The Job Bomb

17 Nov, 2009 by John Hawkins

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The job market in our country is shockingly grim and getting worse:

Think the worst is over? Wrong. Conditions in the U.S. labor markets are awful and worsening. While the official unemployment rate is already 10.2% and another 200,000 jobs were lost in October, when you include discouraged workers and partially employed workers the figure is a whopping 17.5%.

While losing 200,000 jobs per month is better than the 700,000 jobs lost in January, current job losses still average more than the per month rate of 150,000 during the last recession.

Also, remember: The last recession ended in November 2001, but job losses continued for more than a year and half until June of 2003; ditto for the 1990-91 recession.

So we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.

…The long-term picture for workers and families is even worse than current job loss numbers alone would suggest. Now as a way of sharing the pain, many firms are telling their workers to cut hours, take furloughs and accept lower wages. Specifically, that fall in hours worked is equivalent to another 3 million full time jobs lost on top of the 7.5 million jobs formally lost.

This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries.

Many people, including the author of that article, Nouriel Roubini, suggest another stimulus package as a solution to the job problems. Unfortunately, history has proven time and time again that they don’t work. Heck, we just did a stimulus package that cost over a trillion dollars, including interest, and it was sold as a way to create jobs. Guess what? Despite the almost unfathomable cost, it failed utterly and completely to pump up the job market.

So, what can we do?

For starters: Tax cuts on business would be a good idea. Businesses can’t hire new people until they have money in their pockets. Foregoing government run health care, cap and trade, and promises of tax increases that are panicking Americans and causing them to hold off on spending money would be another plus. Another area where both parties typically fail at would be working to open up more overseas markets for American goods. Getting cheap goods from foreign sources stretches the value of a dollar and thus, is a good thing. But, our politicians do a terrible job of demanding that foreign countries lift tariffs and taxes on American goods, so that we can sell our products elsewhere. The more goods we ship overseas, the more jobs that will be produced at home.

This problem wasn’t created overnight and it can’t be fixed overnight, but there are things that can be done to help get the job market going back in the right direction.