This piece is from July, but it's still relevant: http://thecaucus.blogs.nytimes.com/2010/07/19/mystery-for-white-house-where-did-the-jobs-go/
The reality is that post-tech collapse in 2000-02, TPTB engineered a housing bubble to pick up the slack in the economy with the "side benefit" of creating an entire daisy chain workforce surrounding new construction and development. The lax lending standards and credit bubble also spurred hiring in the F.I.R.E. sector of the economy. That ponzi played itself out with absolutely dire consequences as we've seen. The bigger question not addressed is what percentage of all hiring in the past decade has been in the public sector vs the private sector. Blinder basically wants to grow the beast with more public leeches feeding off of a shrinking capacity to float the ridiculous salaries and benefit packages for public sector employees who would go from temporary to permanent as a response to chronic structural employment problems. Globalization, technology (the internet specifically), demographics and declining educational standards are more relevant causes than the ones cited in the article. The media portrays everything in their most immediate terms with tons of mis-direction as to the how's and why's of how we got here and how we get out of this mess. The fact that a corporation can basically compete for resources and labor in a global marketplace, effectively arbing their fixed costs to host countries with less onerous regulations and wage laws will always put pro-labor countries in the backseat. This is another reason why artificially propping up asset prices and maintaining the status quo (i.e. an artificially high cost of living with subsidized crony industries gouging consumers via low interest loans (housing, education, etc, etc) will continue to lose jobs since it's non-competitive for corporations. As pointed out in this article, but typically never mentioned, is the simple fact that perpetual unemployment extensions is a de-facto tertiary bailout for corporations. TPTB realize, and acknowledge in rare cases, that it's this very segment of the population (the paycheck to paycheck variety) that drive consumer spending with entrenched spending habits and behavior. Therefore, since we can no longer compete for jobs in the global marketplace due to all of the above reasons, we still must play out part as consumers in the global economy.
I think the biggest reason for unemployment is the collapse of the housing market; the direct loss of jobs, and the effect it has had on spending habits and reigning in of credit. This lead to less profits for businesses who either closed up or contracted which perpetuated the problem. But I'm not married to my opinion. I'd like to get more input. If we can get a better idea of the problem we'll have a better idea of solutions.
Generally agree. Housing collapsed and the credit markets collapsed as well. When approx. 70% of GDP is consumer spending you are going to have a real problem when unemployment is approx. 20% not that BLS BS number used. If you look at a chart with the velocity of money you will see that we are in a deflationary cycle. Inflation will rear its ugly head, but not for now. Everyone is afraid to speak the truth its a Depression, not a recession. Bubble Ben did flood the market with liquidity unlike his predecessors during the Great Depression, but we still have deflation. The last 10 years have been one bubble after another.
Yup, I agree with you wholeheartedly here. The tech bubble pop and the concurrent loss of many high-paying tech and business jobs to outsourcing and general reduction in hiring was entirely masked by the concurrent Bush/FED-induced housing bubble. The "housing boom" created tons of new types of jobs: real estate, mortgage, banking, surveyors, inspectors, title insurance guys, etc., etc., etc. There was a massive shift in the labor force. I for one, a high-paid IT manager who was downsized at the end of the tech bubble, found ample opportunity in real estate, and its associated businesses. Hence, there was a masking of the Tech Bubble loss of job. When housing and its associated industries came to its knees, the true employment effect of the early 2000's came to light. And yes, the only growth areas have been in the public sector, who wound up negotiating unbelievable deals in a climate that few government officials recognized as a sinking ship. We now have an unbelievable state/municipal deficit problem, that will surely be the next bubble to burst. As Chris Christie (Gov. of NJ) says, "the day of reckoning has arrived". I couldn't agree with him more....
2,000,000 manufacturing jobs gone in the past two years. Over 1/3 of our manufacturing jobs lost in the past ten years. This has little to do with the housing bubble.
I did a modest kitchen remodel in 2005, and dealing with the schlock vendors was a job in itself. The fridge salesman didn't want to talk to you unless you were buying a Sub-Zero and a Viking range. You had to make an appointment to talk to a "lighting specialist" to sell you some pendant lights for over your kitchen island breakfast bar. And the granite counter top guys? That was like visiting the Godfather to ask for a personal favor... you had to greet that salesman on bended-knee, and kiss the guy's ring. Yeah, I remember the contractors coming over to give me an estimate, then bragging about how some guy one town over was spending $200k on quarter-sawn oak cabinets alone. Their point being: My project was small potatoes, and I should be grateful they were even there to talk to me. Oh well, hope some of those guys have found work as credit counselors or municipal employees somewhere.
The American worker is seeing his lifestyle demolished by the cost of living arbitrage (off-shoring of manufacturing, clerical, support, and increasingly professional jobs) on one end, and immigration (both legal end illegal) on the other. Jobs are up for Immigrants with no expectation of a good standard of living, and down for Americans tied to expensive mortgage payments and the expectation of a better (non-impoverished) quality of life. While his real take home pay is falling and has been for some time, the financial/paper economy has ballooned the cost of housing, education, etc. It is the "rock and a hard place" that middle class people in the real private sector have been feeling for some time. The only normal "workers" (non-entrepreneurs) who are doing well either are part of a labor cartel (licensed profession) or work for the Government. The tired globalist/liberal/conservative/corporatist notions that serve the interests of the crony-capitalists will not solve this problem. The notion that America is just a tax code for international corporations, and not a nation, has failed. We need new solutions.
Well as far as the baby boomers go, who is going to buy our houses? We are living in some major Mcmansions (costly re energy and esp property taxes) and the jobs out there won't pay wages for a married couple to afford, except as you say the gov't employees or professionals, not enough of them to go around and secondly, by the time they are done paying for two cars, college loans, and misc other expenses they'll never qualify for a mortgage.