Unemployment’s here to stay

By Felix Salmon
October 7, 2011
these numbers.

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There’s no particularly good news in these numbers. For every glimmer of good news, like the upward revisions to previous reports totaling 100,000 new jobs or so, there’s an offsetting piece of bad news, like the broad U6 unemployment rate jumping up to 16.5% from 16.2%.

And the number of people unemployed for more than six months is now 6.24 million — up by 208,000. The long-term unemployed — the least employable of the unemployed, and the most intractable problem in terms of getting America back to work — are now 44.6% of the total, up from 42.9% last month, and 41.8% a year ago.

It’s always a bit dangerous to try to meld the two surveys which make up the payrolls report, but I’m detecting a trend here: insofar as employers are hiring new people, they’re hiring new entrants into the labor force, rather than people making up the ranks of the unemployed. Maybe it’s recent graduates, maybe it’s former stay-at-home moms who were never claiming unemployment but who are now getting jobs. Maybe it’s immigrants. But the big picture is that employment growth is more or less keeping track with population growth, leaving no new jobs for the 14 million unemployed Americans.

It’s worth asking, in this context, whether Obama’s jobs bill would actually change that dynamic at all. It might help at the margin — if you’re working hard enough to burn through the fat reserves of highly-qualified graduates and moms and immigrants, you might eventually start cutting into the hard muscle mass of the long-term unemployed. But my gut feeling is that the effect of the jobs bill will be much bigger on employment figures than on unemployment figures.

Is there anything the government can do to bring unemployment down? Or is it now too late? If we are indeed in the early months of a double-dip recession, than I think it is too late: unemployment is more likely to go up than it is down from here. And even if the economy’s still managing to eke out modest growth, I don’t see much hope that the unemployment rate will come down to a remotely acceptable level any time soon. Realistically, America’s unemployed are here to stay. And we’re only just beginning to understand how that’s going to affect the political economy of the nation.

62 comments

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Ideally, a jobs guarantee program at $8/hr for anyone willing to work. In the real world, we have high UE in construction and a crumbling infrastructure. It’s not rocket science…

Then further address aggregate demand with tax cuts.

Unfortunately, the deficit terrorists have won the day so we have to starve to death in a room full of food.

Posted by petertemplar | Report as abusive

Felix…. You need a proof-reader:
“…early months of a double-dip recession, than I think it is too late….
No…. it’s: … double-dip recession, then….. not than….

Posted by edgyinchina | Report as abusive

It should be no surprise that unemployment is not decreasing. If you were running a business, and believed the economy was not going to grow, would you hire more people? No. There is no penalty for hoarding your profits and not increasing spending.

So absent of a tax policy that rewards investment and penalizes the accumulation of profits, unemployment will not got away. The only thing outside of that that the government can do is buy more things that people will have to be hired to build (products or buildings).

Posted by KenG_CA | Report as abusive

I also think unemployment numbers will stay the same for a long time. Why ? The low numbers from the past were pretty much all a contribution of one or another bubble of some sort.
10% rate or about is pretty much the *norm* in this global world and last, companies wants and needs up to the minute workers, all so specialized in 1 field but 1 field only. So for example, all those bank workers layed off are great adds for the banks but take long time to *recycle* in an other field of work.

Posted by Wildnfree | Report as abusive

If I ate tomorrow’s lunch it’s quite simple what needs to happen. I’ll be starving for a day and going back to normal the next. What politicians are doing is quite human nature, but that’s not going to solve the problem, and is actually making it worse. They first promoted irresponsibility putting the fault to everyone but myself, next created the illusion that if I eat my kid’s lunch things will be OK.. Why is it so hard to be honest?

Posted by Whatsgoingon | Report as abusive

The key is to get money circulating again. The Fed has tried to coerce banks in to lending by keeping rates insanely low but it has become obvious that this is not the solution as the companies able to borrow already have enough cash on hand and the ones that need money are not credit worthy. The next solution would be for government to spend at a deficit to create public works projects but with the current deficits this is hard to do (unless we tax the stuffing out of the people who are hoarding the money). So that leaves us with the third solution. Inflate & devalue the currency. This would punish the cash hoarders as much as a tax would but with the added benefits of bringing (non-inflation tied) loans to a lower real value which would help out borrowers, create higher property values (in dollar terms not real terms) which would bring more loans back above water. The devaluing of the dollar should help create more domestic jobs as imports become more expensive. Now, I’m not talking about hyperinflation as that is destructive but a 5-10% annual rate would be a good thing at the present time.

