The underclass and you

The Underclass – variously known as chavs, bogans and thugs – seems to be multiplying. Why? Pull yourself a shot of Laphroaig single malt with just a few drops of water, settle yourself comfortably by the fireplace and absorb the following economics lesson.

But, what’s that banging outside your home? Is it the thugs, marauding for loot and savagery? No, it’s just the neighbor repairing his porch. The barbarians are far away from your safe, bourgeois suburb. Now, make sure the windows are locked and that you have a pen and paper handy.

Structural Unemployment

Structural unemployment is level below which the economy suffers a labor shortage.

For example, most Western countries have a structural unemployment level of about 5%. If the unemployment rate falls below that level, businesses struggle to find workers with the required skills. Wages rise and inflation gets out of control.

An economy needs a certain level of unemployment, otherwise workers will be unavailable to take up positions in new and expanding enterprises.

Prior to the 1970s structural unemployment was as low as 2%. Basically, there was a job for everyone who wanted one. That 2% were literally between jobs.

Fraudulent Calculation

So why is the percentage so high today? Before we get to that, remember, the percentage is higher than it seems. In the United States, the unemployment rate is calculated by surveying people about their activities in a reference week. If they did any work over the period, they are counted as employed. So, if you were applying for jobs, playing World of Warcraft and eating cat food all week, except for the one afternoon you helped your mate move house for which he paid you fifty bucks cash in hand, guess what? You’re employed! Congratulations.

Or what if you spent Saturday waiting at your parents’ cafe, or answering phones for your husband’s business while he was laid up with glandular fever? And you weren’t paid a brass razoo? You’re employed, too. That official 5% doesn’t include you.

Introducing the Underclass

But for the sake of argument, let’s stick with the 5%. Why would falling to 3% cause such trouble? Three percent of all workers looking for a job is still a shirt load of available labour, right?

Yes, it is. But they are not the right people. And now we get to the ‘structural’ bit of structural unemployment. This small percentage of workers can’t work. They don’t have the skills. Sure, some of them might be able to work on the factor floor, but these days there aren’t enough factory floors to go around. Others might be fine in retail but again, there are limited places. Still others don’t have the social and organizational skills to manage modern work, or life, at all. They can’t set an alarm or turn up on time.  They don’t know what to wear or how to speak appropriately to customers and managers. They may be prone to physical or verbal outbursts, or theft. Some are disqualified by criminal records. This lack of skills can partly be attributed to intergenerational poverty – if mum never had a job (there’s no dad, of course) then little Johnny won’t acquire the life skills the rest of us learnt just by growing up in a functional family. Add a liberal sprinkling of welfare and tablespoon of relaxed moral standards, simmer and stir. Ta-da! You’ve cooked up the modern Underclass we see fermenting at the margins of Western societies.

The reader will have already guessed the other relevant changes from 1970 to the present. Let us present them briefly.

– Transferal of industry to countries with cheaper labor and lower environmental standards

– Automation

– In some countries, importation of low-skilled migrants

No Solutions

Neither the Left nor the Right has any solutions to the crime and social decay that the Underclass causes.

The Left suggests providing more welfare, throwing fuel on the fire. They propose improved education so that the never-employed can up-skill and work in emerging industries. They rail against the ethnic discrimination faced by a disproportionate number of this group. These strategies will only work at the margins for one very good reason: most of the Underclass are, for genetic or environmental reasons, unable to learn new skills and behaviors. They languish along the left-hand tail of the IQ bell curve. That is the underlying reason that they are unemployed, and unemployable.

In the past, people of low intelligence, if they were otherwise reliable and decent, could find manual work of various sorts. Today, such work is done by Bangladeshis and robots.

The Right suggests we need to wean the Underclass off welfare and incentivize work. The plan will fail, for the same reason that you can’t incentivize this moderately intelligent author to become a neurosurgeon. It’s not gunna happen. A few would find jobs. The rest would starve, steal or riot. And remember, this is a large segment of the population we’re talking about.

And this is where I, the god-like blogster, descend from the clouds and offer my own salve, one greeted with cheers and jubilation by the adoring crowd below.


Not only am I bereft of solutions, I’ve got bad news. It’s going to get worse.

Shit and Fan

Self-driving cars might replace truckies, cabbies and delivery drivers. Improved software may reduce the demand for accountants, lawyers and techies. The number of careers not threatened by the almighty Algorithm is rapidly shrinking. The IQ required to undertake paid employment may rise above the average; above mine, even above yours.

Previously, people replaced by machinery have moved to new, better work. The recent rise from 2% to 5% structural unemployment shows that the previous pattern is not as strong as it was, and hints that the rule may deteriorate further in the future.

Do you turn up your nose at the violence, filth and disfunction of the Underclass? Better get over it, Sunshine. You might be joining them.

Related: Free Northerner wrote an excellent post explaining how the Left sees the failure of its policies as evidence of their absence, and the need for more of the same.

Here is Grey Enlightenment’s alternative view.

Captain Capitalism has his say.

And who is going to pay for the water?


Next: You Are Contributing Much Less Than You Think


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