July 09, 2009

Fun with unemployment!

The crew over at Three Wise Men have been lamenting the sorry state of employment in the US. The numbers do not look at all good with close to 17% being either unemployed or underemployed. The topline looks bad but underneath things are far worse as the length of time it's taking for the unemployed to find new work is, in many cases, stretching beyond six months.

Which leads to the question, how are we going to dig ourselves out of the hole we're in with reduced industries coming out of this recession?

The answer is not at all simple, but here's a simplistic explanation of what will happen... we'll do it by expanding enterprises already in existence and creating new ones.

Already we're seeing migration of those employed in financial services in New York out of the city and to places like Austin, Kansas City and Dallas where they are staffing up small and medium sized banks. No, the money's not as good but the quality of life is far better. The same thing is playing out in a number of different industries on a very small scale now. Watch as the recovery begins to take hold and it continues to expand.

The reality is that we're going to see a weaker dollar over time. It should be far lower now, but there are issues with the large private and central banks globally that have a lot of their capital tied up in dollar denominated assets. They can't dump dollars without negatively impacting those assets and the capital. So we'll likely be on a long slow slide for a while.

That's bad for imports and good for exports. That, coupled with a weak job market, will bring back manufacturing jobs in the US. And, of course, there is infrastructure reconstruction and the transition to green energy, both of which will require enormous numbers of people.

Over the last thirty years, since the Reagan Revolution, we've seen a decline in manufacturing in this country. That will start to turn and create jobs. There is a chance we could actually see some real wage growth again in this country especially if the tax laws are altered to favor increased payments to labor. This trend could also gain significant strength if China is successful in it's drive to develop a real consumer economy.

Certainly things look bleak now for many. But nothing goes down forever and there is a genuine chance that we'll come through this far stronger than we have been in a long time.

Posted by mcblogger at July 9, 2009 08:59 AM

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