As the graph at the left prolonged unemployment is a greater concern in this recession than it has been in many years:
During periods of American economic expansion in the 1950s, ’60s and ’70s, the number of private-sector jobs increased about 3.5 percent a year, according to an analysis of Labor Department data by Lakshman Achuthan, managing director of the Economic Cycle Research Institute, a research firm. During expansions in the 1980s and ’90s, jobs grew just 2.4 percent annually. And during the last decade, job growth fell to 0.9 percent annually.
“The pace of job growth has been getting weaker in each expansion,†Mr. Achuthan said. “There is no indication that this pattern is about to change.â€
Before 1990, it took an average of 21 months for the economy to regain the jobs shed during a recession, according to an analysis of Labor Department data by the National Employment Law Project and the Economic Policy Institute, a labor-oriented research group in Washington.
After the recessions in 1990 and in 2001, 31 and 46 months passed before employment returned to its previous peaks. The economy was growing, but companies remained conservative in their hiring.
Six years passed between the end of the last recession and the beginning of the current one. If the time between this recession and the next, inevitable one is six years and the growth in employment is even slower this time than the last, we could see a significant growth in permanent unemployment for many people.
As I’ve said before that would change American society in ways that will be deep, broad, and hard to foresee. For reasons that are difficult for me to understand the story linked above in its emphasis on unemployed women doesn’t report the real story. According to the Bureau of Labor Statistics, the unemployment rate is 10.0% for men and 8.4% for women, a significant difference. Today there are actually more women employed than men.
My guess is that the disparity will exacerbate social trends already in progress. Marriage rates will go down. Fewer women of middle income and above will give birth. Crime rates are likely to rise. Rates of substance abuse and sexual abuse are likely to go up.
Why, and what do we do about it? I struggle with the why a lot. My gut feeling is that we have concentrated too much of our wealth and power into the hands of too few people. Deadweight loss not only at the governmental level, but at the business level. We are also dealing with global competition and are feeling our way through it in fits and starts. On top of that, we had a major cultural change from savers to borrowers, the reason for which still eludes me. Yes, I can see how it benefits corporations, and it gets Republicans elected, but why at the level of the personal consumer did we make that shift?
As el-Arian says, we are going through a paradigm shift. Our economy will look different, but I am not sure how either. My suspicion is that we are heading towards a two tiered society.( I would point out that crime has actually been dropping, even while more women were working. )
Steve
US companies have trillions of dollars in profits working for them overseas. These dollars are helping to boost the economies of foreign countries. Taxes on these profits have been paid to those foreign countries, almost always at a lower corporate income tax rate than here in the US. If these profits are repatriated, brought back into the US jurisdiction, they will be taxed again. Even with the companies getting credit for taxes paid overseas, taxes would still be owed to Uncle Sam. As a result, companies elect to not repatriate most of these profits and instead reinvest them overseas. As a result, US taxes are not collected.
The US is just about the only country that taxes the repatriation of profits earned overseas. Why not just quit trying to collect taxes which are legally being avoided and allow companies to repatriate those profits without tax consequences? That flow of much maligned capital can be reinvested instead in our country. That flow of much maligned capital will then benefit our workers, our stockholders, our primary companies, not foreign workers, not foreign subsidiaries, and not foreign governments.
Since most of those potential taxes are not being collected anyway, the cost to our government will be minimal. The potential benefits enormous. Repeal that portion of the Tax Code. This is a real and relatively inexpensive way for the government to have a real effect on our economy. A real long term solution.
Uhhhmmm no. What we would see is a higher level of unemployment. Probably an increase in the natural rate of unemployment. That is, a person might be unemployed and eventually find a job (after a long unemployment spell) but even though he leaves the unemployment rolls someone would replace him keeping unemployment at the same level (assuming no population growth).
It is like the 45 million or so uninsured. From month-to-month it isn’t always the same people. That is, a portion of that number is due in part to transitory periods of not having insurance. Similarly with the unemployed.
Depends on where we settle doesn’t it. The unemployment rates of the last 20 years or so have been quite low by standards since the end of WWII, at least compared to the 1970s and 1980s.