Posted by anarcurt | Report as abusive

Unemployment is, YES, here to stay. I had thought to myself when in the 1990′s it became fashionable for the gurus and the politicians to promise that all the new jobs were ‘good quality’ jobs. Also, I remember articles about mothers going to employers to complain about their children not being given a job or being fired because of their attitudes and ineptitudes.

In the old days, before the promises of the ‘good quality jobs’, if a person lost his job, after trying for a new one while on unemployment, they went and had to get something, I mean anything including flipping burgers if need be. Instead, now we have seemingly never ending unemployment benefits, a bunch of unwashed protesters on Wall Street and in other big cities protesting that the rich are the cause of their plight. I even saw one kid saying that he would under no circumstances work for $7/hr. Would he or anyone have said something like this just 20 years ago. The promises of ‘good paying’ jobs by the politicians have become a new entitlement, while at the same time, complaints of ‘outsourcing’ corporations are the norm.

Steve Jobs died yesterday. We are going to miss him for sure. He was a visionary who started his company in his father’s garage and yes, we miss him. Even he had to outsource the manufacture of all the wonderful gadgets to China because the jobs that Apple had in its factories inside the United States were not good enough ‘Good Paying Jobs’!

Posted by ClemW | Report as abusive

“Is there anything the government can do to bring unemployment down?”

Not really. The unemployed need to find their own answers, one at a time.

* Seek lower-paying jobs than they would prefer.
* Go into business for themselves.
* Retrain and recertify.

There is a glut of workers who are broadly literate, a shortage of those with specialized skills. In the absence of specialized skills, those unemployed in their 40s and 50s need to recognize that they are in competition with kids fresh out of college in their 20s — and that their paycheck will be determined accordingly (perhaps $30k-$40k for a college graduate).

The good news is that a mature adult SHOULD have skills that a young and inexperienced graduate does not. Figure out what those skills are, then sell them to an employer (or directly to the client).

Posted by TFF | Report as abusive

We are now beginning to see the real effect of “globalisation,” outsourcing, and the redirection of the US economy into services. Since the mid-eighties this effect was hiding in plain sight thanks to the various bubbles that were driven by intentional dismantling of laws and regulations in the financial sector.

Posted by InHellsKitchen | Report as abusive

As I understand it, the developing world is where most of the global growth is right now. American manufacturing companies are outsourcing their jobs overseas while selling most of their products to these developing companies. Under this scenario, there is no need to hire Americans and these companies can make huge profits. While there is nothing wrong with this approach under a capitalist society, this situation does not help create jobs in the United States. However, we are not really a capitalist society anymore, if we were, there would never have been bailouts. Maybe some non-free trade policies should be introduced to help with jobs as we are no longer function as purely market driven society. Just a thought.

Posted by Slammy | Report as abusive

How many people out there are collecting returnable bottles? A friend did this with all his friends laughing at him until be bought a new diesel powered welding machine just under a thousand dollars. Now he has an electrical generating back up and powerful tool to make a bunch of cash. Ya gotta love this guy.

Posted by judester | Report as abusive

Agreed, Slammy, that manufacturing is increasingly automated and increasingly exported overseas. There simply isn’t any profit in paying a US worker $15/hr (and another $10/hr in benefits and taxes) to operate an assembly line.

That leaves us with a service economy. Most services CANNOT be exported. Happily, service jobs are easily self-created.

(1) Think of something you can do to help other people.
(2) Find people with money.
(3) Encourage people with money to give you some of it in exchange for your services.

It is a pretty simple model, and one that I don’t see people exploiting as actively as they might. It doesn’t offer much security, doesn’t offer paid vacations, doesn’t come with health benefits — but it is a start, a way to make something out of nothing.

There are supposedly tens of millions of people who are unemployed. Are they thinking of ways they can use their skills to accomplish something productive? Or are they mentally locked into the wage-slave model?

Posted by TFF | Report as abusive

TFF, there are still way more unemployed people than there are jobs, regardless of the salary. Also, lots of companies don’t like hiring older, unemployed people. If you are 45 or older, companies paying $10-12/hr won’t hire you if they can avoid it. If you are in your 50s or 60s, not only would they prefer somebody younger, because they might be more energetic, but their health insurance will be less expensive (of course, if they don’t pay for health insurance, well, that’s one more thing that falls through the cracks).

