Why Won't Jobs Recover?

So far, in this economic recovery, we have noticed two contrasting characteristics. One is that the number of people un-employed has stubbornly refused to recover as it has in the last seven recoveries. The second characteristic is that Industrial Production has recovered well; in line, if not better, than the average of the last seven recoveries.

If Industrial Production has recovered, why haven't jobs? The hard truth is that in the U. S., we have had, for a long time, an over-supply of low- and semi-skilled workers and a shortage of highly skilled, educated workers needed in those businesses that produce the specialized and technological products made here in the U.S. (Incidentally, this also accounts for the growing gap in incomes here in the U.S. Whereas, for the rest of the world, the gap in incomes is narrowing.) When the recession occurred in 2008-9, businesses laid off lower skilled workers and as the economy improved, the demand for lower skilled workers was being met by developing countries. The number of jobs improved, but did so at much slower pace that the average of past recoveries.

There really is no short-term answer for correcting this problem, because the answer is to provide the lower skilled workers with skills, which means education and training, which involves time measured in years. It's frustrating for many of those that have no jobs because many of them have reasonable skills. Again, the hard truth is that it is not a static problem. That is, the attainment of greater skills is a journey and not a destination. It's just the way the world is at this time.

An interesting aspect is that we also have a shortage of un-skilled workers. Those jobs are being filled with immigrants (many illegal) that come across our borders to take those jobs. Why we don't make it easier for those people, this writer just doesn't get.

Ancient Rome didn't have this kind of problem. As depicted in my book , The Fall and Rise, the un-skilled workers were slaves or the low classes. The high skilled jobs went to Romans and others in the higher classes just didn't work at all.

The longer-term solution is that the global marketplace will sort this out. I know this sounds like a mis-placed faith, but when wages in developing countries rise to the level such that there is an equivalency in wages globally, this particular employment problem will no longer exist. Unfortunately, this solution is several years into the future.