America’s jobs jam
The St. Louis Fed had a public forum this week to talk about their research into the ailing U.S. jobs market. Not a feel-good scenario.
The bottom line was something the regional Fed bank’s research director Christopher Waller told Reuters in a recent interview: the last three recessions have brought jobless recoveries and this one is no exception. No one can clearly explain why, except that employers are less likely to hire back workers they’ve fired than in the past, and that with so much of the recent downturn due to the collapse of housing, it’s evident that unemployed construction workers can’t easily find new work in, say, nursing or IT.
At this week’s gathering, Waller and his staff fleshed out their research with a number of interesting take-aways. In no particular order:
- Don’t blame China: labor there has become more expensive and labor in the United States cheaper. GE has reloacted a plant from the Middle Kingdom to the Midwest in part because labor costs no longer favored keeping it out of the United States.
- Almost 2 million of the jobs lost during the recession were in construction.
- Even if government programs help make a dent in foreclosures, who’s going to buy new homes? Household formation — the number of immigrants or young people moving into their own digs — is down 75 percent from pre-crisis norms.
- Raising the minimum wage has no demonstrable effect in holding back job creation.
- O Canada! The neighbor to the north might have some lessons to impart: in the 1990s, it took seven to eight years to bring the unemployment rate below 8 percent from around 12 percent.
- Hiring and firing may have simply become more costly, weighing on an employer’s willingness to add workers. U.S. blue collar workers in the past were apparently more readily able to shrug off being laid off because they were confident they’d likely be able to find another job before long. Now, once firms drop workers, they won’t rehire unless they’re sure they will be able to keep them.