31 January 2012

What is a Job?

People familiar with my work, such as in The Honest Broker and The Climate Fix, will also be familiar with my interest in unpacking issues and problems into comprehensible bits. To that end in the area of innovation I am going to be posting on some definitional issues to simply sort through a number of basic propositions as a matter of clarifying my own thinking and writing.

In this post I am exploring the definition of a "job" -- which is a concept that carries considerable political importance and is a variable that we'd like to modulate via policy, but which typically falls into the category of "too obvious to define precisely."

What is a job?  Let's start with the following definitions related to employment offered  by the US government's Bureau of Labor Statistics (emphasis in the original):
The basic concepts involved in identifying the employed and unemployed are quite simple:
  • People with jobs are employed.
  • People who are jobless, looking for jobs, and available for work are unemployed.
  • People who are neither employed nor unemployed are not in the labor force.
The survey is designed so that each person age 16 and over who is neither in an institution (for example, correctional facilities and residential nursing and mental health care facilities) nor on active duty in the Armed Forces is counted and classified in only one group. The sum of the employed and the unemployed constitutes the civilian labor force. Persons not in the labor force combined with those in the civilian labor force constitute the civilian noninstitutional population 16 years and over.
These definitions, which date to 1942 (source), are extremely useful because they clearly define how the government views employment, which is the variable that policy makers seek to modulate when talking about "jobs." But these definitions don't quite get us to a fundamental definition of "jobs."

Here is what the BLS says about jobs:
Not all of the wide range of job situations in the American economy fit neatly into a given category. For example, people are considered employed if they did any work at all for pay or profit during the survey week.
This leads me to the following description of a job:

The defining characteristic of a job is an exchange between and employer and an employee, of wages (or some other compensation) for services (economists like to call such services "labor," defined variously in terms of skills, knowledge, capabilities, etc.). Governments regulate such services in many ways (e.g., some services may be disallowed -- think hit men, drug dealing or prostitution) and the terms of employment are also regulated (e.g., minimum wage, occupational safety, etc.).

All jobs are thus service jobs. With that as a starting point, we are in a position to ask ourselves, in what ways should we categorize and classify jobs in order to help realize the various objectives of public policy? The answer to this question is not obvious, and it is not clear to me that the official government categories are necessarily the most useful or helpful for thinking about policies related to jobs -- recent discussions here related to "manufacturing" are one example.

20 comments:

  1. One important classification I think is private vs public sector jobs. In particular, I think that public sector jobs need a justification that private sector jobs do not, due to the way they are created and sustained.

    A private sector job is justified by the fact that people are willing to pay for the job to be done (even if often indirectly).

    Some public sector jobs are relatively easy to justify (police, firefighters) though there's still a question of quantity. And some jobs are not so clear cut (government contractors).

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  2. I think there's the additional politics into the 'job' as well where it's not just an exchange of wages, but a grouping of time that frames that exchange as well.

    Case in point: The stimulus package counted as a 'job' any set unit of man-hours in a week, even if one person performed multiple sets. This way, if the stimulus created 40man-hours of paid work, that might constitute 'a' job under your definition, but more than one job under the other definition. It probably got even cloudier when discussing a 'job' 'saved'.

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  3. What about self-employed people? There isn't really an exchange between an employer and an employee. Technically, you could make it so, but that just seems ridiculous and for your own benefit in how you want to frame subsequent questions.

    It seems more reasonable to say that a job is: An exchange between a consumer and a producer of compensation for products. In the common case of an employer/employee relationship, the consumer is the employer and the producer is the employee.

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  4. -3-zirb

    Thanks, this is helpful. Self-employed people also exchange services for compensation, and are certainly part of the mix.

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  5. “With that as a starting point, we are in a position to ask ourselves, in what ways should we categorize and classify jobs in order to help realize the various objectives of public policy? The answer to this question is not obvious, and it is not clear to me that the official government categories are necessarily the most useful or helpful for thinking about policies related to jobs - recent discussions here related to "manufacturing" are one example.”

