Forum Post: The coming jobs crisis?
Posted 11 years ago on May 1, 2012, 4:11 p.m. EST by jhhinck
(1)
from Westby, WI
This content is user submitted and not an official statement
Has anyone read Jeremy Rifkin's book, The End of Work, from 1995? Here is a link to a recent publication, cut from the same cloth (if I'm allowed to post links here): http://www.thelightsinthetunnel.com/excerpt.htm
I posted this, and, with regard to rbe's comment (below), that is also what I am hoping as well. Humanity may well be heading into a radically new economic paradigm, but not many seem prepared to even discuss the possibility. Again, I would start with Jeremy Rifkin's The End of Work as a reference.
Thanks for this post - I think the grand scale that we see in today's corporations is always part of this problem. This notion of greater and greater EFFICIENCY and extreme cost cutting is only needed because they have become so big and so large to manage and because Wall Street is allowed to gamble on their profits. Perhaps it's time to downsize the corporation - to go even further than anti- trust or anti-monopoly rules. A functioning society or economic system must have workers who become the consumer. We must have individual small businesses again. The baker, the butcher, hat-maker. What are these corporations really doing for our society turning us all into broke cashiers who can't even afford the stuff they sell? Time to rethink the idea of business, isn't it? Only one percent profit off this current system - don't we all want to profit? We've got to end this. Do we want to be a functioning society or a controlled aristocracy?
That's an excellent idea. I think folks should go out and start lots of small businesses. Then, to the extent the business was profitable, the owners would benefit fully from that increase in wealth,and could put their ideals into action by sharing that wealth equitably with their employees. Society would be the better for it.
It would also have the salutary effect of introducing them to the realities of business, among which are:
What you think you'd like to do isn't terribly relevant. If you can't sell enough of it to pay off your startup expenses and make a living, it isn't going to work. That neighborhood coffee house or little bookstore that seem so charming and appealing are probably nonstarters. You'll be out of business in 6 months.
You can't pay yourself, or anybody else, unless and until you turn a profit. So, from day one, you have to be ruthlessly focused on profitability, just like the big boys. And if you lose money long enough to empty your bank account, you're finished.
The amount of money and benefits you can provide for yourself and your employees is directly proportional to the amount of profit you make. So once again, you are focused ruthlessly on profitability.
Profit margins in most businesses are very thin, when they're there at all. Most businesses lose money a fair percentage of the time. You'll need a bankroll to tide you over through the lean periods, and you'll certainly need one at the beginning, when you will be working like a slave and spending money left and right and getting zero revenue. So when the money is there, you'd better grab all you can. You'll need it.
Cash flow is king. The moment you run out of money and can't pay the bills, you're done. If you have a line of credit somewhere, you can string it out a little longer, but when that's run out you're still done. But your only line of credit is likely to be your own bank account or credit card. If you feed it into the business to pay the bills, you'll have to figure out how to make the rent payment next month.
Employees cost a lot of money. And, you have to invest quite a bit of it in any employee before they start making any back for you, particularly if the job requires any skill or training. You have to hire them, train them, let them get settled in and so on, all the while paying wages, employment taxes and any benefits you provide, and then, if everything goes right, maybe you'll start making money back on them. Maybe not. A fair number of them won't work out and they'll leave or you'll fire them, and you'll have to start all over and the money you just spent will be down the drain with no return. You'll quickly learn to be very selective about who you hire. You'll also quickly come to realize that whether you like it or not, hiring or retaining an employee boils down to a ruthless economic calculation -- if they're not paying their way in terms of making the business more profitable, they have to go. Regardless of whose fault that is, the money's not there to keep them around. Think otherwise and start keeping people around because you feel sorry for them or you're too nice to fire them, and you'll go broke in a hurry.
Taxes on your business and your profits will be much, much higher than you're probably thinking they will be. In very short order, you'll be pondering tax avoidance strategies, just like the big boys do. And if you find one, you'll use it.
The government is not your friend. They'll immediately want money from you in the form of license fees, business taxes and so on, and you'll pay all sorts of employment-related taxes and have to get workers' compensation insurance and on and on and on, and there'll be penalties every time you screw it up, which you will unless you can afford to pay someone else to do it; and you'll never get anything in return. And they won't make it easy, either. You'll be dealing with four or five agencies full of rude, unhelpful people in every state you do business in, plus the feds, and you'll spend lots and lots of time filling out forms and on the phone with them unless you can afford to pay someone else to do it, and you'll discover they don't give a shit about you or your little business except for getting money from you, and if you go broke, they only thing they'll do is demand that last tax payment before you close the doors for good.
You'd better like working 70 or 80 hours a week, because that's what you'll be doing for a very long time, and for much of it, you'll be making very little if any money.
You'd better like stress, because when payroll come due and you haven't got it, there will be stress. There will also be stress when you're in your office or shop or whatever on Saturday night after an 80 hour week filling out paperwork because the IRS audited you and wants $10,000 and they're threatening you, or because some unreasonable customer you can't afford to piss off wants something right now and you just got off the phone after listening to them scream at you for 20 minutes.
57% of all small startups have annual revenue (not profit) of $25,000 or less. Don't plan on buying that yacht just yet.
50% of all business fail within 5 years of startup, 75% within 10 years. It's probably worse for really small businesses, because they're usually badly undercapitalized, relying as they usually do on personal savings, credit cards and loans from family members. If yours is one, you'll lose everything you put into it, which will probably be all of your savings, whatever money you've borrowed or scrounged from friends or family and all that money you put on credit cards. And you'll be stuck with the debt, unless you declare personal bankruptcy. And you'll have worked 80 hours a week for the privilege.
So, by all means start a business, but do so with open eyes. You'll encounter everything I just said and more, and when you realize that these are the same problems every business large or small faces, you'll look at bigger businesses a bit more sympathetically.
I say all of this because I know it all first hand. I run a small business and have for some years; and right now, at 10:50 p.m., I'm in my office working, just like I do almost every night. Just like you will.
scary thoughts
Great stuff! The Lights in the Tunnel is a great book! I've been talking about jobs becoming obsolete for a while now on here. I hope this issue becomes a focal point in the OWS movement.
http://occupywallst.org/forum/jobs-are-becoming-obsolete-due-to-advances-in-tech/