It’s easy to say people should basically start their own business, but most people are not wired to do that (yes, they have been trained to believe they are locked into that wage slave model). And if they do take the plunge, it often costs money which they either don’t have or can’t afford to lose, and then most of them will go out of business. I’m not saying we should discourage people from starting businesses (I have started several, so I would never tell anyone else not to), but that it won’t solve the unemployment problem.

OR are you being facetious when you say “find people with money and encourage them to give it to you”?

Posted by KenG_CA | Report as abusive

If unemployment stays this high, it is because something is wrong (or more likely several somethings). Instead of continuing with failing programs, policies, and practices, they should be modified, replaced, or stopped.

Unfortunately, ideologues and the self-seeking aren’t looking for solutions that benefit the country. They only look for solutions that fit their ideology or that increase their power.

Throughout history, nations have followed same cycle and had the same results. You would think we would learn how to stop the cycle — it’s not as if we don’t have many examples of success and failure in the past.

If we don’t change what we are doing, we will likewise “enjoy” the same results as past nations: dissolution and widespread misery.

Posted by RandyAstle | Report as abusive

We need to limit the duration of unemployment benefits to six months unless the unemployed person is enrolled in a retraining program or is willing to take a lower paying job. I know many employers who can’t find employees for jobs paying 8-12 dollars per hour becuase they would rather stay home and collect unemployment. Even socialist countries like Denmark have reduced the duration of their unemployment programs to force people back in the work place.

Posted by jkk1943 | Report as abusive

Obama’s insane energy policies have eliminated hundreds of thousands of real jobs throughout the energy industry. The virtual ban on drilling in the Gulf of Mexico, Alaska, East Coast, West Coast and oil shale costs the US hundreds of billions of dollars in extra imports while keeping our workers from high paying jobs.

Instead, Obama spends billions on subsidies for high cost, unreliable “green energy”, which is one more reason it would be insane for most companies to manufacture here. The Chinese are installing a new large coal fired power plant every week while Obama is shutting ours down, thus increasing unemployment in the coal industry.

The United States is one of the most energy rich countries on earth, yet we import over a hundred billion dollars of oil a year because the government won’t let us produce our own.

There’s no mystery why we have high unemployment. Like most things the government gets involved with, it creates the very problems it claims to be trying to solve.

Posted by NSJ4 | Report as abusive

Yes, unemployment is here to stay. What politicians and members of the media are failing to understand is that the economy has been trying to restructure itself ever since the end of the Cold War. Few Americans realize that for more than half a century, the US economy was based on government spending, particularly military, that at one time was financed by tax rates as high as 90%. The end of the Cold War resulted in a decline in military spending – the recession of the early 90s was prompted by the cancellation of a military contract to McDonnell-Douglas. The Internet and housing bubbles held off the inevitable, for a time. But now both of those bubble have burst and there’s nothing in sight to revive an economy that is restructuring to the levels of the 1930s. So, get used to it. Current unemployment levels are here to stay.

Posted by SamC130 | Report as abusive

Yes, unemployment is here to stay. What politicians and members of the media are failing to understand is that the economy has been trying to restructure itself ever since the end of the Cold War. Few Americans realize that for more than half a century, the US economy was based on government spending, particularly military, that at one time was financed by tax rates as high as 90%. The end of the Cold War resulted in a decline in military spending – the recession of the early 90s was prompted by the cancellation of a military contract to McDonnell-Douglas. The Internet and housing bubbles held off the inevitable, for a time. But now both of those bubble have burst and there’s nothing in sight to revive an economy that is restructuring to the levels of the 1930s. So, get used to it. Current unemployment levels are here to stay.

Posted by SamC130 | Report as abusive

Unemployment’s here to stay, says felix:

Felix should read Newt’s “New Contract”, which shows the path to economic recovery!

Posted by jackkreg | Report as abusive

The goal of government may be to create jobs; but the goal of business is to produce products or services at the lowest possible costs. Hiring is a response to increased demand. If government wants jobs than government policy must promote growth not jobs; until then joblessness and high unemployment will prevail. The administration goal of increased regulation on banking, environment, labor policy, etc. does not bode well for a pro-growth policy.

