Unemployment Crisis?
From Zanecorpwiki
2010-02-11
Is it really the "high unemployment numbers" in America that are the problem, or does the recent economic troubles highlight a deeper issue: if you're unemployed in America, it's a always a personal crisis. 10% unemployment rate is bad, but part of that is due to the fact that we're coming off a period of historically high participation in the labor market.
The oft quoted "unemployment" is a measure of how many people actively seeking employment are not employed. Participation is a measure of how many people over the age of 16 consider themselves employed. The current participation "in the depths of the crisis" is still 1.9% above the historical average (since 1948).[notes 1] 10% unemployment is high, but there are also a lot more people looking for work than there used to be.
Even compared to the highest participation rates on record, 67.3%, in 2000 and 2001, the current participation rate of 64.7% is only off by 2.6%. That's why I find it puzzling when even the generally responsible and insightful commentators on NPR's Planet Money[notes 2] remark, "Wow, that means one in three people aren't working."
Sounds scary... except that that's as high as the participation rate has ever got. 1 in 3 people (over 16) not working is absolutely normal.[notes 3] On the one hand, it is a problem if one in ten people who want to work can't. It means we're wasting a lot of human capital.[notes 4]
It's hard to look at these numbers and think "crisis". By the same token, there's definitely a problem; it's just quite the problem we think it is. For myself, I see two issues.
First, our labor force is not nimble enough. I say this for two reasons. First, if 1 in 10 cannot get a job, it means either we don't know how to find work or our economy isn't good at putting resources to work. I suspect both are true and both are problems.
Second, I would wager that part of the reason we're not very nimble is because we don't deal well with unemployed. Rather than viewing it as a consequence of structural shifts we look at it as a personal failing. Even when the problem is obviously systemic, we still attach a ludicrous personal stigma too it. In less severe times, when maybe one is fired for personal reasons, who cares? I've fired a number of people who were bright, intelligent people. They just weren't right for the job they were in. It's better for the business, the individual, and the economy for that person to move on and find a position which better suits them.
It's not just unions, but even companies try to keep people employed and save jobs when maybe they should be more agile. Instead of holding onto factory workers who's skills are slowly being obsoleted, cut early and often so they can spend those years learning a new skill rather than falling even further behind. Or not. Or something like that.
It's hard to blame business (less hard to blame modern unions), because there's no societal structure for reshuffling workers. Searching for a new job is odious and being unemployed is fraught with risk.
We also lack the culture for it. We frown on the unemployed and workers are laughably inflexible and unwilling to change fields. Things move fast now-a-days, we either have to deal with it or slow things down.
Notes
- ↑ Data provided by the Bureau of Labor and Statistics
- ↑ January 8th, 2010 show
- ↑ The show also erred in stating, "There's 3 year olds in there." According tot the Bureau of Labor and Statistics, only those over 16 are counted.
- ↑ Although perversely, most big productivity and efficiency gains are made in times of perceived low employment, so silver lining and all that.
