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The Real Solution to Unemployment is *Paid* Work

Call me a heretic, but I have something to say about unemployment. I’ve been a welfare recipient for fifteen years, I have a computing degree and an MBA with a bunch of IT certificates. I do have to inform you, though… I have a criminal record. But I also wrote, as an intern, a small internal paper in 2007 for the Tasmanian Department of Economic Development on the real cost of the unemployed. So I have an idea about the bigger picture surrounding welfare poverty and the complex socio-economic waterfall that it produces.

Graduating with my friends from the MBA in 2010

Let’s ignore the massive numbers of whatever today’s statistic calls the unemployed. That’s only a rigid OECD definition; the true unemployed are the unemployed statistic plus the people who are out of work and not classified as unemployed (800,000+ on DSP, carers, partners in low single income households, yada yada) and the under-employed who don’t have enough work in the given fortnight. Because all jobs aren’t equal. Around half Australians receive some social services benefit. The real unemployment figure is simply massive. And expensive.

Note that definition of unemployment was devised by an American, one Dr. Carroll D. Wright, after the Wall Street Panic of 1873. It was refined through the 1940s, after the Great Depression, and like statistics tend to do, it genuinely warps the truth of real unemployment numbers… this post Great Depression refinement is basically the current OECD definition. However, the general idea of unemployment is broader. I’d suggest if you can’t earn enough to get reduced benefits, you are unemployed in the real sense. If you get partial benefits, you are under-employed.

To get your head around those outside the workforce (the grey area where people are not employed or unemployed) I’d highly recommend everybody take the time to read Men Not at Work: An Analysis of Men Outside the Labour Force, a Staff Working paper for the Australian Productivity Commission authored by Ralph Lattimore released in January, 2007. They have yet, to my knowledge, to produce the promised equivalent working paper for women outside the workforce.

My paper for the Department of Economic Development moderately costed the impact of an unemployed person (making a little over $10,000 per year in benefits) as greater than $50,000 per year to the taxpayer. That’s because the unemployed have greater contact with the police, have worse health outcomes and over-represent in the health system, there is generational flow-on to children through lack of opportunity and resources, significantly higher mental illness and chronic disease, and beyond that $50,000 there is foregone productivity from not contributing in the workforce. Dig deeper and you’ll find more costs attributable to unemployment.

You also have to add in the economic cost of the huge administrative burden from policing unemployment as a normal distribution, assuming all unemployed are bludgers and rorters. We support a behemoth of time-and-paper-chewing Social Services and private sector providers currently ignored in the who-is-bludging-off-who rhetoric. Those policing jobs at Social Services are invented jobs at best. They exist merely to function the underlying problem of un-and-under-employment.

The average estimated costing of $50,000 increases sharply the longer somebody is unemployed (or outside the workforce on payments such as Disability Support). What really would be an economic problem for Australia would be to withdraw that fortnightly stimulus from the economy. The unemployed, their overseers and the under-employed all buy goods and services in the given fortnight. Their benefits are spent, not saved. You won’t hear this often, but Unemployment is an industry that directly contributes to the economy. That means small businesses get cash flow and government generates taxes. It’s not a simple case of cutting the welfare strings, because somebody down the track won’t get money. A large number of small businesses would rapidly fail. These working poor would join the growing unemployed as we plummet into Recession.

So when I hear Work for the Dole, Mutual Obligation and Rationalisation of Benefits, the umbrella term that comes to my mind is Forced Indenture. What we’re really talking about is taking that lower stratum of society, those we perceive to be riding on our dime, and pushing them into a forced indenture. And I’d flip that Mutual Obligation paradigm and say it’s the government’s role to manage macroeconomics (which includes unemployment). It’s not the individual’s role to find work that does not exist; it’s our role to search for work among the limited jobs that do exist. Ultimately, high unemployment is a government problem… not the unemployed. This is simply playing the man because it’s easier politics.

Try this idea for size. Paid work. That $50,000 currently supporting an unemployed person can easily be a $40,000 job for somebody doing a meaningful task that improves the generational outcomes of families. I’m suggesting Paid Work that needn’t be anything but mundane, but shouldn’t be a chain gang with overseers that are really post-millennium Workhouses. And I suggest this because unemployment is a macroeconomic and social problem, not a laziness problem.

Imagine that future. Where government invests in the people. Where the streets aren’t full of the poor riding on anybody’s imaginary dime. Where people like me with qualifications, but lacking opportunities (because jobs simply don’t exist), can earn a living and work our way upward by investing some of our earnings into making a better life. I’m a photographer, a web developer, a business consultant… and I’m unemployed.

Yes, it would be disruptive. But when you’re putting an entrepreneurial idea out there it doesn’t hurt that it’s disruptive. This will hurt. It will take effort. And time. And I can tell you the rich end of society are perfectly happy being on top. But, imagine if it could work. Imagine if we could restructure our society on the fly. Imagine if we could move away from this idea that government is a profit maximising private industry that serves shareholders and onto a paradigm where we are more productive and inclusive. And without so much of the hand-outs.

So consider that for a while. A major overhaul of the way we think about the unemployed (currently locked in the late 19th Century) and what we think tax dollars should be invested in. Is a person and a family worth more than a few bombs and a plane to murder civilians in the Middle East? Or Russia? Any decent person would admit this to be the case.

Just cross our palms with silver for a hard day’s work. That’s all we ask. Because the only real solution to unemployment is PAID work. A real job. Not indenture in a post-millennium workhouse framed as Work for the Dole under a flag of Mutual Obligation.

The result of this disruptive heresy of real work would be less burden on hospitals, police and government oversight… a decrease in homelessness, greater opportunity for children not fortunate to be born into private school suburbs… the razing back of the growing social divide within Australia. We just need to flip our ideas about unemployment. And, surprisingly, it might be the case that it’s clearly cheaper to employ people than maintain this political pretense.

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About the Author

Steven Clark Steven Clark - the stand up guy on this site

My name is Steven Clark (aka nortypig) and I live in Southern Tasmania. I have an MBA (Specialisation) and a Bachelor of Computing from the University of Tasmania. I'm a photographer making pictures with film. A web developer for money. A business consultant for fun. A journalist on paper. Dreams of owning the World. Idea champion. Paradox. Life partner to Megan.

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