The Economy Is Improving…So Where Are The Jobs?
If the unemployment situation in this country were a cyclical issue (which most people assume) than jobs would be being created left and right at this point. We’d be well on our way back towards a more normal and acceptable unemployment level. Unfortunately, this isn’t happening. Despite an “improving economy” as we’re told.
Now I would still debate the level of improvement in the economy – because I think there are two economies. One for big business and one for small business. Big business that has access to cheap/free money and global markets is hitting record profits right now. Small business on the other hand is still struggling. Regardless, neither big or small business is hiring new people at a high rate. Why?
Because the unemployment issue isn’t cyclical. If it were cyclical, all we would need to do is lower rates, print some money, and get the economy moving again. We did that and the jobs still aren’t coming, which shows this isn’t a cyclical problem, and thus the cyclical solutions were not the right solutions.
The unemployment situation is structural. We have major structural issues that won’t be addressed by trying to move the cyclical nature of the economy.
What are the structural issues?
- Demographics – The baby boomers are moving towards retirement. They are moving towards cutting back rather than increasing consumption. Many of these boomers don’t have enough for retirement as is.
- A shrinking labor force – Each month when we get an updated unemployment rate (which is useless and manipulated) we learn of the many people that have just dropped out of the labor force whether it’s due to discouragement or age. The reality is that there are an increasing number of workers that simply aren’t employable anymore. Picture the 55 year old worker with an outdated skill set.
- Erosion of Manufacturing – The productive jobs that make something tangible in this country continue to be lost and shipped overseas to cheaper labor. We’ve replaced these jobs with service jobs. This reflects the consumer-oriented nature of our economy rather than our productive/expert-driven nature of it. This needs to change.
So, what are the answers? Well, not printing a bunch of money for one. The current responses are incorrect and will end up hurting us more than helping us.
The solutions need to be to incentivize job creation, innovation and the creation of manufacturing businesses in the United States. Why not offer zero corporate income tax for five or ten years for any business that creates a manufacturing plant and hires 100 workers. Government needs to realize that they won’t create the solutions, but by getting out of the way and offering to get out of the way even more as various incentives, this can work.
So, if you’re happy with Fortune 500 CEOs and Wall Street traders raking in billions in the new economy while main street continues to struggle, then you should be fine with the current path of economic leadership. If you think this is a joke, then you need to realize that the solutions being implemented are a response to a cyclical downturn, not structural economic ills. We need new plans and new solutions.