After looking through the news, and reading up on few stories, I decided to look up for myself something I had read about earlier in the day: a paper written by the folks at the McKinsey Global Institute titled An Economy That Works: Job Creation and America’s Future.
It is a sobering and enlightening paper.
In this report on the potential and ability of America to recover from the unemployment issues facing this great nation over the next several years, only the most positive of scenarios does America create enough jobs to bring unemployment to the levels they were at before the recession began, and in the two other scenarios the unemployment rate is significantly higher than that, with one scenario seeing stagnation and the unemployment rate sitting at 9 percent, which is where it is right now, 9 years from now.
Furthermore, if the state of education in the United States stays as it is over that 9 year time period, there will be a shortage of people with necessary bachelor’s or higher degrees. A shortage of 1.5 million people. Add to that up to 6 million people with less than a high school diploma unemployed, and you have the recipe for what could well spell disaster.
For my part I think that capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight, but that in itself it is in many ways extremely objectionable.
John Maynard Keynes, The End of Laissez-Faire
The report makes it clear that part of the issue is simply the way business is done, although it doesn’t say that in those precise terms. In earlier downturns, companies sacrificed productivity until demand returned, in recent ones, they attempt to continue to keep productivity up, while cutting the number of employees, thus creating a new normal, and a need to do business in a more impersonal way, forcing everyone to change to meet the new demands of business, rather than the needs of the people those businesses are supposed to serve.
Job creation. It is the lifeblood of business. From the years of 2000 – 2007 the rate of job growth was its weakest since the great depression. Fully half the rate of previous decades, and 13% of the jobs created were created by “credit bubble” jobs.
There are a number of places within the report that point to off-shoring and automation of business services jobs as being an issue, and points to business, saying they need to keep jobs that have been outsourced to other nations here in the United States.
Skills will also be an issue. There will apparently be twice as many college graduates in business and “social sciences”, as in technology, mathematics, engineering and the like, not gaining skills that will be needed for the nation and the workforce over the next decade.
There… is a plethora of information in this report. Rather than have me regurgitate it for you, you can read it yourself here.
If this report is any indicator, a large part of the problem is the changing face of businesses in America, and how they respond to recessions. In at least two separate sections in this report, the first reason given for the slow jobs recovery is that business is not reacting now in any of the ways that they had for years.
But it also points to slow growth prior to the recession, in particular the first few years of the Bush tax cuts.
Draw your own conclusions.
There is much to chew on here.
That’s it from here, America. G’night.