Posted by Cincinatus | Report as abusive

KenG, I couldn’t agree more. I’ve thought about going into business for myself on several separate occasions and one way or another, every venture that I’ve concocted circles back to too high of a cost of entry for me to gamble on. TFF, if going into business for yourself were only as simple as you seem to make it sound.

Posted by spectre855 | Report as abusive

Obama has been a disaster without peer! 9.1% UNEMPLOYMENT, Record Long Term UNEMPLOYMENT! Obama really seed to think spending/wasting nearly a trillion dollars on things like Solyndra was going to create some job? Obama’s extreme left wing policies have killed jobs from day one by the millions. Now he wants to kill more with “Son of Stimulous” and his war against business. Nov 2012 is a long ways away, but we can start to recover when we reject Obama and return to sane economic policies and get a competent President!

Posted by valwayne | Report as abusive

“TFF, there are still way more unemployed people than there are jobs, regardless of the salary.”

KenG, I know what you mean, but if you step back and think about what you SAID it is patently false.

There are plenty of tasks going undone because of a “lack of money”. Classrooms with 30+ students because of a “lack of money”. Roads that should have been repaved a decade ago but haven’t because of a “lack of money”.

But what do people really mean when they blame a “lack of money”? They mean that the going wages for doing that kind of job are higher than the money available to do that job. In other words, it is very much about the salary.

Or turn that around — as long as unemployment runs high, there will never be any reason for employers to raise wages. Wages will ultimately fall (or stagnate while prices rise). I don’t claim this is a positive trend, but I do feel it is inevitable. There simply aren’t enough jobs that are profitable at the present pay scale.

“It’s easy to say people should basically start their own business, but most people are not wired to do that”

I don’t think I claimed it was easy, and in many/most cases it will initially be more work for less profit than the former employment. Simply depends on whether you prefer an easy lie or a tough answer. ANYBODY WHO TELLS YOU THAT THEY CAN BRING BACK HIGH PAYING JOBS AND BROAD PROSPERITY IS LYING!

Hmm… Is it a coincidence that a production of Peter Pan is opening in a week?

Posted by TFF | Report as abusive

“OR are you being facetious when you say “find people with money and encourage them to give it to you”?”

No, that is what I do. I sell my services to individuals, working out of my home (and my car). Earning just half of what I was in my full-time employment a decade ago, without benefits, but I could support myself on those earnings if I had to do so. I’ve found that people are more than happy to give you money if you offer them a service that they want.

My day job now is for a charity, paying about $15/hr without benefits. Would like to believe I’m accomplishing something there, however.

Posted by TFF | Report as abusive

“TFF, if going into business for yourself were only as simple as you seem to make it sound.”

Personal service businesses are much easier to operate than other kinds of small businesses, and many can be run without substantial equipment or startup costs beyond client acquisition.

If unemployed, then what do you have to lose trying?

Posted by TFF | Report as abusive

Going into business is not hard and the success rate is generally higher than most people would expect. In the 80s when the economy started to turn around and tax rates were low (so that the burden on someone attempting a business start up was low) everyone and their brother was starting businesses. Going into business was a somewhat common and valid response to being unemployed. It’s still not bad starting a business now, but every time taxes go up a little on owners of S-Corps, LLCs, and single proprietorship, it makes it just a little bit harder for people to go into business because the money they need to invest in their business and get it on a firm footing is being siphoned off for taxes.

The idea that unemployment is here to stay is often sold by those who want to convince you that the policies that are creating unemployment are the constant and you just need to adjust your thinking. It is often sold by idealogs who are more concerned with their concept of fairness and justice, and how things should be done, than with the fact that their policies are harming others. Don’t buy it. It has been proven time and again that a thriving economy is the inevitable result of freedom, including the right to own property and a respect for the rights of all people to keep what they earn. Denying freedom and the rights of others to the money you have traded them for their goods and services only harms society as a whole by creating a bad economic environment that sinks all boats.

Posted by GernB | Report as abusive

GernB, what policies would you advocate to reinvigorate the economy?

I do agree that taxes make any employment (self or otherwise) a struggle these days.

Posted by TFF | Report as abusive

TFF, I get your point, but you over-simplify things. It’s not just labor costs that stop things from getting done, there are other resources (classrooms, not just teachers, for example) that limit what can be done.

