Has America Suffered a PERMANENT Loss of Jobs? → Washingtons Blog
Has America Suffered a PERMANENT Loss of Jobs? - Washingtons Blog

Thursday, December 3, 2009

Has America Suffered a PERMANENT Loss of Jobs?

Some of the top economists say that America has suffered a permanent loss of jobs:

  • JPMorgan Chase’s Chief Economist Bruce Kasman told Bloomberg:
    [We've had a] permanent destruction of hundreds of thousands of jobs in industries from housing to finance.
  • The chief economists for Wells Fargo Securities, John Silvia, says:
    Companies “really have diminished their willingness to hire labor for any production level,” Silvia said. “It’s really a strategic change,” where companies will be keeping fewer employees for any particular level of sales, in good times and bad, he said.
  • Former Merrill Lynch chief economist David Rosenberg writes:
    The number of people not on temporary layoff surged 220,000 in August and the level continues to reach new highs, now at 8.1 million. This accounts for 53.9% of the unemployed — again a record high — and this is a proxy for permanent job loss, in other words, these jobs are not coming back. Against that backdrop, the number of people who have been looking for a job for at least six months with no success rose a further half-percent in August, to stand at 5 million — the long-term unemployed now represent a record 33% of the total pool of joblessness.
  • Nobel Prize winner Edmund Phelps and Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian say the fallout from the deepest recession in more than five decades is driving the so-called natural rate higher, perhaps to 7 percent.
  • And Former Labor Secretary Robert Reich wrote yesterday:

    The basic assumption that jobs will eventually return when the economy recovers is probably wrong. Some jobs will come back, of course. But the reality that no one wants to talk about is a structural change in the economy that's been going on for years but which the Great Recession has dramatically accelerated.

    Under the pressure of this awful recession, many companies have found ways to cut their payrolls for good. They've discovered that new software and computer technologies have made workers in Asia and Latin America just about as productive as Americans, and that the Internet allows far more work to be efficiently outsourced abroad.

    This means many Americans won't be rehired unless they're willing to settle for much lower wages and benefits. Today's official unemployment numbers hide the extent to which Americans are already on this path. Among those with jobs, a large and growing number have had to accept lower pay as a condition for keeping them. Or they've lost higher-paying jobs and are now in a new ones that pays less.

    Yet reducing unemployment by cutting wages merely exchanges one problem for another. We'll get jobs back but have more people working for pay they consider inadequate, more working families at or near poverty, and widening inequality. The nation will also have a harder time restarting the economy because so many more Americans lack the money they need to buy all the goods and services the economy can produce.

    And see this.

    Heck of a job, Larry, Tim and Ben.


  1. It has been my take on a limited scope that those who are on unemployment are not willing to accept jobs at the $7.50 to $9.50 range and would prefer to continue their unemployment compensation. Who's taking over? Walmat and the "box" stores? I fear that is the future.

  2. One thing you can bet your bottom dollar on is business trying to lower overhead. American work has been highly valued (some might say overvalued) for decades due to high productivity. That productivity was mostly the result of a vibrant education system and the application of technology.

    The technology has spread and the educational system has atrophied here and strengthened globally. It no longer makes any economic sense to pay so much more for American labor (not even accounting for the high American corporate tax rates). The only jobs that won't get exported are the ones that can't be exported, unless America regains the lead in productivity or American wages come closer in line with global averages.


→ Thank you for contributing to the conversation by commenting. We try to read all of the comments (but don't always have the time).

→ If you write a long comment, please use paragraph breaks. Otherwise, no one will read it. Many people still won't read it, so shorter is usually better (but it's your choice).

→ The following types of comments will be deleted if we happen to see them:

-- Comments that criticize any class of people as a whole, especially when based on an attribute they don't have control over

-- Comments that explicitly call for violence

→ Because we do not read all of the comments, I am not responsible for any unlawful or distasteful comments.