You’ve heard it again and again: the unemployment situation is bad. Indeed, it is bad – for a certain group of individuals: what we are seeing is an emergence of a dual economy when it comes to those who are employed and those who are not. My colleague, The Analyst posits that the jobs may not come back due to a phenomenon called a Deferred Productivity Shock:
“What if shocks like the most recent (current?) financial crisis allow, if not downright encourage firms to play catch-up, by taking drastic and quick action to recognize previously un-recognized productivity gains? If GDP and BLS data is even remotely accurate, it seems like we’re now, post-crisis, doing more with less, and there’s very little reason to expect this trend to reverse course anytime soon, if ever.” -The Analyst, Stone Street
As I’ve written (until my fingers have literally become blue), that does not explain all of what is occurring right now in the US labor markets. This morning, Catherine Rampell published an article in the NY Times which highlights what millions of Americans are experiencing during this “recovery”: a coldhearted prejudice against them on the basis of being unemployed. I find it fairly accurate in describing what is happening in the labor market currently. It’s not that the majority of businesses are reaping the full benefits of a positive productivity shocks, but that they are now engaged in something more sinister; an act that will permanently scar over 14+ million Americans for life. Companies are, in effect telling those people who have been unemployed since the 2008 recession that they should roll over and die, that they are worthless, unemployable, lazy. My colleague touched on the mental aspect, highlighting an interesting quote from Megan McArdle at The Atlantic that people who are long term unemployed are increasingly succumbing to:
“That is what these numbers mean: millions of people, staring into the abyss of an empty future. We don’t know how to re-employ them. The last time this happened, in the Great Depression, World War II eventually came along and soaked up everyone in the labor force who could breathe and carry a toolbag. I hope to God we’re not going to do that again, so what are we going to do with all these people?” – Megan McArdle (The Atlantic)
What are we to do? Those people who are in their late 20’s, 30’s and 40’s who are smart, capable, hungry individuals who want to work, but cannot – because:
“We may be seeing what’s called statistical discrimination,” said Robert Shimer, a labor economist at the University of Chicago. “On average, these workers might be less attractive, and employers don’t bother to look more closely to pick out the good ones.” -Robert Shimer, UoC (From NYT)
Laziness. On the part of those whose sole job it is to look for candidates.
“I feel like I am being shunned by our entire society,” said Kelly Wiedemer, 45, an information technology operations analyst who said a recruiter had told her that despite her skill set she would be a “hard sell” because she had been out of work for more than six months.
Here’s what happened from my perspective: Corporations have raped and pillaged the lower classes for so long, 2008 was a gift to them in many ways. Now with low borrowing costs, they can raise capital in the US while happily sending the jobs overseas. Corporations wanted this to happen: A wide wedge developed within the American population. They don’t care – they can cater to the growing middle classes in emerging market economies after sucking the blood dry here. They can keep a few of the American populace employed buying products that they don’t need just so they can continue to say “look, we’re hiring Americans” thus appeasing the dimwitted in Washington. The question I ask is: what are they going to do once they’ve exploited the middle/lower classes in the emerging markets? Who are they going to sell products to after they fatten the calf, then slaughter it? The Martians? Some civilization millions of light years away? When is this all going to end?
Paul Donovan is guest editing at FT Alphaville today and he penned this piece: Why prejudice is really, really bad for growth. It’s not a far stretch to say that the prejudice against the unemployed in the United States will hurt growth. It’s bad business for everyone involved. Donovan talks about an environmental credit crunch but I believe that prejudice in any form hampers growth.
“This two way interaction between prejudice and economic competitiveness is particularly important today. The circumstances of the financial credit crunch have rendered more people vulnerable to a reduction in their standards of living (or, if they were hooked on the hallucinogenic drug of credit, the perceived standard of living). That means that they are also more vulnerable to seeking a scapegoat – and prejudice feeds off of that.” -Paul Donovan, FT
I feel the pain. Everyday. It’s hard out there, at times there really doesn’t seem like there’s anything worth fighting for. There is – justice for the millions who were unfairly tossed out into the streets, the capable, the willing people who just want this nation to get back to some semblance of normalcy. Washington doesn’t care. Democrats and Republicans don’t care about what happens to me, you or your neighbor. They don’t get it.
While discriminating against the unemployed isn’t illegal, I’ll leave you with something to think about when it comes to this whole topic of not considering the unemployed for work (despite the fact that they WANT work):
“Never forget that everything Hitler did in Germany was legal” – Martin Luther King, Jr.
Wake up, America. Your choice.