Your solution will result in a race to the bottom. Whenever supply exceeds demand, prices drop until the suppliers go out of business. In this case, when the supply is labor, the prices would drop until the workers die. Not the solution I would expect from an alleged “great” nation.

You are committing a common mistake that I see so many people do – “I have worked hard and accomplished this, others can do the same thing”. That is part of the myth that “all men are created equal”. No, they are not, if that was the case, I would have been in the NBA. However, I could have worked 12 hours/day, 7 days a week, and never made it there, because all men are not created equal.\. You may not think of yourself as that special, but as someone who has hired lots of people, I can say that a majority of people are not capable of doing a lot of different tasks, let alone figuring out what to do, and how to do it. the nation doesn’t teach self-starting, and punishes failure on the small scale (it greatly rewards those who fail on a large scale – go look at the severance packages of execs who were fired for doing a bad job). Nowhere in the industrialized world are people trained to start their own business.

I don’t think Nancy Reagan’s “just say no to drugs” plan was a success.

Posted by KenG_CA | Report as abusive

As long as we have the Job Terminator in the oval office, we will have high unemployment. His 4 year mission: Seek out and destroy all jobs except green jobs. To kill jobs where no man has killed jobs before. To boldly spend where no man has spent before.

Posted by gstefan | Report as abusive

“It’s not just labor costs that stop things from getting done, there are other resources (classrooms, not just teachers, for example) that limit what can be done.”

Here, at least, they are laying off teachers — leaving empty classrooms. Students still use the same books, the same supplies. They are simply stacked 30 to a class when a few years back they were at 24. It is wholly a matter of labor costs.

In fact that is pretty typical of service businesses. They are labor-intensive by their nature, and thus sensitive to labor costs. On the flip side, the products are frequently discretionary expenses, and thus sensitive to economic conditions.

“Your solution will result in a race to the bottom.”

Partly true. I definitely expect real wages to fall over the next decade. (Will leave it up to you whether it is better to have inflation and stagnant wages or no inflation and falling wages.)

Yet you are also forgetting the discretionary nature of these expenses. There ARE still people with good jobs, making more money than I could dream of. As labor costs fall, they will presumably avail themselves of more services. Is it better to have some people earning $30/hour and others unemployed? Or to have everybody employed and earning $15/hour?

“You are committing a common mistake that I see so many people do – “I have worked hard and accomplished this, others can do the same thing”.”

Keep in mind that I’m not claiming overwhelming accomplishments. In 2010 I grossed $33k (no benefits) between my two part-time jobs. Is that truly unrealistic for somebody in their 40s with a lifetime of experience who is willing to work 50-60 hours a week?

Your analogy to the NBA is deeply flawed, as there are strictly limited roster slots available. The number of jobs is not fixed. Worse, you are assuming a SPECIFIC job that might not fit your talents. That is the wrong approach — instead consider your talents and build a job around that.

I’ve never said it was easy. Don’t think I even said that everybody could do it. Which brings us back to the question — do you prefer tough answers or facile lies?

“I can say that a majority of people are not capable of doing a lot of different tasks, let alone figuring out what to do, and how to do it.”

That’s a pretty damning condemnation of humanity… Perhaps it is a symptom of my profession, but I see greater potential in people than that.

“the nation doesn’t teach self-starting”

Perhaps we should change that?

Posted by TFF | Report as abusive

Dear petertemplar,
You would be surprised. I am very conservative but would go for a 7 or even 10 per hour ‘workfare’ type program. If you lose your job I would be all for provideing regular unemployment for up to 2 or even 4 months. After that, unemployment for as long as you want as long as you work for program like you describe. Yes there are people who can’t find a job because of the economy, but there is a significant percentage (30-60%) who won’t work because the get benefits for doing nothing. I know several of them.

Posted by GJPinKS | Report as abusive

So do you pay the formerly unemployed teachers less? Or are the salaries negotiated every year? If you make it an annual exercise, you will drive a lot of people out of the field. If your goal is to hire teachers at the lowest price possible, I don’t think you will end up with a good education system. You will be stuck with people who just want a job, and don’t care about what they are teaching, or whether the children are learning anything.

