Monday, November 14, 2016
A “Jobless Recovery”
As I have blogged before, GDP (Gross Domestic Product) numbers are wildly misleading because they are based on aggregated numbers. If one segment of the economy makes alarming amounts of money while the rest stagnate, the averages can reflect stellar increases in GDP. GDP also fails to account for costs due to infrastructure degradation (and repair if there is any), environmental damage including the cost of natural disasters, military operations or losses incurred by society through variables including criminal activity.
Employment numbers also only reflect those in the market who are either working (including part-timers and those whose work depends on the unpredictable gig or contract economy) or are actively seeking work. They do not reflect those who are underemployed or those who simply have given up looking for work. They may live in those pockets – e.g., West Virginia (coal country) – where unemployment is overwhelming or work in industries that have either been heavily automated (more reliance on machines, less reliance on labor) or simply succumbed to lower priced labor in the global marketplace.
For workers in those difficult arenas, job prospects are dim no matter who won the presidential election. Again, the numbers reflect averages and simply do not address those sectors of seemingly unsolvable and chronic unemployment. Aggregate numbers might look good, but for those mired in places and industries where employment does not and will not exist, the world looks bleak, to say the least. When politicians promise bringing manufacturing back to the United States, what they aren’t telling you is that for most of those sectors, that only make sense economically if labor-saving automation is employed. So those who own the machines make money at the expense of the workers we think will get the work… but absolutely will not.
What’s worse, there are many jobs even in this country – primarily in the new-idea/new-idea-implementation marketplace – that simply are going begging for lack of sufficiently-educated workers. A solid STEM education (science-technology-engineering-mathematics) is what is treasured, not undergrads with degrees in marketing or “business.” But reeducating and retaining workers who just want their old jobs back, or who consider themselves too old to learn new skills, is often a thankless and fruitless task. Basically, during the time that it took for these economic downturns to be assimilated and for the economy to rebound, the very nature of what “work” is and how that work is accomplished have steadily and irretrievably altered.
The October 28th Washington Post charts above show the impact of such changes on those with rather clear and complex skills against those with only basic and easily replaceable skills. The Post further explains: “It used to be that jobs returned swiftly after a recession. But since the 1990s, the labor market seems to have lost much of its natural buoyancy. The past three downturns caused extended periods of underemployment. Years after economic output had fully rebounded, there were still fewer people at work.
“Economists have struggled to explain the forces behind these so-called ‘jobless’ recoveries. A popular view is that recessions are times when companies clean house and find ways to become more efficient. In recent decades, that has often meant replacing employees with computers. This could explain why the jobs we lose in a recession don’t seem to return anymore: The positions became obsolete.
“New evidence says there might be another reason for these stubborn spells of low employment: After a recession, the remaining job openings may become harder to fill because employers start to demand people with better skills, who can adapt to new technologies in order to be more productive.
“In other words, it’s not just that many jobs go extinct during a recession. Even the surviving jobs sometimes shift beyond recognition — and beyond the reach of many…
“Both of these theories are significant because they link jobless recoveries to another unsettling trend — the replacement of manpower by machines, which has contributed to the hollowing out of the middle class.” In addition to the contracting middle class, the other ugly byproduct of recent changes in the American labor marketplace is the profound and unprecedented levels of income inequality that have roiled through recent election rhetoric.
As a society, we may have encouraged massive levels of new growth and economic opportunity for designated sectors of our economy, but we have rather completely ignored those who have been chronically displaced. While we have deep political divisions in this nation over some rather fundamental values differences, for those unable to find a viable economic path with dignity and at least a modicum of comfort, they will lash out or fall into deep depressions… creating further instability for a nation already on the brink of unraveling.
Dealing with this growing anomaly, which will begin to impact even those with the highest levels of training or education as artificial intelligence become the new standard for work, is truly the biggest conundrum for us… and the entire capitalist world. If we don’t fix this issue, the United States probably breaks apart.
I’m Peter Dekom, and we need to work together as a unified people to solve these problems; if we fail, the price we will pay is to lose our own country in a cacophony of fractious selfishness.