U.S. jobless rate hints at permanent structural change

http://www.theglobeandmail.com/report-on-business/economy/us-jobless-rate-hints-at-permanent-shift/article1696060/

by petercooper • 16 years ago

31 57 16 years ago

tomjen3• 16 years ago

I don't think the example they came up with is really useful - how many engineers are really in the market for 50k/year jobs? It seems very low, so it is no wonder that he can't find qualified applicants.

As for the structural change, yep that is partly what is happening, but there is also a cyclical downturn.

dasil0032• 16 years ago

No doubt! I took a web development job for less than that 10 years ago in higher ed when I was 22 and had no professional experience... of course they also gave me free healthcare, free tuition for my whole family, generous vacation, sick days and holidays, and a fantastic retirement system that when I turn 65 is slated to pay me $650 a month until the day I die, even though I only worked there 5 years.

Now I'm not sure what "qualified" means in this case, but it doesn't sound like they are hiring people fresh out of school, which they should be at that rate.

xiaoma• 16 years ago

On the other hand, it could mean FizzBuzz.

patio11• 16 years ago

I have to ask: California state employee? (Edit: on reflection, the skimpiness of the retirement plan makes me doubtful.)

arethuza2• 16 years ago

Employers often seem blind to the fact that the job market is a free market - if you can't get applicants for a post at the rate you are offering then it's because you aren't offering the right amount of money. Don't whine about getting the government to educate more employees with the right skills - pay more money!

asmithmd12• 16 years ago

The market is signaling that here in the US we have a severe shortage of CEO's.

We should be asking Congress to allow H1B visas for European CEO's who will do the same job for less than half the salary.

dotcoma2• 16 years ago

Hey, can't have it both ways! If productivity goes up, and low-productivity jobs get outsourced to developing countries - which, by the way, is probably one of the reasons productivity goes up in the rich world - of course we will need less working hours to be done. But what should be regarded as a success - and to some extent as neo-colonialism against the world's poor - is seen as a problem. I think this speaks worlds about how backwards and still stuck in a work-and-produce mindset we are...

anamax3• 16 years ago

> If productivity goes up, and low-productivity jobs get outsourced to developing countries - which, by the way, is probably one of the reasons productivity goes up in the rich world - of course we will need less working hours to be done.

You're assuming that consumption doesn't go up.

If we're paying unemployment benefits, those folks should either be looking full-time or doing public service. Yes, that includes things that might otherwise be done by public employees.

exit• 16 years ago

er, what will the public employees do then?

dotcoma2• 16 years ago

I'm not assuming that consumption won't go up. I'm hoping it won't go up. Bigger, better, faster can't go on forever. We have this thing called the "economy" and instead of trying to "economize", we want to consume more and more forever...

Also, did I speak about unemployment benefits? I think we should try to keep as many people as possible employed, and have them all work fewer hours, whenever it is possible. Obama can't really relax too much, or share his job with another co-President, and of course if you're launching your startup and it's the challenge of your life you have to give it all - but not every job is really that important. To a large extent, the truth is that the world is full of small people who have trouble finding value and joy in their lives and want to "seem important" by working way too many hours (nor does the system help them give up part of their working hours, truth be told).

fauigerzigerk• 16 years ago

Rising productivity doesn't necessarily mean that working hours go down. Productivity is output per hour worked. So if output goes up and hours worked stay the same, that's a productivity increase.

Not sure why you call it neo-colonialism when a country like China builds a lot of factories to make stuff we want to buy. Hundereds of millions of people in these countries are now much wealthier than before. I do know about the harsh working conditions there but apparently they are better than what came before or everybody would just stay in their villages and grow rice. China's lack of democracy and prohibition of trade unions is hardly down to neo-colonialism either.

nanairo7• 16 years ago

I would agree with you, if the benefit were shared by society. But in a country like the USA the cheaper, more efficient outsourced productivity helps those who own the companies, and the managers of the company.