I don’t think we would get inflation with stagnant wages, the only way that would happen is if food and housing had to be imported and the dollar lost so much value due to giant budget deficits. Given that the EU, GB, and Japan, the other major floating currencies, are all running giant budget deficits, we’re not going to see currency-driven inflation for some time. That would leave demand exceeding supply as the driver for inflation, and since there is an excess of capacity of most things in the US (especially housing), we’re not going to see that kind of inflation, without rising incomes. So yes, I would prefer to take my chances with inflation, mainly because it isn’t going to happen soon without growth in the economy.

Rather than your choices of everyone employed making $15/hr and partial employment at $30/hr, I would suggest that we reduce the work week, and keep salaries the same. The world is efficient enough that we don’t need people working 40-50 hr weeks. If we have 10% unemployment, and half of the jobs can be reduced from 40 hours to 32 hours, we can eliminate unemployment without reducing hourly wages (not that most people would go for it, but since you asked which option I prefer, that’s the one).

There are people with discretionary income, but that subset is shrinking. The same store sales at Wal-Mart have been decreasing for 9 or 10 quarters, and that represents a much bigger piece of the economy than the few percent with enough discretionary income to hire unemployed people for personal services.

I didn’t make the NBA comment as an analogy to the current situation, just to make my point that all men are not created equal. We all have different skills and abilities, and I don’t believe everyone is endowed with the knowledge, confidence, and maturity to strike out on their own. I think people are capable of a lot more than they know, and that’s the problem – they don’t know what they can do. Throwing them in the water and telling them to swim will work for some, but not all.

But I will definitely agree with your last sentence. Yes. any ideas how, other than to force them?

Posted by KenG_CA | Report as abusive

The solution is something like Cain’s 9-9-9 or like Perry’s return to tradition and to government doing its job, or like Gingrich’s new contract. Whichever, it starts with a new and different President and enough new and different Senators.

Posted by johnwerneken | Report as abusive

I would start a business and hire people tomorrow — if there were no government mandates. Ok, that’s maybe just a little extreme but start from there and keep the government intrusion, mandates, fees and regulation to an absolute minimum.

Posted by NoLawyers | Report as abusive

Here to stay for how long? I agree it looks like we will have high unemployment for a few years, but beyond that much depends on if growth restarts. To restart growth, cut taxation and regulations that hurt business. Also cut spending and get America onto a balanced budget trajectory.

Europe has had high unemployment for decades. But thats because its a socialist continent. Lets hope America has the intelligence not go down that path.

Posted by gliderpilot | Report as abusive

John Galt’s digging in his heels.

BHO better leave in January 2013, or this little Republic might well be toast.

Posted by serr8d | Report as abusive

Permanent unemployment in the 20% range is the key identifying characteristic of every socialist economy. That’s what the Soros-funded hippies want, they can have it.

Posted by doctorfixit | Report as abusive

The solution is staring right in front of America’s face but no one is going to do anything about it.

1) Get your education right. Government need to tailor needs of economy from the core of its students.

2) Angle education into labor that needs to stay. E.g. There is a tremendous need for medicine and while there are many country that are good like mine, Singapore, there is no one that can have so many scientists working on the same time that America still can. A vast percentage of this is foreign talent in America, get locals and see unemployment fall.

Other areas are : Energy independence and green energy; water technology ( clean out dirty/ waste water desalination); construction/ mantainence of infrastructure.

3) Keep business taxes low but personal taxes high and progressive. Keep corporate taxes as close to 0% as possible. Let the maximum income rate for the rich be 90% (including social security) if need be, and let Buffet rule take shape. Also, never lose the progressive structure of taxation collapse. Never allow flat taxes; it kills the middle class and the poor.

Posted by PreetSG | Report as abusive

In the last decade, America has discovered huge new reserves of oil and natural gas all across the nation.

This provides an opportunity to: employ millions of Americans with good paying jobs, decrease our trade deficit and stabilize the economy,provide cheaper energy to our manufacturers and exporters to make them more competitive,and decrease the cost of living for all Americans – especially the poor.

But leftist global warming fanatics and pampered environmentalists don’t care about the poor, or about the nation. They care only about their leftist fundamentalist religion.

Posted by Parker1227 | Report as abusive

I, for one, am happy to welcome our new statist overlords…not!

Unemployment is ~not~ here to stay. The economy is dynamic and unemployment will drop to less than 3 percent with President Cain’s 9/9/9 plan.

Get used to ~that~, beltway media drones!

