August 1, 2012
The Unemployment Dilemma
The official unemployment rate has been hovering at about 8.2% during 2012, but
it's down from its recent peak 10.3% in October of 2009 (Source: National
Conference of State Legislatures).
.
When you look at how the economy has evolved over the last twenty years, it is
amazing that the rate isn't higher. Consider these trends and events:
·
Technological
advances have encouraged American companies to replace human employees with
machines (bank tellers vs. ATMs).
·
Outsourcing
of manufacturing jobs to poorer countries is a continuing trend.
·
Internet
shopping has devastated not just local retail stores, but major corporations
(book stores). As the dominant online sales company continues to expand
its product line, it threatens other retail companies, big and small.
·
Internet
services have reduced the need for human service providers (travel agents and
financial advisors).
·
Government
job reductions not only increase the unemployment rate, but it means that fewer
workers will spend their money at private businesses. Think Furlough
Fridays in Sacramento.
·
Consumers
have never recovered from the economic disaster of 2008. People in the
middle class are afraid to spend for discretionary items. At our art
studio, sales have not come close to what they were before. While
frugality is good, it doesn't stimulate the economy.
·
Huge
corporations continue to consolidate and merge. This reduces the number
of mid-level jobs. As industries become oligopolies or virtual
monopolies, employees with industry-specific skills are less able to bargain
for good paying jobs.
·
Finally,
the worldwide recession continues to drag on, reducing demand for American
products.
As
confidence in the economy grows, businesses and consumers will start to spend
more. Job growth will increase and unemployment will decline, but due to
fundamental shifts in the type of jobs available, the U.S. economy may never
reach that magical "full" employment number again.