The times they are a'changing. From the New York Times:
The increasing emphasis on more advanced skills raises policy questions about how to help low-skilled job seekers who are being turned away at the factory door and increasingly becoming the long-term unemployed. This week, the Senate reconsidered but declined to extend unemployment benefits, after earlier extensions raised the maximum to 99 weeks.
The Obama administration has advocated further stimulus measures, which the Senate rejected, and has allocated more money for training. Still, officials say more robust job creation is the real solution.
But a number of manufacturers say that even if demand surges, they will never bring back many of the lower-skilled jobs, and that training is not yet delivering the skilled employees they need.
In other words, the changes in the U.S. labor market are structural and long-term. The miss-match between what the majority of companies want out of their workers and what the majority of workers can offer isn't going to resolve itself in a hurry.
From some economist on some blog:
There is long-run structural change going on in the US economy - including a shift from manufacturing to services, and a shift in demand from low-skilled to high-skilled labor. We're all aware, I think, of the increase in the wage gap that developed 30 or so years ago between college-educated workers and those with less education. The housing boom masked some of what was going on, as it absorbed a lot of low-skilled workers. With the collapse in housing construction, we're stuck with the fallout - what some would call structural unemployment - which is making the unemployment rate higher than it would otherwise be.And higher than it would otherwise be is probably where it will stay for the next decade or two.
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you're predicting 10% unemployment for a decade or two???!!! How exactly does one fix structural unemployment?
ReplyDeleteDon't get me wrong. I'm not predicting the 10% figure. What I'm saying is that the comfy 4% figures we were so used to during the early 00s probably won't return with the end of the recession. 6 or 7 seems more likely to me. That is, higher than it would otherwise be (which is probably a misleading way of putting it, since it seems the lower numbers we actually a bit of an anomoly).
ReplyDeleteAnd on second thought, I think the more devastating issue will not be those who simply can't find a jobs, but those who have to settle for much lower paying, much lower status service jobs after having spend the majority of their working lives doing something everyone has discovered a machine or a Bangladeshi can do for a quarter the cost.
The standard answer to the issue of structural unemployment is an emphasis on retraining and education. But even if we pour resources into those areas, it's much harder to get hired if you're a 55 year old retrained machine operator competing with fresh high school graduates who demand less in pay and benefits and who probably learn quicker. So until all those middle-aged underemployed who have found themselves to be obsolete exit the workforce once and for all, I don't see how this problem really goes away. Which is why I say a decade or two.
Either way, file this under things that Ben predicts but probably has no business predicting. Take this with a grain or two of salt.
I think you hit the alligator on the chomping teeth with the Bangledeshi joke. Not only are the Bangledeshis (or more often, Indian or Indonesians) willing to accept much less in wages, they cost much less, in relative terms, to train. As these governments continue to pour money into their higher education systems, American companies will be (and are) increasingly looking abroad for labour that is not only cheaper, but better-suited. By expanding their applicant pools across borders, American companies almost inevitably increase the dreaded Unemployment figure at home. But it's harder to extend the "stealing our jobs" argument to HR departments who can argue their new hires are more competent than American applicants.
ReplyDeleteHow will America look when it is not the grunts and call-guys who are telecommuting from South Asia, but the chief engineers and project managers? Are Americans ready to be contract labor? The auto industry provides a quick answer. While it was the only manufacturing sector that actually saw a jobs increase through the turn of the millennium (though not, of course in this current recession), the UAW membership dropped by almost half in the same period. The new jobs were largely in Kentucky and Tennessee, not Detroit, and the companies were not American, but German and Japanese.
In the talk about outsourcing and the back-patting advertisements about Toyota in Texas, it has somehow escaped attention that we are already a large-scale target of outsourcing, as well as a source. These companies, notably, choose America not because of transportation costs (and definitely not because American-made parts are more reliable), but because the strength of unions in their countries does not allow them to deprive their workers of benefits and organization rights. I guess it's not earthshattering to call Tennessee "America's Bangladesh," though, with no offense meant to the former East Pakistan.
Fuck, Dan. Just write a blog post already.
ReplyDeleteAlso (or, because, I guess) those are some fine points you made.