Posted by janvones | Report as abusive

Keep setting the narrative, Lame-stream media… that way you’ll convince everyone that O couldn’t do anything – it’s just the way it is. You guys couldn’t be more in the bag for ‘the one’ than if you had ‘we love obama’ as a by-line.

Posted by Kevlaur | Report as abusive

The only way to re-institute policies that force companies doing business in the US to reinvest their profits in the US is to eliminate all the top-1%-benefiting laws that were passed in the last 20 years under the rubric of free trade.

*No more permitting profits to be moved offshore to be repatriated later
*No more offshoring – either permitted or encouraged
*Wage and environmental parity tariffs
*No more H1/2 visas – zero
*Public funding of all campaigns – no private money

Yes, these are ambitious statements. But if you wonder where your unemployment is coming from, all of those are reasons your politicians do not vote for you to have jobs in America. Multinational corporations have no loyalty to anything – they will not do the right thing unless forced to.

Posted by Unsympathetic | Report as abusive

Liberalism is destroying america. We must vote liberals out of office. Start at the top (Obama) and work our way down, voting against every liberal.

Posted by Sherlocktoo | Report as abusive

Poverty — it’s here to stay. And in fact, along with prisons and police, is one of the only growth areas of America.

Get used to it. And the kinds of markets it brings. The new Romanoff America.

Posted by txgadfly | Report as abusive

I also lay a lot of the blame for our present unemployment numbers right at the door of public education. We graduated millions of students who couldn’t read, can’t write, can’t spell, can’t even balance their checkbook! Millions!

How are those individuals going to “retrain” when they can’t read for comprehension, can’t do the math required of an entry-level machinist and have none of the study skills required to learn a new profession?

That is the real reason we are seeing a permanent unemployed class here in the US. Certainly some of them will manage to break out of that group but most will not.

Posted by stanrich | Report as abusive

“So do you pay the formerly unemployed teachers less? Or are the salaries negotiated every year? If you make it an annual exercise, you will drive a lot of people out of the field.”

I’m not sure what you are talking about here, KenG. I would expect that teaching salaries WILL fall (at least in real terms), along with wages for everything else. Given the retreat in the private-sector wage scale, teaching salaries are looking better today than they have in decades. That won’t last.

But teaching is just one of many service-sector industries. I expect we will see similar trends in all of them — falling wages leading to falling prices, ultimately spurring greater demand.

“The world is efficient enough that we don’t need people working 40-50 hr weeks.”

Arguably true, but the present trend is in the opposite direction. Companies are laying off workers and redistributing the work among those who remain. Why do they do this instead of simply paying everybody proportionately less and sending them home early?

(1) To a point, most workers would rather work X% more than earn X% less.

(2) To a point, employers would rather have their top employees working longer hours than their mediocre employees sharing the burden.

(3) The cost of health care benefits are proportionate to the number of covered employees, not to the hours worked.

Working longer hours for the same pay is simply another form of cutting wages. It might not be necessary, and at least in the short run it is economically more disruptive than your alternative, but I can understand how it happens. How do you propose to reverse that trend? Executive order?

“Yes. any ideas how, other than to force them?”

Not really… I know how to raise initiative in high school students, but am not sure where to begin with adults. Kids are more impressionable.

Am not saying it is a positive example, but consider the structure of the internal economy in India. Those with what we would consider middle-class skills and wealth employ household servants — allowing those WITHOUT the middle-class skills to subsist.

We seem to be heading towards a similar structure, albeit on a wealthier scale. A sizable fraction (10%?) earning six-figure salaries. If each employs 1-2 personal servants, then the present unemployment is absorbed.

That isn’t going to happen at $30k salaries, however. And I don’t see how the “good jobs” we saw in the 90s and 00s are going to return.

Posted by TFF | Report as abusive

TFF, the only way teaching salaries will fall in real terms is if there is inflation, and that isn’t happening. My question was how do you integrate the unemployed teachers willing to work for $15 or $30/hr with those under contract at a higher salary? You either auction the jobs off every year, or deal with really pissed off teachers working for far less than the ones under contract.

To your first point about what workers prefer, since when did the employers care about that? Tell the unions they have X hours available for employees, they can spread it over Y employees or Y*1.25 employees at the same price. Yes, the take home pay will be less, but people will have more free time, and it sounds like you don’t mind that.