    When one eludes to “..various objectives of public policy?” one is coming from the altruistic position of political science. That is to say, political science, at the end of the day, is the altruistic notion that the well informed voter chooses good candidates that make excellent policy decisions for the greater public interest. Stated alternatively: it’s the world of political dupery, under political nitwitery, and in government mysticism we trust!

    If one changes “public policy” to “politico policy”, then one has entered the realm of public choice theory. -Or- as James M. Buchanan of George Mason University defined public choice theory: “politics without the romance”. Yes, the world of economic rent seekers, the unrepresented highly diffused tax payer, small highly organized special interests, politicos, politico enablers, politico building constituency through tax payer dollars, etc. Moreover, be sure to substitute the term “government” with “politicos through the mechanism of government”.

    Returning to the original question, lets do some editing:

    “With that as a starting point, we are in a position to ask ourselves, in what ways should we categorize and classify jobs in order to help one better understand the various objectives of politico policy? The answer to this question is obvious and clear that politicos through the mechanism of government categorize jobs in a necessarily way regarding politics related to jobs - recent discussions here related to "manufacturing" are one example.”

    Ah, the evil of it all!

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  6. - 3 - zirb

    What about bartering? Do you have to specify the form of compensation also?

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  7. Joshua, Good point, the distinction between producer and consumer is quite arbitrary. Two people doing a barter may have both been producers and then both consume from each other.

    Definitions really expose a lot of assumptions.

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  8. - zirb -

    "Definitions really expose a lot of assumptions. "

    So true. That's why it's so important to specify what definitions you're working from.

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  9. I know it is common practice, but I don't see a good rationale for excluding active duty military from the work force. We've had a volunteer military for many years now. Many people are currently in the military because they can't jobs in the civilian sector. They are paid wages and get benefits. Military service is a twenty plus year career for some. etc., etc. Why exclude them? How are they different economically from other publicly paid local state and federal employees, e.g., fire fighters, police, teachers and bureaucrats?

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  10. Joe- Speaking of definitions, I wonder what your definition of a "bureaucrat" is?

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  11. So where does a business proprietor fit into your definition? What about a professional gambler?

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  12. Roger,
    you pose the interesting question "in what ways should we categorize and classify jobs in order to help realize the various objectives of public policy?"

    In this pragmatist spirit it would be useful to say a bit more about the "various objectives of public policy" before attempting definitions.

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  13. -11-heyworth

    1. Business proprietor ... like a shop owner? They are exchanging a service for compensation, their employers are called "customers"

    2. professional gambler ... simultaneously plays the role of employer and employee.

    Both are a class of people discussed above as "self-employed."

    I think it works (?) Thanks!

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  14. -12-Reiner

    Thanks ... "it would be useful to say a bit more about the "various objectives of public policy" before attempting definitions" ...

    Well, I am (so far) pretty happy with the definitions, which represent a starting point for further analysis, rather than any conclusions about this or that, which will require getting specific about policies.

    Thanks!

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  15. I'm not sure the 'all jobs are service jobs' catchphrase is useful. While you might technically have a point from the point of view of the employee, once you've said, 'all jobs are service jobs' then 'service job' becomes synonymous with 'job'.

    There is an obvious, intuitive distinction between offering goods for sale and offering services for sale. Whether this is a useful distinction to make is another matter, and I don't know whether the political preference for manufacturing jobs over service jobs is a good thing or not. But saying that no distinction can be made doesn't really serve any purpose.

    I guess there are well-known definitions to distinguish between goods and services, but I don't know them. My instinctive way of differentiating between them is to ask, "Can the thing being sold then be resold to a third party?"

    Under this definition there may be some jobs that are a mix of both - when I get a contractor in to extend my house, he both sells me goods (the materials) and services (putting them together). The goods can be resold, the services cannot.

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  16. @Sharon #10
    Someone who works in a government bureau, i.e., a government employee. It's not necessarily a pejorative. After all, many of us actually do useful work.

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  17. in what ways should we categorize and classify jobs in order to help realize the various objectives of public policy?

    Classifying jobs by the amount and consistency of income they produce at a given skills level be a start. The current classifications are just 'politico speak'.

