“Employment for college graduates is up 5.8 percent so far in the recovery but jobs held by high school dropouts, generally with low skills, are down 3.9 percent.”
When macroeconomic policy types talk about high unemployment, they try to distinguish between cyclical unemployment (the kind that results when investors correct for previous overexpansion and businesses lay off staff) and structural unemployment (the kind that results when workers’ skills and available jobs don’t line up). The distinction is important for policy reasons: with cyclical unemployment you can use the standard macro tools to promote lending (like lower interest rates and easier loans for banks) but with structural unemployment you actually need to change something about the way that workers are acquiring skills and experience and how they’re connecting with employers. So which is going on in the US?
I read a lot of very smart and well-educated people arguing that the current unemployment in the US is mostly cyclical. However, with numbers like these I honestly don’t see how they can seriously make that argument. It’s pretty clear that the people who are hurting right now are solely those whose skills no longer line up with the labour market. And that’s a really suboptimal place to be.
In the long term, this problem is going to become more acute: exponentially increasing computational power, advancing robotics, and all that technological jazz is going to push more people with less education and skill caches (I don’t use the word cache enough) out of the job market.
Compare this with growing exports and the growing concentration of wealth in the U.S. We can make more money employing less people. Resource booms are a great example: you can make billions of dollars a year employing 15,000 here and there (15,000 in a country of 313,342,000 and growing).
While there may be fluctuations, increasing productivity (less employment) is going to be the long term trend.
This leads to the greater problem: how do we address this in the short term, and how do we address this in the long term? Short term is easy, if politically impossible: increased spending on road construction, expansion/establishment of metro systems, building a high speed train network, constructing a nationwide wireless system, revamping the energy grid, conversion to renewable energy production, doubling or tripling food stamps, job training, and more funding for both educational institutions and those seeking educations (this list could go on). Long term is going to be more difficult.
In the long term, there will be a need to dramatically increase both the quantity of people graduating from college and the quality of their education. More people will need to have some background in mathematics or the sciences. While I am a proponent of a strong liberal arts education, you should probably pair that English or Political Science major with something else. Take Calculus, dammit.
And the American public will have to accept a growing bureaucracy. Considering how little of our economy is the public sector compared to other wealthy countries, we have room to grow.
This is something we should be planning for now. But even if it’s being taken seriously, we aren’t doing anything about it.
Reblogging for the excellent additional commentary.
Although you’re entirely right that every one of those short-term fixes you’ve suggested is totally politically impossible. I think some of the adjustment will come through a decrease in net immigration of low-skill workers (both documented and undocumented) but ultimately most of it is just going to be a steadily increasing number of people with too little education to find employment and no way to access that education. This is obviously expensive (for example, food stamps are already covering 46 million people, and that number is growing) but as long as overall productivity keeps rising and other spending requirements stay basically constant, the US can afford to maintain a perpetually impoverished underclass at subsistence level. Really can’t see any other outcome.
While I would hope policy planners, Congress, and the Executive would actually do something progressive about mitigating this, you’re almost certainly right that we’ll just end up “maintain[ing] a perpetually impoverished underclass at subsistence level” or lower. America, fuck yeah!
However, between climate change and productivity increases, the oft used pathways for developing countries and their people for increasing incomes are closing. If I can use a 3D Printer to make a mug, a wrench, or something increasingly complex as the technology develops, why the hell do I need to pay someone in Vietnam to make it? Plus, the countries that will endure greater environmental catastrophe from climate change are in the global south. Focus on Sub-Saharan Africa and the Indian Subcontinent.
Now combine these, shake, and sit back to watch the explosion. There could be significant migrations from the global south to wealthier countries, and the
United States North America will likely experience the brunt of it.