It Isn’t a Jobless Recovery…
…if it’s a recovery at all…it’s a “Jobs lost” one.
Only 58.4 percent of Americans are employed, the fewest since the 1980s. Corporations have recouped 100 percent of profits lost in the recession. GDP has regained its pre-recession level with 7.3 million fewer workers.
I think baby-boomers leaving the workforce at least partially accounts for the first number. Regardless, companies aren’t going to add jobs back “just because.” They will only do so if the growth justifies it. Instead, during this recession, companies learned that fewer workers can do the same work (or more) as before.
It’s easy to criticize corporations for raking in profits while millions of workers go unemployed or underemployed. However, the bottom line is that companies have adapted to the changing structure of the U.S. and global economies a lot faster than the American workforce has, and a great number of those workers have a lot of catching up to do.
Companies have adapted and streamlined and become profitable at current employment levels.
The push to bolster profitability has permanently altered the employment needs of many corporations, especially the mix of skills companies require. “We believe a large proportion of today’s high unemployment is structural in nature, resulting from a huge skill mismatch between the jobs being created and the existing skill sets of jobseekers,” says Wells Fargo economist Mark Vitner.
In other words, as the aforelinked article is titled, “some jobs are never coming back.” Now workers have to adapt or be left behind, never to recover.
US Corporations are smarter than the average bear. Increased regulations from Hussein Obamas minions (see EPA destruction of coal jobs last week in PA and WV and NLRB destroying Boeing jobs in SC 3 wks. ago) are choking off growth. The alien in the White House is attempting to addict the states (and the masses) to mama govt. as their only option for “growth”. Well we certainly are growing dependents and the lower end of the economic class. In Husseins world that is the “Hope” with spare “Change” in your pocket.
“a huge skill mismatch”
Bingo. And every person milking two years of benefits waiting for a job that will never exist is probably removing several more jobs from the economy through the financial burden they pass back to society and their reduced consumption.
And the worst part? Our education system is still training people for the kinds of jobs that disappeared in the 1960s.
I think it’s time for radical changes to cope with ‘the new normal’. Make getting extended unemployment benefits contingent on -some- form of work (Digitizing medical records? Pouring cement? Picking up trash? Crossing guards?). Make real job training available for free in some areas (we need more sysadmins in Providence, we’re literally hiring people and hoping they can learn after they land, and those are $60-80K jobs).
“we’re literally hiring people and hoping they can learn after they land, and those are $60-80K jobs”
Wait, what? We are? Where? Holy cow. Sign me up!
Right behind you, Patrick. I can learn on the job with the best of them.
You mean the Bush tax cuts didn’t actually create jobs? I’m shocked! How could this be?
Russ, since Obama extended them, isn’t it now fair to call them the Bush/Obama tax cuts?
You mean the Obama stimulus plan didn’t actually create jobs? I’m shocked! How could this be?
Patrick, about the tax cuts for the rich… yes, absolutely correct (you guys always seem to assume I’m some type of Obama fan).
About the stimulus, also correct (assuming you mean net job creation), something even Obama’s Wall Street cabal is now forced to admit.
See “How to avoid our own lost decade” (must read)
Many liberal economists warned of exactly that problem with a stimulus that was focused primarily on bailing out the banks and was much too small to make up for the hole in US demand.
