February 9, 2012
America?s jobs deficit recently climbed above 30 million workers.? Although U.S. labor market data have improved considerably of late, Fed Chairman Bernanke continues to emphasize the market?s very weak overall level rather than the better pace of change, and he?s correct to do so.? U.S. nonfarm payroll employment recorded identical rates of growth of 1.84% per annum in the sequential decades to December 1989 and December 1999.? That pace makes a good frame of reference for the long-term trend and provides a standard against which to measure how the labor market has performed in the 21st century.? To be sure, jobs expanded by an even more rapid 2.44% per annum in the ten years to end-1979, but that was when most of the baby boomers entered the labor force and was a period when many families switched from single to dual earners.
Labor growth of 1.84% per year from end-1999 averages out to 221.7 thousand new nonfarm payroll workers per month.? That needed long-term norm was somewhat exceeded last month and nearly reached in December.? However, the average net growth of jobs over the 145 months since end-1999 was only 12.9K per month.? That undershoot of 208.8K per month from America?s long-term trend over a period of 145 months cumulates to 30.3 million fewer workers than represented by the historical trajectory of total U.S. jobs. If jobs were to expand at a quarter of a million workers every month from February 2012 onward, it would take 89 years and two months to catch up to the trendline, which continues to advance at a pace of 221.7K per month.? At a monthly pace of 300K, the elapsed time for eliminating the jobs deficit would be 32-1/4 years, and even if employment climbed at the incredible average rate of 500K per month, the jobs recovery period would stretch to February 2021.
America?s labor market imbalance is part of a broader problem shared by other advanced economies.? The jobs deficit is even larger in Euroland, where the current 10.4% jobless rate exceeds America?s cyclical peak of 10.0% touched in October 2009.?
The jobs deficit has been exacerbated by the technology revolution and globalization.? If the pronounced change in needed job skills had been known a generation ago, the preemptive way to prepare for the future would have been a better infrastructure of continuing education for all people from their 20s to their 60s.? That?s still a good idea, but the impediments to such a system have escalated sharply.? Localities are burdened with unaffordable school budgets and looking to trim, not expand.? The federal government and states will not take on the responsibility.? They are too passing program responsibilities down the food chain to lower levels of government.? Businesses carry an ever-rising cost to cover the health premiums of employees and are hard-pressed to take on a whole different sort of expense that wouldn?t necessarily augment near-term revenues.? Severely indebted new student graduates are likewise in no spot to self-finance their continuing education.? Their top three priorities are to get a job, get a job and get work.
The areas of growth in today?s jobs market need people with plenty of training in science, technology, engineering, and math.? The call for such skills is easier identified than done.? Aptitude levels at the starting gate are not equal, and the conceptual rigors of these disciplines have been a natural screener of manpower even in areas with good teachers and an early start.? Despite the lure of highly compensated careers, the number of experts in these fields has been self-selecting for obvious reasons, and that?s not going to change.? This distribution of careers wasn?t a problem when America offered dignified and well-paying jobs in many fields that didn?t require a higher level of education.?
Supposing the supply side of the labor market were better equipped to fill all jobs needs in science, technology, engineering, and math, those openings would still likely fall well short of absorbing un-and under-employed people.? The Facebook empire was built with a staff to date of less than 4 thousand.? It would take over 8,000 Facebooks to close the U.S. jobs gap, and that erroneously assumes that all such job hirings are going to be filled by U.S. workers.? The world is global, and so are the power brokers running it.
The older edge of the baby boomer generation is caught in particularly difficult circumstances, and it?s not at all surprising that the Great Recession created a fallout of far more long-term unemployed people than previous postwar recessions.? Skills must be learned that younger generations have used all their lives, and the two groups compete for a scarce number of vacancies.? Without a lifetime of continuing education in a wide range of areas not specifically related to one?s current career, the end of the line is now at hand for thousands, if not millions, of people.
Copyright 2012, Larry Greenberg.? All rights reserved.? No secondary distribution without express permission.
Tags: U.S. jobs gap
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Source: http://currencythoughts.com/2012/02/09/the-u-s-jobs-deficit/
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