Re: Unemployment Rate Falls to 4.9%


"El Castor" <justuschickens@xxxxxxxxxxxx> wrote in message
news:q344s15a2j4p5r0fe2i970tpstaa4vral6@xxxxxxxxxx
> "MichaelC" <mikecraney@xxxxxxxxxxxxx> wrote:
>
> >
> >"Rumpelstiltskin" <PleaseDoNotReplyByEmail@xxxxxxxxxxx> wrote in message
> >news:v5o2s11nbgamd4nafo3c4h5cuhpdmbpoq0@xxxxxxxxxx
> >> On Sun, 08 Jan 2006 02:22:51 -0800, El Castor
> >
> >>
> >> The great untold story of the American economy in the 1990s is the
> >> disguised high rate of unemployment and its direct impact on
> >> stagnating living standards. Properly calculated, our rate of
> >> joblessness is well into double digits.
> >
> >This is possibly true. I'm of the opinion that a better calculation would
be
> >the way businesses calculate their employees, which is the simple number
of
> >people who are employed full time. Statisticians in each country will
easily
> >tell you what percentage of the population don't want full time
employment,
> >making the "problem" statistics the full time employment number minus the
> >"don't want full time" estimate.
> >
> >However, using that sort of counting, one shudders at what the actual
> >joblessness is in a country where the current estimates work out to, or
> >close to, double digits.
> >
> >> No wonder workers have no bargaining power to get their share of an
> >increasingly productive economy.
>
> There is a good argument that globalization is the reason US workers
> lack bargaining power. If a widget can as easily be made in China or
> India, what power does a US worker have to demand a higher wage? Some
> in this group would answer that protectionism is the answer, but I
> doubt it.
>
> >Well, the sentence is a bit of an oxymoron, and self-explaining. As
> >productivity increases, less workers are necessary, and so yea, as
> >businesses become less and less labor intensive, of course workers end up
> >competing with each other for the same salary pool.
>
> That assumes there are a finite number of jobs. Are there? I don't
> think so. A company that is more efficient is presumably more
> profitable, and capable of generating more jobs. The efficiency of US
> workers has done nothing but increase, and I don't see jobs
> disappearing.

Right, the statement assumes a fixed pool of labor and jobs, which is never
the case. Productivity also spawns new businesses and new jobs, so at the
same time it's destroying positions at company A, it's creating company B
which also needs to tap the labor pool. Ultimately, its the rate of
productivity growth vis a vis rate of job creation that determines if there
is a labor shortage or surplus, and thus determines the barganing power of
the woker.
>
> >> Among economists, a debate rages on why earnings inequalities began to
> >> rise rapidly and real median wages started to fall a quarter century
> >> ago. Some blame a technological shift that cut demand for uneducated
> >> labor while boosting the demand for those with greater education and
> >> skills. Others identify global "factor price equalization"--in an open
> >> global economy overseas workers with comparable skills but lower wages
> >> are forcing the wages of Americans down.
> >
> >Both are true, obviously. It's a bit of a perfect storm for bottom third
of
> >the skill spectrum.
>
> I agree, but what is the solution? The only proposed solution around
> here is protectionism and retraining. The bottom third of the skill
> spectrum just may not be capable of a whole lot, and these days may be
> less capable than half the population of China.

Retraining is key. The problem is not the capability of the lower third of
the American workforce, its the inability of our educational system to
provide adequate training. There are tangible methods that could be
implemented, but often are not.
>
> The world may be a better place when a manufacturing job moves from
> the US to China or SE Asia, but is the United States better off? I
> suspect that in the long run we are, but I admit that I don't
> thoroughly understand the process that will result in our benefit. In
> this post industrial age, maybe that bottom third of the skill
> spectrum is going to have a hard time fitting in.

Over time, there will be equilbrium. China and India will go through an
inflationary period, and there will be a day where the monetary drivers
which encourage offshoring will lessen. It's likely to be a rough
half-century for the unskilled in the developed nations. When feeling
paranoid about China, it's good to remember that in the 80's we were
"selling America to Japan", while in the 90's. we bought it all back for
pennies on the dollar.
>
> >> What's left out of this lengthy, if inconclusive, debate is the role
> >> played by the slack economic environment in which these two forces
> >> have been operating. While each is real, their impacts would have been
> >> very different if they had operated in an environment of labor
> >> shortages rather than one of vast labor surplus. The U.S. economy has
> >> been celebrated for creating tens of millions of jobs during the past
> >> two decades. But properly counted, our true unemployment rate is no
> >> better than Europe's. And nothing keeps wages from rising like a large
> >> pool of idle or underemployed workers.
> >
> >The second last sentence is simply not true. Matters are obviously quite
> >worse in Europe, both anecdotally and statistically -- one example we've
> >seen recently in France, where the riots we've observed are as much
> >employment riots as they are cultural riots. No such behavior here.
>
> Care to speculate on why things are worse in Europe than they are
> here?

Mostly due to strict labor regulations having to do with hiring, firing,
benefits, vacations, and other fringe benefits. These regulations
significantly add to the cost of hiring, so (1) existing companies add as
few employees as possible, and (2) the cost of starting a new business is so
high as to markedly increase risk. Europe has a moribund business start-up
rate compared to the US, simply because those with entrepenurial tendencies
(and those who would finance them) perceive ventures that would easily be
funded here are too risky.
>
> >However, the megatrends discussed by the article are correct, and the
last
> >sentence is spot on. But, BE OF GOOD CHEER. The US and EU are moving into
a
> >prolonged period of labor shortages brought on by boomer retirement.
(Just
> >think what a great time it will be to be a handyman, when the boomers,
who
> >have been feeding Lowe's and Home Depot for two decades with their own
> >nesting projects, can no longer lift and bend.)
>
> LOL. I'm on the leading edge of that wave.

Heh. Stay tuned for action.

Mike


.

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