The way the US economy is adding jobs each month – or rather, not adding a sufficiently large number of new workers – Mitt Romney will be six months into his second term or Hillary Clinton will be a half-year into her first term before the unemployment rate comes back down to levels before the Great Recession hit in December …
A teetering worldwide economy
The U.S., European and Asian economies are closely intertwined and all are in serious trouble with a lack of jobs. The monetary issues in Europe add to the global instability. It's bad enough that many an Asian sweatshop has gone out. Until real jobs with decent compensation and benefits are created, we're in an economic downward spiral that isn't going to change.
New baseline unemployment likely
I'm guessing that the author's speculation that a new baseline unemployment level has appeared is the most likely cause of the high number.
My personal experience during this recession has been decent - I'm still getting phone calls about interviewing for jobs, just less frequently. However, I do know a lot of people who aren't so lucky.
The first problem is that people looking for full time employment who have been laid off are having trouble getting interviews; apparently, any gap in your employment record is the kiss of death.
The second is a huge skills mismatch. Within IT, there are a lot of people who fill very specific niches, and employers refuse to look beyond that to see if they're trainable for something else. Outside of IT, there are fewer and fewer jobs for "the rest of the population". In days past, people who weren't cut out for technical or scientific work had their choice of decent-paying factory jobs or various decent-paying mindless paper-shuffling jobs in corporate-land. Automation and outsourcing on both fronts really hurts those in the middle of the IQ scale, and permanently relegates them to low-level service jobs. Even that sector can't absorb all these people, so you get the unemployment levels we're seeing now.
I have no idea how we're going to solve this. Until we do, it will be a very divisive issue and various political rhetoric is going to get less and less reasoned/rational.
The construction employment figures are the key to this
If you look at graphs of construction employment over the past 10 years, you can see that over half of the changes in the unemployment rate during that time can be accounted for by the construction industry alone . Construction typically leads in recoveries, as low interest rates lead to more construction activity. Problem is, that doesn't work when the recession was caused by too much construction in the first place, thus explaining why the low interest rates have not helped this recovery like they have in the past.
From the post 9/11 recovery up until unemployment started creeping up in late 2007/early 2008, the construction industry was very overemployed to support the housing bubble. Now because there are still more houses than are needed (in many areas, not all) the construction industry is quite underemployed. As the excesses are worked through in more areas and reach a "normal" (i.e. sustainable) amount of construction, that industry will hire more workers. And having more money to spend, those newly employed workers will help other businesses through their spending, rather than increasing the deficit by collecting unemployment or welfare.
This will happen in the next four years regardless of which guy wins, but you can be sure the guy sitting in the White House will take credit for it. I think both parties realize this, which is why they believe it is a particularly important election. If Obama loses, the republicans can point to the recovery as "proof" their plans worked, whatever they do. Likewise, if Obama wins, the democrats can point to the recovery as "proof" that Obama's policies were right all along, and they just needed more time to take effect, as he's been trying to argue lately.
Neither party wants the other in power when the economy recovers, as it will lead a long term shift in party affiliation, just like happened in the early 80s when Reagan presided over the last major recovery (which was mainly engineered by the Fed raising interest rates sky high to kill inflation with some credit due also to the stimulative effect of massive defense spending increases) The only thing that has left the democrats competitive in the face of this shift has been the fact that the population growth has been mainly latinos, who tend to vote democrat to a large degree. If Obama wins, and takes credit for the inevitable recovery, the republicans are going to have to make major changes in the makeup of their party to be viable - they probably will have to do so eventually anyway, but this would hasten that day.
It is stupid that people blame or credit the president for stuff like unemployment or gas prices, but that just shows the stupidity of the average voter, and why campaigns are insulting to those with higher than average intelligence (which on a site like The Reg, is probably 99% of us, Apple v. Android fanboy wars notwithstanding)
The New Math in Action
The jobs created v. jobs lost v. unemployment numbers always seem to have a fuzziness to them. The numbers are updated from month to month with such large changes that one has to wonder if they are all just made up. Add the numbers as chimps throw darts? The agencies that formulate these numbers should be forced to show their work or they don't get paid.
Some of the missing facts are the increasing number of people that are now on permanent disability. Many workers have lost good paying jobs in manufacturing and have had to take low paying jobs in retail (read: Walmart) to keep food on the table for their families. Many of these same people have lost their homes and now have to rent at a much higher monthly price which greatly lowers discretionary spending. Many have had to take part time jobs where they had full time jobs previously. An good indicator that I found in an article recently was the percentage of US working age people receiving government assistance (food stamps). It way up since the current President took office. US presidents do not have a large degree of power. The culprits in the ongoing fiascos is the legislature. Being comprised of mostly lawyers, there is no way they can craft economic solutions to the US's financial problems. It has been shown that many of them can't balance their checkbooks, understand right from wrong or hire a taxi when they have been out drinking.
Just like nappies, politicians should be changed often and for the same reason.
- Review Xperia Z3: Crikey, Sony – ANOTHER flagship phondleslab?
- Pics Whisper tracks its users. So we tracked down its LA office. This is what happened next
- Human spacecraft dodge COMET CHUNKS pelting off Mars
- Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
- Downrange Are you a gun owner? Let us in OR ELSE, say Blighty's top cops