There are valid reasons to believe that our high unemployment rate is more permanent than cyclical. Neither economic cycles nor government fiscal policy missteps are entirely to blame. In fact, while government policy may be blamed for a lot of things, it may be as much to blame for high unemployment as first world nations are to blame for global warming -meaning not very much. The magatrends highlighted below may have a similar impact on the employment rate as solar activity has on climate change – meaning a whole bunch.
Two megatrends are putting the squeeze on full employment. One is on the employee supply side, and the other is on the jobs demand side.
On the employee supply side, we have two concurrent megatrends. One is the shift from stay-at-home moms to career women. Instead of one parent staying home to watch 2 or 3 kids and manage the household, we have 2 or 3 daycare workers managing 30 or 40 kids. So we not only have nearly twice as many workers, but we have only a fraction of the workers doing the babysitting. But that is old news from the 70’s. That trend has embedded itself in our culture. It appears to be an voluntarily irresversable fixture of life. On the other hand, the involuntary nature of unemployment may bring one of the parents back into the home. But they will still be considered “unemployed.”
The other impact on employee supply is immigration, both legal and illegal. This one IS a policy lapse, especially in times of high unemployment. How many more jobs would US citizens have if we didn’t have 12 million illegal aliens also seeking employment? By my not so difficult calculation, about 12 million.
Now for the demand side. Technology is the mega-trend that dries up hundreds of thousands of traditional job opportunities. How so, you ask? Here is an abbreviated list of the biggies:
- Postal service: Email replaces the need for thousands of postal jobs
- Banking: On-line banking eliminates the need for tens of thousands of banking jobs
- Retailing: On-line retailing eliminates the need for tens of thousands of store clerks and support services
- Education: On-line courses eliminate the need for thousands of teachers and professors
Sure, new high paying technology jobs have been created. But there is something on the order of one new tech position created for every 10 jobs technology eliminates – the very goal of technology in the first place.
And the granddaddy of all demand side job loss: The high cost of doing business in the United States which sends jobs overseas. We manufacture almost nothing, relatively speaking. We have lost millions of jobs through this invention of no-borders, free trade globalists.
So, what then? What do we do about this? We could stimulate the economy to encourage greater unsustainable consumption so that low paying retail employment can be increased to sell more Chinese goods. We could retrain present and future workers into non-existent jobs. We could reverse the trend of chasing jobs from the US to other countries. The first two options don’t help at all. They just promote unrealistic expectations with unrealistic and counterproductive policies. The third option is not likely because neither democrats nor republicans, with few exceptions, have any desire to reverse “free trade” until they learn that it really isn’t all that free at all.
Or do we bite the bullet and lower our collective expectations? For decades, our cultural sense of satisfaction and success, nationally and personally, was fed by expectations of bigger and more. Bigger houses, bigger pay checks, more vacations, more gadgets. The expectation of ever-growing bigness and more-ness is not sustainable given the momentum of our thrust toward equalizing the world’s wealth.
As rioting in protest of government austerity in Greece and other European countries has demonstrated, creating unrealistic expectations is asking for trouble. Government programs-turned Ponzi schemes due to lack of revenue inevitably end in unfilled expectations and chaos.
Most conservatives refuse to give up the expectation of perpetual “bigger and more” because we believe that capitalism will solve all our problems. It is un-American to believe that our level of prosperity has limits. We get upset with those who believe that we need to lower our expectations and live simpler lives. Maybe the fear is that an attitude of lowered expectations will reduce consumption and ultimately crash our economy. And maybe it will. This explains why some among us expect some level of civil unrest in the near future because they don’t see any of the options as ending well.