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Is high unemployment here to stay?
Pamphlets with information about unemployment are displayed at Eastbay Works Oakland One-Stop Career Center in Oakland, Calif.
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TEXT OF STORY
STEVE CHIOTAKIS: A look at chronic unemployment in this country just a day before the big government jobs report is released for August. Some economists are predicting an increase in unemployment from the month before. So the question is, could high unemployment be here for the long haul?
Here's Marketplace's Mitchell Hartman.
MITCHELL HARTMAN: Economists talk about the "structural" rate of unemployment. Think of it as the economy's sweet spot -- if you want a job, it doesn't take too long to find one. If you're hiring, you can get the skilled workers you need. This is where we were before the Great Recession. Monthly unemployment was just about 5 percent -- enough churn in the labor market to keep things humming along.
Now, unemployment's double that. Ken Matheny is with Macroeconomic Advisers.
KEN MATHENY: And it's going to be many years at least until we see unemployment back to kind of typical 5 percent range.
Could we ever go that low again? Economists at the IMF think not -- that "structural" unemployment may now be more like 6-7 percent. The argument is our economy has become less able to provide jobs where they're needed.
MATHENY: Labor markets aren't functioning as well as we'd like. People seem to be kind of frozen in place, have a difficult time buying and selling houses to support better matching of location with where new jobs might be created.
The housing market should eventually thaw, letting people move around again. But what about other labor-market problems -- like employers unable to find enough skilled workers for new technology jobs. Couldn't that push unemployment permanently higher?
Dean Baker of the Center for Economic and Policy Research doesn't think so.
DEAN BAKER: There's no real good reason to think that our economy has fundamentally changed with this mismatch of skills and jobs. The reality is the economy does not change that quickly.
Baker says what's holding employment back isn't some structural shift in the economy, but simply a lousy economy, where no one's feeling confident enough to hire again.
I'm Mitchell Hartman for Marketplace.
No surprise here wealth gets sent to a cheaper labor pool until their standard of living is on par with ours. What they don't tell you is that for that to happen money will leave the USA in droves until we are much like Mexico. A few very wealth powerful people and the rest in a barely existing living poor we can all ready see it happening. Nov 2010 elections gave the rich and powerful the rest of the support they need to make this happen. Thanks rednecks and repubs America will never be the same!
Since 2001, the number one priority of most politicians in Washington is the free lunch of tax cuts, while having lots of nation building projects, voters to buy with Medicare entitlement increases, and big subsidies to big oil, coal, and nuclear energy to benefit the big global corporations.
That was a radical change from the Clinton priorities of balancing the budget, providing for the children's health and nutrition with SCHIP, and making sure the tech companies could export their computers, connect to the Internet, make sure consumers had choices in computer chips, and boosting medical research with the Dept of Energy project to sequence the human Genome.
"Tell me: why do the people complain so,
When it's plain the economy gains so?"
"Though statistics agree
That we've grown GDP,
Unemployment's a pain, and remains so."
By Dr. Goose
http://www.limericksecon.com
The Competitive Disadvantage of Nations : High COST of Living and the Devaluation of U.S. Human Capital Investments. There's been considerable recent concern (ex : Andy Grove, Wilbur Ross) that the U.S. may be losing it's position in R&D, innovative new businesses and other related professional work, and regarding the low number of engineers graduating in the U.S.. It occurred to me that Human Capital investments in the U.S. may be placed at a distinct competitive disadvantage relative to similar investments (eg. engineering education) in other competing countries. Here's why : 1) U.S. education is very expensive relative to our competitors. Many of our competitors provide free or heavily subsidized university education - some even provide stipends for students. Our students - on the other hand - often have to spend over USD 100,000 for their education and start their (often uncertain) careers heavily in debt. 2) NOTHING IS EASIER TO SEND AROUND THE WORLD THAN INFORMATION. This means people who work in information-related fields in the U.S. are particularly vulnerable to offshoring. This includes not just I.T., computer scientists and engineers, but also lawyers (see the recent article in the Economist re: outsourcing to India), accountants, business analysts, radiologists, and all professionals whose work does not heavily require local presence. 3) *COST OF LIVING* (NOT just STANDARD of living) is often considerably lower among our competitors. The cost of renting a decent appartment, buying a meal at a restaurant, buying groceries, paying for medical care, buying books, software or computers, paying for a bus-ride or taxi-ride to work - all are substantially lower among our competitors. For example, according to CNN one can buy a new computer in India for $35, a new car (a Tata Nano) for $1000, a new minivan (made by GM in China) for $4000, a cataract operation (available at Avavind - a specialty eye hospital in India) for 1/60 the average U.S. cost - to name a few. I did a gross estimate of some costs in Mumbai vs NYC for example - and estimated that the *COST* of living there is one fifth to ONE TENTH that of NYC. So this means that smart, hard-working, educated professionals living and working in Mumbai could live **EQUALLY WELL** as a similar professional in NYC ****while earning 1/5th to 1/10th the money****. 4) Policy tends to be set by and heavily influenced by people who are "STARS" in their fields. These people are not only smart, hard-working and well educated, they also have a "brand-name" for themselves and tend to be well connected. People who are not "STARS" are often quite skilled but their employment is often far more price sensitive and (unfortunately) they are treated more like a commodity. 5) It is hard to PROVE that you are 10 times more efficient than some other smart, hard-working, educated professional. This is particularly difficult in labor-intensive "information" work. But in order to keep their jobs, the non-"STAR" U.S. engineer or business analyst has to be able to PROVE precisely that - or their job will be sent elsewhere - to a place where other smart hardworking professionals are able to live quite well - with the SAME STANDARD OF LIVING - on a tenth their income. 6) MOST engineers, scientists, analysts, programers, IT people, lawyers and other professionals are NOT "STARS". This doesn't mean that they aren't excellent at what they do, but they do not have a "brand" and they must compete on price. It is likely that in this competition, over time, many - if not most - will lose - NOT due to a lack of skill or work effort - but due to gross asymmetries in the COST of Living. **7) As such, human capital investments in the U.S. are currently very risky and very expensive. The U.S. should not be surprized therefore when they see their engineering base and other professionals eroded over time. ((8) Heavily protected professions with very high barriers to entry - like medicine - will continue to enjoy higher wages, but this will make healthcare increasingly expensive and price it out of the reach of more and more Americans). Bottom line : Human capital investments in the U.S. are currently very risky and expensive relative to our competitors. If public policy does not address this comparative disadvantage, the U.S. may find its human capital based devalued, eroded and degraded and over time. At a minimum, U.S. policies which facilitate the devaluation of U.S. human capital investments should be reviewed.
