There have been times in the course of human events when economies contracted. Certainly, it has happened on a national level, but many more times on a local example. Nationally, most will remember the "great recession" in 2007-09. Investopedia instructs that there is no standardized definition for "depression" versus "recession." Interestingly, it notes that the "recession" label for this particular downturn results from "a near consensus among economists." For more on the implications of consensus, see Consensus in the Absence of Proof. In a nutshell, we are prone to find some persuasion in the collective agreement of the purported experts.
Merriam-Webster online defines "recession" as a "period of reduced economic activity," and "depression" as "a period of low general economic activity marked especially by rising levels of unemployment." So, perhaps unemployment is critical to a distinction. However, unemployment exceeded 10% during the "recession," according to Pew Research.
President Harry Truman had a little different definition for the two terms. He proffered:
"It's a recession when your neighbor loses his job; it's a depression when you lose yours."
I have heard similar sentiments in various contexts, such as it is a shame when your neighbor's house is hurricane damaged, and it is a tragedy when your own house is. These examples suggest that there is some potential element of direct effect, or impact, that contributes to our own personal perception of both recession and depression.
There is a history in the world of various "booms" and "busts." When some resource or enterprise develops, that attracts people. Enterprise can find its niche and will then require a variety of skills, talents, and efforts to persevere, grow, and succeed. Businesses and industries grow, fueled by the propensity of consumers to demand particular goods or services.
Many are comfortable from high school history with their understanding of the 1848 California Gold Rush. According to Britannica, about 300,000 people poured in from around the world to seek their fortune. Towns were born, grew, and prospered in the support of such efforts. But, as the returns diminished, the rush largely subsided. Towns declined, and some even failed. On a local basis, communities devolved through recession and into depression.
The gold rush is not the only example: another notable instance is the copper rush in Michigan beginning in 1840. According to the Detroit Free Press, mills were built and towns sprung up around them. People built houses, started various businesses, and economies of the small-town America flourished. However, some of those towns have now diminished. The article cites one example where the town is now "just a brief interruption in a corridor of trees along a narrow highway."
There are a variety of examples that can be cited. Travel.com cites various examples that are in the throes of demise. In some instances, some event or depletion can be identified and blamed. But, as I have traversed this continent, I have happened upon a great many crossroads and wide spots that piqued my curiosity. Along some byways in the countryside, I have happened upon large, boarded, and posted, facilities. They raise my curiosity. What was manufactured here? Who was employed here? What happened to change these circumstances? Where did everyone go?
Does it have to be a town? Absolutely not. Brands have similarly evolved. in 1886 a fellow started a mail-order watch company (for the younger generation, this was a device worn on the wrist or kept in the pocket that assisted with knowing the time of day before the cell phone was invented). That little shop evolved into one of the largest retailers in the world, Sears Roebuck and Co. It was America's largest retailer until the 1980s. Stores were built, catalogs were printed (an ancient form of web page that was printed on paper and mailed to people), customers were developed, and yet times changed. New paradigms and developments evolved, and somehow someone else built what the market found to be a "better mousetrap."
More recently, some will remember the unheard-of innovation of watching what you wanted when you wanted in your home. Yes, in the 1980s we saw the birth of recorded programming, and stores popped up in every community. One, founded in 1985, was called Blockbuster Video. These stores were lined with shelves; each covered in VHS tapes (magnetic, upon which programming was recorded). Imagine a Redbox that was not automatic, and which you could walk inside of. We went, we browsed, we rented, and we watched. We often failed to return them timely, and we paid late fees. Then came Digital Video Discs (DVD). Then came on-demand movies and glacially slow downloads. Then came broadband, and streaming, and low and behold the demise of Blockbuster. Well, almost, there remains one store out there.
Is it interesting that these examples have come, prospered, and gone? Note that the vast majority of them have not enjoyed some intervention of the government. Certainly, there have been examples of local governments striving to support some enterprises in hopes of retaining jobs and related economic activity. But did the federal government step in to save Brewster, Florida? No. Did it step in to save Sears or Blockbuster? No. The national government in no way stepped into those municipalities or businesses as their protector. Booms and expansions in those micro-instances slowed and eventually ground to a halt through exhaustion of resources (natural or human or imagination).
Is any of this really different from the Industrial Revolution, the advent of steam power, and the rapid diminishment of agriculture-related labor needs? As the industrialized, and later corporate, farmers gained sophistication and leverage, there was a displacement of the family farm, and its umbrella sustenance. Farmers' children and other young people departed the farm labor life for urban venues; families consolidated land, and often split with some portion of the family moving outward in search of larger land holdings – or some other opportunity for sustenance and a chance to compete.
Today, we similarly see booms. Amazon only began in 1994. Google started in 1995. Tesla started in 2003 and then became the most valuable car company in the world. The market-influencing leaders of today barely existed 25 years ago. As they have experienced a boom, other businesses have declined.
