| Monday, June 22, 2009 |
| Recovery's Missing Ingredient: New Jobs |
Leave it to the Washington Post to start my week on a sour note - Recovery's Missing Ingredient: New Jobs "Unemployment won't peak until this time next year, and then it will remain very high through next year," said Mark Zandi, chief economist for Moody's Economy.com. "It won't get back to full employment until 2013 or 2014. This really speaks to the severity of the job losses that have been absorbed by the economy. They were massive."
Since the recession took hold in December 2007, the U.S. economy has lost 5.7 million jobs, a rapid decline that caught administration and other economists off guard. In recent months, the velocity of job losses has slowed substantially, which, combined with a rising stock market and increases in consumer spending, has offered hope that a recovery is beginning to take hold.
But employers still cut 345,000 jobs last month, while the nation's growing working-age population requires the job market to expand by 125,000 to 150,000 a month just to keep the unemployment rate stable.
The dynamics of the modern economy further dim the employment picture. Job growth was weak for years after the past two recessions, in 1991 and 2001. Employers have grown increasingly slow to rehire workers, and steady advances in technology have allowed businesses to do more with fewer workers.
While the recession has touched workers across the spectrum, "many of the job losses are in manufacturing and construction, affecting less-educated workers and immigrants," Zandi said. "It is going to be hard for them to find their way back into the workforce quickly."
Meanwhile, the current recession has been characterized by the implosion of the housing market and the near collapse of the financial sector and automobile industry. Despite huge federal interventions, many of the jobs in those industries are gone for good.
High unemployment also does not bode well for consumer spending, which accounts for about 70 percent of the nation's economic activity, putting further pressure on the job market.
"We have not seen the highest unemployment rate, and this is going to go on for a long time," Mishel said. "The political conversation seems to be that we have already dealt with the recession. But we need to have a conversation about how we are going to get to the other side, where employment is growing again." Where will these jobs come from? If it is true that Americans have really changed their consumer habits during this recession, we can't assume the service sector will recover anytime soon. If people are no longer spending so much, we don't need all of those malls, restaurants, and other retail outlets (nor can we count on those jobs). Will America look to its core after so many years of superfluous living? Build back the infrastructure of our lives? |
| posted by Boston Gal @ 8:54 AM *
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| 4 Comments: |
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A couple of different comments: First, as a parent of children ages 11 and 14, I wonder how to encourage their schooling so that when they come out of college they will be competitive in the economy as it is then. It would be nice to have a sense of where the jobs will be. We have been encouraging environmental science and engineering and Chinese language classes!
Second, regarding the types of job losses: my neighbor is the head of the local food bank and has worked there for years (at least 15). She often has an interesting perspective on the nature of the various economic cycles. She said that currently, there are many more families coming in for assistance (like from 2 families a day in the past, to 6, then 12, then 32 families in one day last week). But, while in the past she has been troubled by the number of middle class people who have suddenly lost their work, what she is seeing now is many people who are repeat clients from past years--that is, she feels those most affected in the current economy are people who tend to be on the edge in any economy--low job skills, poor interpersonal skills, something that makes them on the low rung of the ladder. As employers cut back, it is these workers (who may have received employment training or counseling through her social services network before) who are the first to be cut, and the last to be hired.
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Forget College. Send your kid to Technical school. I don't see what the fuss about High income job creation is about. The answer is just time. I know my grandfather could build, fix and repair most of his house. My dad could too. I can do some, not to their extent. However, almost none of my friends can fix or repair anything beyond painting... and even that is marginal. Has anyone hired a Tradesmen lately. Plumbers, carpenters, electricians are well paid. Those who work hard end up owning their own truck/company. The lack of skills in the younger age groups will make them even higher paid. Don't learn chinese, learn how to wire a house.
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Anonymous #2: while I don't disagree with you...perhaps wiring houses is a bad example :P Accounting is a trade as well...there are many trades that don't require picking up a hammer or blow torch.
The way I see it is this: we've all read (or at least I did) that consumer SAVING is up. That is because people are still scared - where is the economy going? Will I lose my job? This saving, coupled with far less consumer credit being doled out and we have a BIG DECREASE in consumer spending. This decrease in consumer spending means that manufacturers have to quit making/building product, as there is less demand for the product. Less buying/selling/manufacturing means less jobs, regardless the product (and this includes the creating, selling and servicing of these goods). Through this process the manufacturers have their inventories eaten up.
When things begin moving on the buying/selling front, there will be a need for more product and hiring will begin to produce/service more!
We're going to see consumer spending increase first, regardless of the unemployment percentage, and (contrary to what many think) the increase in consumer spending will bring forth employment. 2013 - 2014? I think it will happen earlier than that, but what do I know...I'm just some random poster :)
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Interesting. As of today, I am 5 days away from being offered a full time position at a technical college teaching prospective electricians. I have a BS in electrical engineering. Without a 4 year degree, I wouldn't be able to teach.
With an engineering degree, I've managed to do all of the electrical wiring for an extensive home project. I didn't need to be a licensed electrician to perform this work. Any idiot could do this work.
However, if we were to have added a bathroom, we would have needed to hire a licensed plumber. It depends on the trade and state regs.
That being said, construction projects don't just affect the men and women who get their hands dirty. When people/institutions with money stop a project, it hurts the architects and engineers first and then trickles down to the laborers and manufacturers.
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A couple of different comments: First, as a parent of children ages 11 and 14, I wonder how to encourage their schooling so that when they come out of college they will be competitive in the economy as it is then. It would be nice to have a sense of where the jobs will be. We have been encouraging environmental science and engineering and Chinese language classes!
Second, regarding the types of job losses: my neighbor is the head of the local food bank and has worked there for years (at least 15). She often has an interesting perspective on the nature of the various economic cycles. She said that currently, there are many more families coming in for assistance (like from 2 families a day in the past, to 6, then 12, then 32 families in one day last week). But, while in the past she has been troubled by the number of middle class people who have suddenly lost their work, what she is seeing now is many people who are repeat clients from past years--that is, she feels those most affected in the current economy are people who tend to be on the edge in any economy--low job skills, poor interpersonal skills, something that makes them on the low rung of the ladder. As employers cut back, it is these workers (who may have received employment training or counseling through her social services network before) who are the first to be cut, and the last to be hired.