On the other hand, those who've been fired see very little of that money, and hence suffer the most.

known4• 16 years ago

Globalization, outsourcing, war on terror and internet will saturate America. And USA will be inhabited with people living on Passive income

gaius5• 16 years ago

A government cannot fix the job market, for the very simple reason that structurally, the economy reacts slower than "before the next election". Anything it tries to do in the short term will almost certain make the problem worse. The best thing it can do is try not to.

We see this pattern repeated again and again in the UK. The voters, sick of austerity, will vote in the high-spending Labour Party which promises all sorts of largesse. Then they'll wreck the economy with high tax and high borrowing, and voters will turn back to the fiscally responsible Tories, who will balance the books but slash spending on public services in the process. As soon as they've "fixed" the economy they'll be voted out again...

Another good example is the health service. All political parties promise to improve it. But a government lasts 5 years and it takes 8 years to train a new doctor. So rather than invest in skills, they spend the money on very visible projects like new buildings, the boast about how much they've spent, not what has actually been gotten for the money.

stretchwithme5• 16 years ago

The government makes waves on the pond and directs your attention to where the water went up, distracts you from where it goes down and when boats get tipped over, it claims "no one could have seen it coming".

MC272• 16 years ago

The Labour/Tory thing isn't that simple. The UK's economy is strongly focused on London. When the Tories (conservatives) are in power, most of the money goes to the South East and the rest of the country suffers really badly. When Labour are in power, they attempt to spread that wealth to the outskirts, but they aren't good at doing it, so waste a lot. They are polar opposites, each creating their own long term damage, especially to public services.

gaius5• 16 years ago

Mmm, this is exactly my point - no-one focussed on "the next election" can safely undertake to deliberately make structural changes in the economy. The timescales are all wrong. It probably takes "a generation" to do it, 20-30 years. The best thing - for the country as a whole - for either party to do is just stop interfering. But, as is human nature, each will prioritize the interests of its core voters.

wake_up_sticky• 16 years ago

Sounds like what you guys want is something for nothing. Unless I'm missing something...?

gaius5• 16 years ago

No - what I want is nothing for nothing. Right now we have nothing for something!

nanairo7• 16 years ago

Mostly I agree. It's a problem in democracy and it has been badly exacerbated by the speed of communication nowadays (TV and Internet mostly).

Though I think we completely disagree on the UK example. ;) (I won't get into the details because it's off topic, but I think you are quite a bit off)

stretchwithme5• 16 years ago

The US economy is built on debt. And all that borrowing pushed up wages in the US and caused trade deficits and migration of workers into the US.

After all, it is not paper we are borrowing. It is the labor of others that we are borrowing. We must take delivery of it somehow.

And it seems likely that our borrowing will continue until it becomes impossible to continue. Neither the Republicans nor Democrats have the balls to break the debt habit in a downturn. And this downturn is far from over.

But the US keeps committing to more spending and absorbing all of the risks of private risk takers in favored industries. It insures many pension funds, is on the hook for your social security, your medicare and your house when you finally decide to walk away.

No individual would ever make such a grand series of errors and anyone who did would face consequences pretty quickly. Only the United States has the resources, trust and good will to piss away on this stupidity.

nanairo7• 16 years ago

Where does this economic theory come from?

If the government cuts expenditures to pay the debt, then more people are without a job or without services. Therefore the economy cools down and the government gets even less money from taxes. At which point they may not be able to pay the debt, so they need to take more cuts and so on.

That's what happened to Argentina a few years back, and I think (though I may be wrong) it's what has happened to Ireland now.

The problem you have in the USA is that what should be done is government taking debt to support the economy in the bad days and paying it off in the good ones. But unfortunately the Repubblican are suggesting exactly the opposite: they wasted a surplus and got you a huge debt when the economy was doing fine, and now that's in a mess they want you to cut expenditures.

stretchwithme5• 16 years ago

Is it the government's job to ensure that everyone has a job? Should it be hiring everyone? Where does this economic theory come from? And why is its logic never questioned?

