices. We also believe that we are entering the age of de-globalization.”

Macquarie Research, “What caught my eye” V. 61.

See also: Citibank’s Plutonomy Report (2005).

 

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