Bad news will probably come again within the next week. We will hear of more job losses during September 2009, even as some economists tell us that we have turned a corner in the Great Recession.
The Recession is over when we have two consecutive quarters of economic growth. We have yet to achieve even one quarter of growth since the recession’s start in 2007.
No one likes bad news. But what if I were to tell you that they are sugarcoating the really bad news? What if I were to say that Americans should be rethinking the very meaning of employment and their job security for the next decade? Or longer?
In August 2009 we hit 9.7% “official” unemployment. That equates to just under 15,000,000 workers idled, many whose unemployment benefits are racing the clock.
Our “unofficial” unemployment rate: 16.8% or approximately 25,000,000 Americans. These are Americans whose unemployment benefits have run out and thus are no longer counted as unemployed.
The reality is that unemployment may persist or worsen for years to come. After the much milder recession of 2001 we saw definite changes in the American workforce. For example, in 2006 when jobs went elsewhere, 40% of people lost their job because the job went overseas.
By 2009 much of America’s manufacturing capability had dramatically changed or was reconfigured in ways unimaginable during the boom years of the 1990s. Two examples of this: #1) while American auto companies have ceased building mini-vans supposedly due to being unprofitable, this niche now belongs to Honda, Kia and Toyota which sell tons of these imported vehicles. How is it that they can make money? … and #2) while American auto manufacturers have gone bankrupt we actually had foreign manufacturers building new auto plants in the USA during 2009. How can this be?
Challenge #1: If the Recession were to end today when would the jobs start returning? Chances are that unemployment would remain at its current level for at least a year before there is any upward tick.
Challenge #2: How quickly will jobs return? Here is the scary part! If job losses stopped today and jobs started returning immediately at the rate of 250,000 jobs/month then it would take us 4 years and 8 months (May 2014) to find jobs for all of those who are “officially” unemployed.
However, the best year on record for job growth during the 2000s was 2006. During 2006 1.84 million jobs were created, or an average of 153,333 jobs monthly. At that rate we would not find jobs for all of those who are “officially” unemployed until another 98 months: late 2017.
Job growth and creation for those that are “unofficially” unemployed (25M) means that jobs recovery will not be until some time in 2024 (163 months from now).
Challenge #3: Throughout the 2000s we became more and more a service economy. Recent U.S. job growth has been primarily in just three fields: Consulting, Education and Health Care. The Top 10 career fields projected for job growth through 2014 fall within just two categories: Health Care and Information Technology.
All other categories have stagnant growth, or projected growth of less than 1%. Unless a career field is growing then its value for compensation potential also stagnates or income earned may even drop.
Challenge #4: There will be those that have and those that have not. Can the unemployed afford to live where they now are? A strangeness about the Great Recession is that salaries of those employed have taken very few hits. There has even been raises across a wide range of job types and areas. Small raises but raises nonetheless. Unless there has been a major economic loss most companies have hung onto the folks that they had when our problems began.
This has also been a unique period in that older workers have actually seen an increase in jobs available to them. Workers at ages 55+ are working more than ever, sometimes at the expense of younger professionals.
One interpretation is that companies are hunkering down. They need the skilled workforce that they have to survive. They are willing to pay a bit more to keep their investment in people intact. The very limited hiring over the last two years has been primarily for loss replacement.
Standards of living and living wages: Many areas of the U.S. have become so affluent that those in distress can only keep their head above water for a very short while. When there is one job available for every six unemployed Americans (or one job per every 12 “unofficially” unemployed) what is our responsibility to aid these fellow citizens? Only the most crusty of hearts can believe that these Americans brought this woe upon themselves — especially in a time of record profits in many industries.
Outlook and What It All Means:
- Job losses will continue.
- Positive job growth is not on the radar.
- Those that have jobs can continue their comfortable lifestyles, but should be prepared that if they lose their footing that it will be a slippery fall.
- Jobs recovery — it could be years before we know what that means or what it looks like.
- Whether the two Americas can coexist — employed and affluent, and the unemployed America of the formerly affluent or manufacturing class — remains both an economic and political challenge.
- Jobs recovery and renewed economic growth is a challenge that I do not believe any political party or economic philosophy currently has an answer for. And private industry is interested more in protecting market position and viability than taking risk in the current market environment — so don’t look to private industry for answers any time soon.