Coronavirus Proves Labor Indispensable. Basic Income, Too.
What would you say are the lessons of the past two months?
Is it that we should all be more careful who we come in contact with, being more cognizant of our surroundings and those who occupy our daily lives? Or is it that we should be prepared to be unemployed at a moment’s notice, feigning loyalty during the 9 to 5, but in the back of our minds knowing our employers will terminate us as soon as things get rocky?
But the thing that stands out to me is something less harrowing, something that makes me feel optimistic about the future of our republic. I’m referring to the budding relationship between government and labor. Because if Congress has learned anything from the last few weeks, it’s that a strong labor force and a malleable social safety net are invaluable components of the 21st century economy.
By now, it's safe to say our leaders are facing what is likely to be one of the toughest tests in a generation. Nobody can say with any certainty how long or to what extent the Coronavirus will impact our daily lives. It's truly terrifying. Thankfully, though, party politics seem to have taken a back seat to serving the needs of the people, giving us hope that, perhaps, political ideologies may be more mercurial than we once thought. This notwithstanding, many Americans are still sitting at home, unemployed, with little hope that things will ever get back to normal or that "normal" even exists anymore.
But there's an upside. Because if we look closely, hidden beneath all the uncertainty and heartache, there’s a message for those workers stuck at home: the economy can't function without you. Regardless of what the weekly unemployment filings show, it's evident that labor is not only a necessary component of national output, but labor's purchasing power is vital to national consumption, making up more than 60% of US GDP.
Now a growing contingent policy wonks, myself included, have argued that automation will replace most workers over the coming century — believing it’s not a matter of if, but when. Some have even gone as far as to suggest the current crisis will be the one that leaves many workers permanently displaced as business leaders are forced to cut staff and increase investments in automation to remain profitable in an economy where workers are forced to stay home.
What’s interesting, though, is that the current crisis shows us just how far we are from any of that happening. I'm not denying automation is a serious threat; it’s already done irreparable damage to millions of American families — anyone can look at how automation decimated factory jobs in the Midwest and see that. But despite the continued, and likely increased, desire to fully automate production, executives are a long way from being able to implement such a plan. If you don’t believe me, just look at all the service businesses that have closed their doors because they operate in a world where labor is a necessary input to production. We just aren’t there...yet.
So that being said, what can we say about the strength of our social assistance delivery systems when we don’t have a fully automated economy? Is it that our government is ready and able to inject income where income is needed, helping stave off another Great Depression while workers are stuck at home? Nope. Far from it. The current crisis proves just how antiquated our social safety net actually is. Our leaders knew weeks ago that consumers and businesses would need cash to make critical payments, but March came and went, leaving everyone with April bills and little income.
So where does this leave us? What conclusions should we draw from this?
I would argue that we finally have a model showing just how valuable labor is to our economy, and that basic income, or some form of direct cash to consumers, isn't as taboo as it once was. In fact, when federal payments finally hit consumers’ bank accounts, it will be the only thing keeping our economy from collapsing to depression-era misery. Yes, these are extraordinary circumstances, and extraordinary circumstances can force policymakers to leave ideologies at the door and do what's right, but nearly every lawmaker on Capitol Hill — including the deficit hawks — voted for sending cash to consumers, something that was inconceivable only months ago. This bodes well for us arriving on a solution to our present problem, but if we fail to reflect on the lessons learned over the last few weeks, we will have failed in what I believe are two key aspects.
First, it’s clear there should be a better conduit for distributing cash to consumers. We never thought we would be in a situation where the federal government would need to quickly send payments to the entire nation, which is probably why we never built an infrastructure capable of doing so. We are learning the hard way that mailing out millions of checks, and haphazardly developing an online portal to register Americans for direct deposit, is an inefficient and time consuming method of getting cash to consumers. We need a facility designed to instantly push cash into their hands, and we need it now. Whether it’s a government cash card, a more efficient direct deposit system, or a secure mobile application for cash transfers, it must be better and faster than the current system.
Second, whether they are currently employed, or laid off and forced to stay home, workers need to recognize the value they provide to production. It's safe to assume that with each day of lost revenue, labor's bargaining power will increase exponentially, leaving many workers in an excellent position to demand a more equitable distribution of profits, once the dust has settled from Covid-19. Perhaps owners will have a better appreciation for the people they employ, rewarding them accordingly, but I wouldn't count on it. What I would count on is a noticeable power shift between those who own and those who make, and labor would be wise to capitalize on that shift. The coronavirus has been disruptive in many ways, but an encouraging corollary is that after everything is said and done, corporate power dynamics will have shifted from those in the c-suite to those on the front lines.
There is much we can learn from this crisis. But the most important economic lesson is that nothing is more vital to a 21st century economy than a robust labor force, and consumers, regardless of their employment situation, holding the purchasing power necessary to make critical payments during a crisis. If we fail to acknowledge this, and fail to change how we distribute social assistance, we will only leave ourselves less prepared when the next Covid-sized crisis hits.