Here’s Dean Baker from 2009… “Washington Must Do More to Put Unemployed Americans Back to Work” Since economist John Maynard Keynes’ major works on government economic policy in the 1930s, we have known that the government can boost demand in the economy and put people back to work. It took the huge burst of spending associated with World War II to get us out of the Great Depression. We don’t have to spend on a war, but the government can create the demand needed to quickly restore the economy to full employment. There are some obvious routes for boosting the economy that Congress could pursue. The first course would be to extend unemployment benefits for workers whose benefits are about to expire. These workers are looking for jobs in a labor market that doesn’t have any. Unemployment insurance helps not only help families in need, it also boosts the economy by providing some money for the unemployed to spend. The second route is to support state and local governments so that they don’t have to lay off school teachers and firefighters and raise taxes. Almost half of the growth impact of the last stimulus package was offset by cutbacks and tax increases at the state and local levels. The third route is through a tax credit that would pay employers to shorten work hours. The basic point is simple: If workers put in 5% fewer hours, but the tax credit left their pay (and therefore demand) unchanged, then employers would want to hire 5% more workers. Such a tax credit, properly designed, could quickly bring unemployment back to acceptable levels. Those who question the need for an additional boost to the economy should go way back to February 2008, when the first stimulus package was passed with bipartisan support in… Read more »
Russ – I disagree with the premise stated as fact within your blockquote that government spending can spur much other than bubbles and malinvestment masked by artificially high employment and GDP numbers, so I won’t delve too far into what a progressive economist concludes based upon that premise.
I do, however, have one question for you to consider as an intellectual exercise:
Let us assume that the federal government adopts your suggestion and boosts stimulus spending two- or even four-fold. Assume that GDP next year grows at a rate of 2.5%. Would this mean that stimulus spending was too high, too low, or somewhere in between? Should stimulus spending then be increased further or cut back? How would you know?
I already know that there is no coherent policy answer to this question, underlining the fallacy inherent in Keynesian stimulus spending, but it would amuse me greatly if you attempted to answer this common-sense question anyway.
I’m not sure that’s a common sense question. Kind of wonkish if you ask me.
And I’m not sure that GDP is the appropriate metric (“you can’t eat GDP or pay your mortgage with it”). For instance, GDP resulting from a rise in inventory levels does little for consumer demand and acts as a drag on future growth. What I’d say is that unemployment numbers are the appropriate metric.
If you want a quick answer though, I’d say absent a massive jobs program, no, 2.5% GDP growth isn’t enough to make much of a dent in unemployment.
Unemployment numbers are the appropriate metric? Government could easily get unemployment to 0% tomorrow if that was the goal. That’s no big trick. Just create a bunch of makework government jobs, recruit into the military, or pay employers to hire people. We’d have gross waste and probably end up starving to death, but unemployment would be 0%.
My point actually isn’t that GDP is a great metric for measuring the success or failure of stimulus. My point is that there is no metric that can measure such a thing. The reality is that you have no idea how to measure the success or failure of your policies, i.e. they are unfalsifiable and unscientific, and yet you and your progressive economists feel totally qualified to direct everyone through top-down centralized economic policies. It’s egomaniacal and delusional.
2.5% too low? What would be a good number in your book? How would you know whether your policies helped or hurt that outcome? How would you know whether the growth rate was healthy or a fragile bubble about to burst? Would you like a couple of extra decades in charge of the economy to tinker through trial and error, then report back to us?
Now those questions are truly rhetorical.
Sounds good to me, although I’ll concede there is a level of natural unemployment. “Do they owe us a living? Of course they do!”
As for GDP, like I said I don’t think it’s a good measure without looking at other metrics (for instance, if GDP continued to be negative that would be a sign that public spending should continue – not so controversial in a depression, no?). Let’s keep in mind that GDP growth was fairly strong last year, but without much change in the jobs picture. Consumer confidence, unemployment, etc. that’s the stuff that impacts demand.
Russ is now making definitive statements about what growth and unemployment numers “should” and “should not” be, treating the entire economy as one homogeneous whole that can be centrally steered by policy experts like himself. Some specific industries are doing absolutely fine, but pay no attention to them as they are inconvenient to the progressive gospel of Keynesian aggregate demand models.
How does Russ know what the numbers should be? Well, they feel right to him. How does he propose we achieve them? Tinker with federal spending policy until he gets the outcome he wants. How do we know if the numbers are just another government-fueled bubble of malinvestment ready to burst again? Trust him, he knows what to do.
Are you scared yet? This is progressivism. This is the kind of authoritarian egomania that destroys countries.