The United States of Unemployment
One of the few things that both Democrats and Republicans can agree upon is that the current number of unemployed workers in this country is painfully high. Although the official “unemployment rate” is hovering around 10%, the actual unemployment rate is probably closer to 20%. The reason for this wide disparity is that the official rate only takes into consideration those individuals who are actively seeking employment. Those unemployed who have simply given up trying to find a job; who are perhaps waiting to be recalled or who have come to the conclusion that finding a job is hopeless, are dropped from official statistics. The sad fact is that close to 20.0 million Americans who would rather be working cannot find a job, and the even sadder fact is that this situation is unlikely to change much in the near future. The U.S. economy has significantly downsized, and the required labor force has downsized along with it.
The return to the level of productivity (and the low unemployment rates) of the “good old days” may not be so easy to achieve in today’s global economic environment. The longer the recession lasts in America and Western Europe, the greater the advantage of developing countries (such as China and India) to claim a larger share of the means of production. A good example of this is China’s purchase of the Hummer line of vehicles from GM. While American companies have been delaying investments in technology and new plants & equipment, their Asian competitors have been steadily becoming more efficient through massive re-tooling. When the dust of the “great recession” finally settles across heartlands of America and Western Europe, we may find that the “normal” rate of unemployment has been re-defined to be closer to 10% than 4%.
If, in fact, high levels of unemployment become a permanent part of the American economic landscape, the future Presidents and politicians will have a thorny set of social issues to deal with. These will be the same issues that the Europeans have solved through socialistic policies that ultimately squelch productivity, and that the third world nations, such as Brazil, have solved by creating police states to protect the wealthy. Either way, the standard of living for the average American family is likely to decline for the first time in the history of this great nation.
—Rich
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After this one must ask is there any hope for us. So hard and cruel reality. But that is how it is. I admit I didn’t expect this crisis to go so far. Solution is, in my opinion, to find a way to stop every next crisis, to stop them repeat all the time.
I agree with you Rich. The actual numbers are much higher than 10%. Not sure about 20%, but I wouldn’t be surprised. Nothing surprises me anymore unfortunately.
Also, the standard of living has already declined. How?
Our parents were able to live on one income. Dad worked. Mom stayed at home.
Today, living generally requires two incomes. Or at least one income and one partial income. And that’s everywhere and almost everyone I know. And yes, it’s only going to get worse. Yikes!!
NewsMeBack,
I don’t think there is much hope that America will avoid a long term unemployment problem. The question is whether or not the government will (or should) be able to provide a big enough safety net to avoid social unrest.
Bring back Pluto (either the dog or the Planet),
In a capitalistic, market-based economy what happens when demand and supply are in equilibrium at a level that results in an overabundance of labor? The answer is those who produce will have to support those who do not produce. In America we call this the social “safety net”. When the social safety net gets too big it smothers the very economy it relies upon. Therein lies the danger.
Here in the San Francisco bay area the unemployment rate is very high and getting higher. We also have a large percentage of the computer industry in the area that seem to be “underemployed.” They take side work that pays more than unemployment but less than half of what they used to make. Let’s face it if you no longer make enough to stay in your house in your eyes you’re unemployed even though technically you’re not.
I went to see Paul Krugman speak in Manchester, Vermont in October. After speaking for an hour, he started taking questions from the audience. A man a few feet away from me stood up and asked him where the jobs were going to come from for his children and grandchildren.
Paul answered that he didn’t know, but green jobs might be an answer. He also said that something might come along that we haven’t invented yet, that will revolutionize things similar to computing and the internet. He just didn’t know from where the jobs were going to come.
I don’t think we can sit around and wait for something to be invented that doesn’t exist yet, but green jobs could put people to work now.
Why, as far as I can see, is nothing being done to create green jobs and put people back to work?
What about all of the crumbling infrastructure in this country? Roads, bridges, water pipes that are 100 years old and leaking?
We spent billions of dollars to save the casinos on wall street. Can’t we spend a few billion to put some people back to work?
I am extremely disappointed that President Obama is not addressing the unemployment problem.
As Paul Krugman said, “We need a better government than we’ve got.”