American labour’s ‘casual’ turn – The Hindu BusinessLine

The US workforce is becoming ‘casualised’
| Photo Credit:
JORGE GARCIA

Everyone knows that food can be cooked at home or outside. If outside, you can either go to it or it can come to you. Using micro data from mobile phones, an NBER research paper by Austan Goolsbee, Chad Syverson, Rebecca Goldgof and Joe Tatarka shows that Americans are increasingly preferring to have the food come to them.

This has apparently resulted in a massive increase in productivity of restaurants. Parallelly, Americans are spending less time in restaurants.

The paper says that this “cannot be explained by economies of scale, expanding market power, or a direct result of COVID-sourced demand fluctuations. The restaurants’ productivity growth rates are strongly correlated, however, with reductions in the amount of time their customers spend in the establishments, particularly with a rising share of customers spending 10 minutes or less.” It’s best to leave this change in American behaviour here. I think however that the change is driven by three other factors.

One, it is cheaper not to eat in restaurants where the tip adds 20 per cent to the bill;

Two, it is more convenient to order in because there’s no hassle related to commuting;

And three, the supply curve of labour in America has shifted downwards meaning unskilled labour has increased, fit only to serve as couriers at low wages.

Meanwhile, other small surveys have shown that, regardless of US President Trump’s dreams, Americans aren’t dying to return to factory shop floors. They prefer the service sector where the person sells his output rather than his time.

In other words, the labour market is being casualised. This, in turn, suggests an excess supply of labour. Or, to put it differently, the American labour market now resembles India’s: a few highly skilled and a sea of unskilled ones.

The difference is that India has a shortage of capital and the US has an abundance of it. Hopefully the bilateral agreement will fix this problem.

Published on April 24, 2025