All around us, there are modern-day "booms" similarly evolving before our eyes. They are changing how we consume, what we consume, and even where we consume. As a society and individuals, we are shifting and growing in our acceptance of change. Producers and servicers seem persistently shifting to meet both our demands and the potential competition presented by other businesses intent on shifting some portion of the market in their favor instead. We see grocery delivery and even "meal kits," massive online catalogs of goods, and sophisticated marketing efforts directed at our consumption.
What businesses will survive and thrive? Some scholars suggest that time is the real test. Gary Hoover recently wrote "The Three Greatest American Companies of All Time." Might we guess which he selected? Are they the companies mentioned above? No, they are: "Pennsylvania Railroad from about 1870 to 1920, General Motors from about 1925 to 1975, and IBM from about 1930 to 1980. He demurs regarding alternatives such as "Apple, Google, Microsoft, and" others; he notes as regards those that "a company can appear great and permanent one day and be gone, transformed, or acquired not long after." (See above re Sears, Blockbuster, etc.).
Note that it is the General Motors of the last century, not the General Motors of 2009 that drove into bankruptcy. The General Motors of the last century was many brands (Buick, Cadillac, Chevrolet, GMC, Oldsmobile, Pontiac, and after the 1975 date cited by Mr. Hoover there was Saturn and Hummer). There was a time when it was said "GM is too big to fail," and that "as GM goes, so goes the country."
This enterprise, to some, defined us. When the Great Recession knocked, the country answered and bailed out the enterprise. Todd Zywicki wrote an intriguing piece about the interrelationship of business and government. Some will perhaps see that as "big business," but might find some interest in the Cares Act response of government during the last administration. The federal government, in various instances, was perceived as flooding a marketplace with funds. Is there room in modern America for the "rule of law" in any event?
The fact is that evolution and even revolution is continuous and persistent. As workers' compensation faces the future, it must be with recognition that the workplace and workforce may likewise evolve and change. Employment may not mean the same as it means today in 20, 50, or 100 years. Your descendants may look back with some degree of mirth at the "backward radio phones" with which we were so enamored. We may ourselves look back in shock at how enthralled we once were with self-service food kiosks, in the same way we currently laugh at the "automat" of the 1950s (If you remember automats, let me remind you it is likely time to take your medicine).
The point is that labor is a livelihood. Regardless of what we do to earn a living, there must be value in what we do. That is not merely value to us (fulfillment, self-actualization), but value to someone else such that they will consume our labor. The same remains for companies that must similarly deliver value to their customers. When we (personal or enterprise) fail to deliver that value, it is probable that some competitor will entice away our customers. They will peddle some innovation, perspective, or pitch that promotes their value over what we are striving to deliver. In effect, any one of us (individually or collectively) could be the Google of today or the Blockbuster of tomorrow.
The workers' compensation community ("industry" if you must) will have to continue to evolve and grow. This concept of counterbalancing benefits and burdens for both employer and employee will have to accept that markets change, businesses change, consumers change, and preferences change. It will have to remember that some changes may make big splashes, but subside rather rapidly while other changes may be more seemingly permanent. This community will similarly need to remain conscious of its value and how it can continue to be relevant, to deliver value, or those constituencies may similarly find some relevance in someone else's innovation, perspective, or pitch. There may be comfort to some in the legislative process, but the voters in California recently provided cautionary notes about the people getting what they want. (See The Gig of Participatory Democracy).
Will the "gig" economy continue to thrive and expand? Will "sticks and bricks" retail ever return to primacy? Will we ever return to movie theaters when the "great pandemic of 2020 (or will it be 2019)" subsides? Will telecommuting persist post-COVID and offices shrink? Will technology bring us other evolutions and changes that we cannot even yet predict or perceive? Where will there be booms, busts, expansions, contractions, false starts, and whole new races?
In 2016, an ambitious effort was undertaken to focus this community on where it is and where it might go. This directed analysis to where workers' compensation started, how it has evolved, and what might be next. The discussions lamented the fallacy and irrelevance of the National Commission in the 1970s. We questioned where are the challenges, or the vestigial tails? As we embark on the second decade of the new millennium, the time has likely come to pursue this conversation again. Whether in some formalized setting, or over a coffee at the annual Workers' Compensation Conference, it is time for critical thought and open discussion about how this community can and should evolve to remain vital, relevant, and purposeful.
Will the national government become involved in the world or workers' compensation? If so will that be in riding to its rescue like General Motors, or regulating it into submission? These questions were on seemingly every tongue in 2016, but a great many abandoned their interest thereafter. A select few realized and voiced, even then, that there is already federal involvement, look no further than the Medicare Secondary Payer Act. While it is not an explicit effort to impact workers' compensation, it is significant in that way nonetheless. Will government become further intertwined in this community, purposefully or not?
What will we see in the world of employment? Will the seemingly growing infatuation with, the revival of, socialism and communistic governance render workers' compensation antiquated and redundant? Will the micro-capitalism of self-employment, gigging, and self-determination render workers' compensation irrelevant? Will any or all of these potentials be booms or busts? As a $40 billion per year industry (approximately), is workers' compensation "too big to fail," or will it become some footnote in history to be studied and examined? Will the federal government play a role, will state systems evolve or decline?
The conversation continues. What will you contribute to the discussion?
