Unemployment And The Future Of U.S. Jobs

Unemployment And The Future Of U.S. Jobs

Over the last three years, nearly 5 million U.S. workers have effectively gone missing.  No, you will not find their pictures on the backs of milk cartons.  They are the jobless Americans who have grown discouraged by their unsuccessful searches for work and have simply given up the hunt.  Only 45.4% of Americans had jobs in 2010, the lowest rate since 1983.  Last year alone, only 66.8% of men had jobs, the lowest on record.  Working-age men have been dropping out of the labor force for decades.  This disappearance has been quickened by the loss of construction and manufacturing jobs.

The current “measured” unemployment rate is 8.3% that is those workers who are currently collecting unemployment benefits.  This equates to roughly 27.31 million people out of work.  If we add back the “missing” workers, we come close to a real unemployment figure of 17% or over 55 million people out of work!  It is difficult to accurately pinpoint the real number of Americans out of work but most economists would double the current published rate of 8.3 which would give us 16.6% or very close to the estimated 17%.

According to a recent report, a single worker needs an income of $30,012 a year, or just above $14.00 per hour, to cover basic expenses and save for retirement and emergencies.  This figure is close to three times the 2010 national poverty level of $10,830 for a single person, and nearly twice the federal minimum wage of $7.25 an hour.  Now a single worker with two young children needs an annual income of $57,756, or just above $27.00 per hour, to attain economic stability.  Even for those who do get jobs, it may be hard to live without public assistance.  Many households with children are working but not earning enough to cover basic needs, much less save for retirement or an emergency.  In households with an annual income of $25,000 almost 83% of them would not be able to afford food within 3 months of losing the family income.  Many jobs being added in retail, hospitality and home health care are unlikely to pay enough for workers to cover the cost of fundamentals like housing, utilities, food, health care and transportation, and in the case of working parents, child care.

Complicating this already dismal outlook is the fact that today many of the “missing” workers are largely qualified workers.  But ever since World War II, the U.S. has shifted from a manufacturing industry to a service industry and many of the manufacturing jobs have moved overseas to cheaper countries like China and India.  A lot of low-skilled labor jobs have been lost and people are no longer needed in America to work in factories and assembly plants.  But now service jobs are quickly being replaced overseas.  Travel agents are being replaced by websites like Expedia, librarians are replaced by Google and Wikipedia, bank tellers are being replaced by ATMs, and salesmen are being replaced by online stores.

The difference in today’s economy is that to succeed, you actually need unique, irreplaceable skills.  Many college graduates specialize in business or liberal arts but do not acquire many skills during school.   Skills that matter today relate to computers and programming.  So how does this problem get fixed?  Americans must “qualify” themselves either through higher education or vocational schools.  It is sad but everyone needs a skill that contributes to society or they can expect to be unemployed.  Today’s fastest growing companies are based on ideas and designs.

Currently, some of the hardest jobs to fill can’t be outsourced or turned over to robots.  Sales representatives, mechanics, welders, truck drivers, machine operators to name just a few.  Part of the problem is that many of the jobs are not all that attractive like delivery drivers and technicians.  One hiring source was quoted as saying that we need “people who can go to a trade school.”  Unfortunately, a college degree alone won’t be a free pass to employment anymore.

I anticipate that during the coming years, the U.S. labor market will be transitioning from “generalists” to “specialists.”  I would also anticipate that we will see a change in our higher educational system away from four year degrees to programs that result in a “certification” or a “license” to perform a specific type of work.  However, during this transitional period, the new norm or standard for our unemployment level in the United States may move up from the old 4% to a newer, higher 8% level.

Written by
Donald Wittmer

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