Yes, the government can continue to borrow massively to spend so much that everyone has a job and subsidize lending so that otherwise unviable economic activity occurs.

But this is the economic thinking that produced the housing bubble and the dot com bubble before it, both of which left economic disasters in their wake.

More of the same faulty action will not resolve the underlying massive structural problem being created.

Some day, the bill will come due for borrowing trillions that do not result in an improvement in our ability to produce products and services the world is willing to pay for.

Both parties have wasted massive amounts of money on things which add no value. The difference between Argentina and the United States is that the US has far greater wealth and ability to borrow and thus can piss away vastly greater amounts before the bill comes due.

The government is like a rich child that is never disciplined by his parents. Its easier to throw money at all of the problems created than to impose the same discipline that created the wealth in the first place.

Yes, more people will be without jobs. But the

known4• 16 years ago

I've a somewhat radical solution to US unemployment problem. Breakup all mega corps for e.g. http://en.wikipedia.org/wiki/Bell_System_Divestiture

asmithmd12• 16 years ago

That would increase efficiency in those corporations and INCREASE unemployment.

When I have worked for "mega corps" I saw more people getting paid to much to do nothing.

nanairo7• 16 years ago

What? So now mega-corporations are less efficient than small companies and hence we have to keep them?

You break up the big corporations and with many suppliers suddenly they need to fight it off in the free market. It will lower prices and despite the efficiency going down (because you have no economy of scale).

You may get a lot of people losing their job at first as the economy resettles which is why it's probably not the best time to do it. But generally I think it would be a good thing.

Stwerner2• 16 years ago

I've been bouncing an idea around in my head related to this for a little while now. While I don't think it's as specific as 'no engineers qualified to fill 50k/year job' I have a feeling that in general it is lack of computer skills that is keeping these people unemployed.

There is a huge amount of the population - in America at least - who cannot handle the most basic of tasks on their computers without assistance or a large waste of time. Not that I'm blaming them, as they got along just fine (though less efficiently than their more computer literate co-workers) before the downturn, but now that they have been laid off and are looking for new jobs, the employers willing to hire people who don't have the basics down are few and far between.

Qz• 16 years ago

A friend of mine recently finished a 5 year architecture program, but for whatever reason her curriculum didn't include computer aided design (more traditional focus she said), but now she can't find a job because everyone wants people with CAD skills.

Stwerner2• 16 years ago

Wow, I wasn't really even thinking about recent graduates not knowing how to use the software particular to their industry.

I'm worried the article may be right, that there needs to be a massive re-training effort or there is going to be a whole generation of people spending the second half of their lives jobless or underemployed. I imagine the only thing keeping it from being a more pronounced effect year round is big corporation's typically slow adoption of new technology.

evilduck• 16 years ago

Computer skills or not, the pay is not appropriate for an engineering position if he's expecting any sort of experience or qualifications beyond the degree itself. I graduated from an engineering college, I've got several close friends who are engineers (electrical, mechanical, civil, chemical and geological), all of them started working fresh out of college at +$10k more than that.

Graduates are probably getting better offers from other employers and experienced workers are probably laughing at the job ads, or politely turning him down once salary was discussed but not telling him why.

100k• 16 years ago

I think this "structural change" argument is nonsense.

An example: much of the unemployment is in the construction industry -- mostly due to the housing bust. But look around you. There are billions of dollars worth of infrastructure projects that need doing: potholes filled, sewer systems upgraded, rail lines built, bridges fixed...The list goes on and on. Yet construction workers sit idle because local and state governments have cut back, and the federal stimulus was too small (and ill-targeted: tax cuts instead of spending) to cover the gap.

The one thing that is true is the lack of labor mobility due to underwater mortgages. That will take a long time to reach equilibrium, and in the mean time, people will be reluctant to move, making the problem worse.

nanairo7• 16 years ago

I agree. Not sure where the ideas that a country where people cannot afford any goods because they have no money need more tax cuts, especially for the rich.

