In my recent post on unemployment claims, I noted that 160,000 new jobs were added last week but that nearly 50,000 were part-time census takers. Nothing to write home about. In an article from this morning's Wall Street Journal, Robert Reich, the well-known labor expert from Clinton's administration, said that it takes more than 150,000 new jobs just to keep up the growth of the U.S. population.
Unemployment claims have been hovering around 440,000 per week for the last few months, not a hemorrhage, but still not at the 380,000 to 400,000 that would be a sign that the economy is creating enough jobs to maintain stable unemployment. We'll have to get down to 350,000 to actually have a genuine recovery and more like 300,000 claims per week to have boom times back.
Reich argues that it may take five to eight years to catch up, predicating his ideas on a number of issues:
- The number of underemployed or unemployed is in the neighborhood of 11,000,000.
- Consumers have been shedding debts, often by defaulting on loans. Debt still averages nearly $45,000 per American, or about 122% of disposable income. Reich suggests that most analysts believe a "sustainable" debt load is around 100% of disposable income.
- The richest 10% of Americans accounted for half of total national income in 2007, but they only accounted for 40% of total spending.
- It's likely that many job losses will never return. Cost-cutting moves by American companies, built on software, robotics and foreign labor support that structural change.
So what does all this mean? The only way the jobless will retain their jobs is by settling for much lower wages and benefits. The example Reich gives is of Ford Motor which added 1,200 jobs in Chicago, but those workers were hired at one-half the salary and benefits of what current workers were paid when they began their jobs.
There's another issue beyond settling for lower wages and benefits. It's obvious, based on the unemployment statistics:
- unemployed workers with college degrees--5%
- unemployed workers with only a high school diploma--10.5%
- unemployed workers lacking a high school diploma--15.6%
What security you're able to gain will be enhanced by a college degree. Although a degree is not a guarantee, it is the union card for the 21st century. And if you already have a degree, I'd start thinking about how to gain a graduate degree. The graduate degree has paid phenomenal dividends for myself and all three of our daughters. All three have created a niche for themselves, have developed large networks and stay on top of their relevant industries to see what's coming and make changes for themselves.
The cost of education will require sacrifices for many. But them's the facts!
Think also, about this. I've seen families go way overboard in sports for their kids, missing and avoiding the opportunities for academics. Instead of getting caught in that dead-end treadmill, teach your kids to use sports for maintaining fitness, and nothing else. Thinking you're going to have a wealthy sports jock, a beauty queen for the movies, or a wealthy musician is a rejection of the statistics. Those fields are so competitive as to be a dead-end. Be sure your passion is highly realistic.
Here's what I recommend to middle-class dads (and moms, too). Learn to talk to your kid about something other than sports. There'll be more than enough sports idiocy in grade school and high school. Limit the tube and the computer. Take him/her to museums, check out books from the library with them, and learn to enjoy science displays and exhibits. Emphasize subjects in this order: math, science, the humanities, and then the behavioral sciences, and help them learn how to ask questions, communicate and WRITE. I'd bet that fewer than 30% of business people can write a sensible paragraph without typos and misspelling. That shouts out loud for the better recruiters. Finally, teach your kids how to do things that neither they (nor you) necessarily like to do.
And if you're really fortunate, your kid will say what my 14 year-old grandson said about the book, Lies my teacher taught me: "It's filled with cool facts!"
WSJ article: The Jobs Picture Still Looks Bleak, Robert Reich.