    I.E.

    Service Job - low income, generally low skill level , fairly consistant employment

    Manufacturing Job - moderate income, generally low skill , fairly consistent employment

    Construction - moderate income, mix of skilled and semi skilled workers, large seasonal variation in employment

    Professional - moderate to high income, highly skilled, consistent employment.

    Of course it would be political suicide for any politician to refer to the employment struggles of 'unskilled workers' as referring to them as 'unskilled workers'.

    The 'mentally challenged' individual at my local grocery store is quite happy to explain in great detail and pride how much 'skill and training' is required to be a 'grocery cart collector'. As far as he is concerned he is a 'skilled' worker.

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  18. I appreciate this discussion as this really is a tough issue - in part because the relevant national accounts are set up -- BEA is generally focused on industries and BLS around jobs and people – with different focus and objectives. I believe historically service industries are defined more based on the “final” goods & services delivered and not on the employment of service jobs. The answer depends on the question asked and what you want to do with the data. A manufacturing company has many service functions both in the HQ - back office and in other parts of the organization chart such as manufacturing and R&D. Take the automotive industry, for example. Each of the inputs used in final assembly of a passenger car (auto parts, plastics, paints & coatings, electronics, computer & integrated circuits, adhesives, textile products, rubber products etc.) involve service activities and likewise for the suppliers and the suppliers' suppliers and so on (including the pension funds). So what is the service content of a Chevy Malibu, Ford F-10 truck or BMW 750i sedan. It is possible to decompose things further using the industry classifications under SIC and NAICS and using the U.S. I-O tables which give the inter-industry linkages and flows; and then applying BLS census data to give insight. I assure you this is a lot of effort. A little different example would be decomposition of the consolidated hospital and healthcare I-O “use table” which will show you that among the largest inputs are things unrelated to the usual definition of healthcare rather they are to running a major enterprise: real estate and facilities (by far being the largest and certainly a “good”); followed by pharma/meds manufacturing; management services; securities, commodity contracts and investments; employment services; legal services; postal services; management consulting services; food & beverages services; building & dwelling services management; etc. (And you wonder why health costs have grown as they have esp. in the U.S.). Point is, while no one would debate whether hospital & healthcare really is a service, it contains a myriad of inputs including related to manufacturing. I would rather stick to the traditional definition of services as it relates to the final product delivered though even then there will always be some debates on definitions. I would also recommend J. Bradford Jensen’s 2011 book, Global Trade of Services (Petersen Institute for International Economics) in which he presents his very extensive analysis of services to help shed some light on services trade.

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  19. @Harrywr2 "17

    re: "The 'mentally challenged' individual at my local grocery store is quite happy to explain in great detail and pride how much 'skill and training' is required to be a 'grocery cart collector'. As far as he is concerned he is a 'skilled' worker."

    I hope you don't mean that this individual shouldn't be proud of being in the work force and doing a good job no matter how menial his tasks. I hope you don't mean that he shouldn't be paid a living wage. Indeed, I hope you don't mean to be mean. Perhaps you might find a better example to make your point. One of the great dilemmas of our post industrial "information" is how we can justly incorporate those who are incapable of processing information in the way that you or I can. I don't have the answer for that, but I know it is neither ridicule nor patronization.

    I beg your pardon if I have misunderstood you.

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  20. @Harrywr2 "17

    re: "The 'mentally challenged' individual at my local grocery store is quite happy to explain in great detail and pride how much 'skill and training' is required to be a 'grocery cart collector'. As far as he is concerned he is a 'skilled' worker."

    I hope you don't mean that this individual shouldn't be proud of being in the work force and doing a good job no matter how menial his tasks. I hope you don't mean that he shouldn't be paid a living wage. Indeed, I hope you don't mean to be mean. Perhaps you might find a better example to make your point. One of the great dilemmas of our post-industrial "information economy" is how we can justly incorporate those who are incapable of processing information in the way that you or I can. I don't have the answer for that, but I know it is neither ridicule nor patronization.

    I beg your pardon if I have misunderstood you as I hope I have.

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