2010 February 21 Sunday
High Chronic Unemployment In America

One of the worst developments in the US economy in the last couple of decades has been the growth of a chronically unemployed population. This has many causes including outsourcing, automation, and immigration.

Factory work and even white-collar jobs have moved in recent years to low-cost countries in Asia and Latin America. Automation has helped manufacturing cut 5.6 million jobs since 2000 — the sort of jobs that once provided lower-skilled workers with middle-class paychecks.

As a graphic attached to this article demonstrates the rise in long term unemployment has hit blacks especially hard. That is to be expected because low skilled (mostly illegal) Hispanic immigration has flooded the market for jobs which blacks have done historically. It is an amazing fact of American politics that a part-black President who makes a big point of wanting to help blacks favors immigration policies that severely hurt blacks in the labor market and our worthless elites do not make a peep about it.

Jobs recovery has gotten much slower after recent recessions.

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.”

As a result of slow hiring the number of months it takes for the economy to replace lost jobs after a recession has increased from 21 months to 46 months in the last recession. Given that this current recession is deeper and the economy is beset by more problems (e.g. sick banks, debt-burdened consumers, higher oil prices) the recovery from the current recession will take far longer. In fact, I think it very unlikely that a full recovery will occur before the next recession starts.

Steve Sailer points out that immigration is making the problem far worse.

For example, Ed Rubenstein has been tracking on VDARE.com for years the closest the federal government will come to measuring the impact of immigration on jobs: the ratio of Hispanic to non-Hispanic jobholders. Last Tuesday, Ed reported that Hispanic employment is up 22.4 percent since January 2001, while non-Hispanic employment is down 2.5 percent.

Steve points to a new piece by Don Peck in The Atlantic entitled How a New Jobless Era Will Transform America. In a nutshell: high male joblessness is breaking down all taboos against single motherhood (which used to be called having illegitimate babies back when it was seen as illegitimate to do so). Even the white lower class is becoming highly dysfunctional.

We could at least stop the immigration of low skilled workers. But what to do about the effects of automation? They'll become even more pronounced in the future as robotics enables even more tasks to be fully automated.

Peak Oil is coming too and that'll bring on a downturn more like the Great Depression with much higher unemployment rates. However, a larger fraction of the goods still consumed in the US during that downturn will be manufactured in the US. In his book Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization (see chapter 5) Jeff Rubin makes the argument that bulk products with low value per unit weight (e.g. cheap furniture) will no longer get shipped across oceans once Peak Oil hits. You can also see an article he co-authored in May 2008 when he was chief economist at CIBC World Markets: Will Soaring Transport Costs Reverse Globalization? Ignore the Adobe Acrobat error and advance to page 4.

Share |      By Randall Parker at 2010 February 21 08:12 PM  Economics Labor

Wolf-Dog said at February 22, 2010 2:46 PM:

The main cause of the chronic unemployment is the foreign trade deficit that eliminates local jobs.

In fact, even the revolutionary Ford Fiesta car which will provide an astounding fuel economy of 40 mpg, will be manufactured in Detroit. This car can be bought for less than $14,000 and it will compete with hybrid cars that are much more expensive, but even if all Americans buy this car, the net benefit to the workers in Detroit will be almost nothing.


Wolf-Dog said at February 22, 2010 2:49 PM:

Sorry I made a typographical mistake. I meant to write that Ford Fiesta will be manufactured in Mexico instead of Detroit.

Beanner said at February 23, 2010 9:05 AM:

"High Chronic Unemployment In America"

Funny comming from a citizen whose country is suffering from unemployment like hell.

tehag said at February 23, 2010 6:27 PM:

"Peak Oil is coming too"

What, again?

Wolf-Dog said at February 25, 2010 6:13 AM:

On this occasion, let me emphasize that once upon a time in France, there used to be a law that imposed a maximum of 35-hour work week per worker. Understandably, this law was the brainchild of the French socialists, but the idea was to reduce unemployment. More recently Sarkozy's ideal of efficiency became the rage, and this law is intensely attacked, but it seems to me that the reason this law is not working well in France is because they also have additional laws that make it very difficult for French corporations to fire workers. For this reason, the French corporations are very selective in hiring workers.


Clearly this law would not work in Silicon Valley, but in many places it is possible to reduce the number of work hours per week without hindering productivity, provided that it is still possible to fire workers. The reason this law might be worth re-examining is because such a policy would also guarantee that more people have enough income to continue the consumption. Otherwise, as productivity increases faster than the growth rate of the economy, it is conceivable that 50 % of the population will be unemployed, and hence without enough income to continue consuming, leading to less profits, snowballing the unemployment to 75 %!!!

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