Point #2 is well taken. As an employer, I would heartily agree. But we’re trying to solve a problem, and there is no perfect solution, only some that are better than others.

Point #3, absolutely right there, which is why we need a health care system that is not so dependent on employer contributions. If a great nation is one where people have access to great health care, then it follows that that access shouldn’t be dependent on luck. Unless you want to make health care a reward – that is a choice a nation can make, but in my opinion, it is not something a great nation would choose.

The only way to reverse the trend of longer hours for less pay is to grow the economy, which how to do it is the subject of a never-ending debate (or more realistically, acrimonious standoffs). Only constant re-investment of profits and income can sustain a growing economy, and the best way to ensure constant re-investment is a tax policy that punishes the accumulation of profits, and rewards investment. We do not have anything that resembles that kind of policy.

Since the US stopped re-investing much of its profits years ago, the rest of the world has caught up with many of our former world-leading industries, and we no longer have an exclusive claim to the higher margin ones. As a result, yes, the good jobs are mostly gone, but they can return if hoarded capital is deployed here.

Posted by KenG_CA | Report as abusive

“TFF, the only way teaching salaries will fall in real terms is if there is inflation, and that isn’t happening.”

There are a variety of ways that can happen, all are in play right now. I agree that teaching salaries are likely to be “sticky”, especially since the union involvement makes it easier to cut positions than cut salaries. But that doesn’t mean they are guaranteed to always rise with inflation.

“Tell the unions they have X hours available for employees, they can spread it over Y employees or Y*1.25 employees at the same price.”

The majority of union members will choose the latter option. Always. Still, most jobs are not unionized, so this is a peripheral point. The employer typically dictates the terms of employment, and it is up to the individual employees to take it or leave it. In the present job market, they are understandably reluctant to leave.

“Only constant re-investment of profits and income can sustain a growing economy, and the best way to ensure constant re-investment is a tax policy that punishes the accumulation of profits, and rewards investment.”

Sound policy. I still fear that technology has reduced the need for “office drones” in our economy. Individuals with initiative and high-level skills are wealthier than ever before, but the positions in the middle are disappearing. Travel bookings once employed an army of agents. Now the process is fully automated, and simple enough to navigate that individuals are encouraged to book their own (rather than centralizing that activity at a single desk for a business). Just one example of many…

I don’t think any policy will turn back the clock. Hopefully we can find a way to move forward, but the new economy may look very different from the old one.

Posted by TFF | Report as abusive

This is a great thread. If you drill into the latest few months worth of employment data you will find that the private sector has actually done pretty well at adding jobs. The reason the headline number is too loo to drop the unemployment rate is that goverment employment is falling for the first time since the end of WWII.

In the private sector I have no problems whatsoever with unions. If they drive bargins too hard for the market to bear than the company fails just like GM, Delta, Delphi, Chrysler, PanAm, Fairpoint, and dozens of others. There is however no place for union representation for goverment employees. The goverment obviously must follow minimum wage laws, OSHA regulations and the like. Having met those hurdles employment should be at will.

At $8/hour a 100 billion dollars yields 6,250,000 jobs. So for that amount of money you could immediatly re-employ ALL of the long-term jobless. 100 Billion is some pretty big coin… but consider that we now spend 10 times that much paying old people NOT to work… in that light paying five million people to do something useful in some kind of WPA scheme dosen’t seem that unreasonable to me.

Posted by y2kurtus | Report as abusive

TFF, I just don’t see inflation happening for a while. There are two basic causes of inflation: demand exceeding supply, and devaluation of the currency, and neither is a threat here.

Even if the economy heated up, there is enough capacity to prevent demand from exceeding supply. I realize that printing money almost always results in inflation, but not this time. The money that is being injected into circulation is not being spent – it is being used either as ballast for banks, or to pay down debt.

Normally, when the government borrows as heavily as it has been, the dollar would be devalued, but given that the economies of all of the other major floated currencies have massive debt problems also, the dollar is actually stronger than it has been in years. Even though US government debt has been downgraded, people still want dollars instead of euros, pounds, and yen. The only way the dollar could be worth less at this point is if tChina let the renminbi rise, and they just don’t seem willing to do that. However, if they did, the price of imports would increase, but these are not necessities, they are mostly luxuries, and will not drive inflation.

Or is there another way inflation could be fueled?

Posted by KenG_CA | Report as abusive