Posts tagged ‘Paul Krugman’

June 27, 2013

Lack of jobs may become a problem for the ‘majority of the population’

by Grace

On the topic of sluggish jobs growth, Megan McArdle says our stubborn unemployment problem is rooted in “technology and trade”.

… Global shipping and trade liberalization has made it more practical to manufacture in low wage countries.  Meanwhile, in high wage countries, technology is substituting for labor.  At its peak, General Motors employed 600,000 people to make slightly less than half the cars in the country.  Today it employs 77,000 to produce about 1/5th the cars on the US market.  Even if it regained the market share it has lost to imports, employment in the industry would be way down.

Remember this chart of the hollowed out middle class?

20130624.COCHollowMiddleClass2

But the lower class is also on shaky ground.
Highly skilled individuals who are motivated and persistent will always find ways to support themselves.  But there is a surplus of workers for middle class jobs McArdle describes as “seated, skilled, steady, decently paid”.  And while large numbers of low-skill jobs continue to be created, these “jobs are, on average, pretty unattractive ones”.  They are generally low statue, and sometimes miserable.  In some cases, our government safety net is a more attractive alternative to these low-end jobs.

The “majority of the population” may be in for a long struggle.

… we are not creating a lot of good new jobs–defined as jobs that are relatively secure, physically tolerable, and decently paid.  People with enough grit and imagination can invent themselves new jobs, but at no time in history has that described the majority of the population.  The alternatives for the rest aren’t very attractive.  And since modern-day America tries hard to keep people from becoming truly desperate, those jobs aren’t being created.

McArdle points out that part of the problem is cultural, with families and communities undergoing massive changes that break with traditional attitudes towards work.  And education is not a solution by itself.

… Until roughly the last five years, it was possible to believe that education would be the solution: send more kids to school, retrain people for new jobs.  But college graduates aren’t finding it so easy to obtain solid employment either.  It’s true that having a college diploma is still much better than not having a college diploma, but that doesn’t mean that by sending more kids to school, we’re actually making the workforce more productive, much less mitigating the problem of economic change; we may just be forcing people to jump over a higher bar to gain access to a shrinking number of jobs….

A stronger safety net does not seem like a good solution.

For starters, it is politically difficult to imagine a really large class of people who simply permanently live off the state.  The safety net is rooted in human instincts about reciprocal exchange.  … They will lose political support if you have one group of people paying taxes, and a different group of people who can expect to live their entire life on the dole.

Such an arrangement would also be socially toxic.  Being out of work is astonishingly bad for your state of mind, your social relations, and even basic skills like math and reading….

 Glenn Reynolds does not think it’s a temporary problem.

There’s a lot of flailing going on, and there has for years been insufficient concern about what all the folks on the left half of the bell curve are going to do with their lives — only now it’s looking like the left 2/3 or maybe 3/4. I’m not sure what to do either. … I do think there’s something structural going on, not just an economic cycle.

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