Poor people don't get many advantages from lower taxes because they often don't have to pay that many (especially if they are not working). And rich people will use the extra money to invest... but they may very well invest abroad, and in the current situation they actually just prefer to keep their money to their chest.

A government that paid for construction work, or subsidised jobs useful for the community would help a lot more than one cutting the taxes.

Though of course it doesn't follow common sense, so there's no way society will stop believing Fox news and friends.

dantheman3• 16 years ago

Because taxes take money from productive sectors and redistribute them to the less productive. Not sure where the ideas about taking money from some people and giving it to to others came from. No person is keeping their money in a chest.

Government spending is the least efficient form of spending, and governments in the past few years have spent too much. Look at how much debt local, state, and the federal governments have accumulated.

By lowering taxes business have more money, and thus are more secure - they can handle an uncertain future better. So if a business has 100k in savings it can then hire another worker, and be ok if the economy goes down a little bit. If they only have 10k then they won't hire a new worker because it could put them out of business if the forecasted sales are wrong.

anjuna• 16 years ago

Here comes the arrival of Reddit Kensyian fanboys.

gmlk2• 16 years ago

At the core of the economic problem is the mismatch between the price of basis necessities (which include healthcare, shelter, energy, mobility, education, clothes, food and water, etc) and a normal income: The last century wages haven't increased at the same rate as the real cost of living.

The only way to get out of this mess is that either the incomes at the bottom must rise or basis necessities must come down. At the sometime jobs have become more mobile then people, moving to places where the labor force is even less expensive. Failing that, there is automation which increases productivity per worker, which also will result in less jobs overall.

So we get to a point where a large part of the population will be permanently unemployed because there are not enough jobs for everyone. These people will need to be able to pay for basic necessities just like anyone else. Even the people who do have a job will find that their wage is not enough: Giving the surplus in workers the wages will go way down.

The only way to solve this is to introduce an unconditional livable basic income for every individual citizen. http://en.wikipedia.org/wiki/Basic_income_guarantee

dantheman3• 16 years ago

This is a completely ridiculous statement -- there will always be more work than can be completed. The problem is in identifying what it is. The more the government manipulates the market they more difficult this is.

The problems with healthcare a largely government created - why is health insurance tied to employment?

The large population that is unemployed needs to change jobs , or what their expectation of compensation should be. The wage is directly correlated to the value that they produce, the more value the higher the wage.

gmlk2• 16 years ago

At which price is doing the work still viable?

What if the added value of the work being done is lower then the minimum wage? Then no employer will pay you to do it. Or consider a machine which can do the same job cheaper then some employees earning minimum wage: How long before the job will be automated?

In a world where much physical work is automated away there might not be enough remaining work left for everyone. And the simple law of supply and demand a labor surplus will lead to increasingly lower wages. As soon as this hits minimum wage the work will either move to a place with a lower minimum wage or none at all, or the work is just eliminated (not done) if one can get away with it.

It all ends up the same… With a surplus of (some kinds of) labor, wages will decrease so that some people are unable to earn a livable income. At the same time a shortage of (some kinds of) labor will lead to higher wages, which means that automation becomes viable at higher prices. In either case, given enough time most people will end up without a job, without an income: Only the owners of businesses will share in the profits.

erikstarck• 16 years ago

"The last century wages haven't increased at the same rate as the real cost of living."

Are you sure?

"In 1901, the Bureau of Labor Statistics reported that in major industrial expenditure item for families was food — half of spending in low-income third in more affluent ones. In 1999, food took only 15 percent of household more than a third of that spending was for food prepared away from home."

Source: http://bit.ly/dkLEux

known4• 16 years ago

If there are only 2 options for America,

   1. H1B
   2. Outsource

What would you choose?

known4• 16 years ago

Since Corporations have become bigger and smarter, Govt cannot monitor their day-to-day illegal & immoral activities. It is better to breakup these corporations into smaller entities to promote competition and solve unemployment crisis. http://en.wikipedia.org/wiki/List_of_companies_by_revenue

U.S. jobless rate hints at permanent structural change

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