Bobswern and teacherken have posted diaries using Bob Herbert's latest column as a point of departure. I would like to use this column as well to explore some points that touch on some aspects that reflect on who we are as a society and a few academic angles that have pointed relevance in the real world.
Herbert's column:
Nearly two-thirds of the unemployed workers who were surveyed have been out of work for a year or more. More than a third have been jobless for two years. With their savings exhausted, many have borrowed money from relatives or friends, sold possessions to make ends meet and decided against medical examinations or treatments they previously would have considered essential.
There is a fundamental disconnect between economic indicators pointing in a positive direction and the experience of millions of American families fighting desperately to fend off destitution. Some three out of every four Americans have been personally touched by the recession — either they’ve lost a job or a relative or close friend has. And the outlook, despite the spin being put on the latest data, is not promising.
The U3 unemployment rate is forecast to stay unchanged in 2011. That would indicate some permanency to our current economic state. While we hear trumpeting celebrations of 50 thousand jobs created in November, that is roughly one-third of the jobs that need to be created just to keep pace with population growth. If, by some odd circumstance, we manage to hit the 150K job creation target, that will only supply employment for the current workforce pool. That will do nothing to absorb those who have been chronically unemployed for the past three years.
I have been re-reading Economics for Dummies (which would make a really good textbook except for the title). The unit on Human Capital is extremely relevant to this Herbert column.
From the book:
"If you put a person to work for which she has high human capital, she will produce much better or much more output than a person with low human capital, even though they both supply the same amount of labor in terms of hours worked." (p. 37)
We are in a transformative era in which people with high human capital are losing, or have lost, their jobs. At the same time, people just finishing technical training and higher education are entering the workforce. Their knowledge, energy and skills will diminish if they do not find work right away in their chosen field.
In the short-term, these conditions will erode productivity. The combination of these conditions, in the long-term, (experienced people with high human capital being long-term unemployed and newly educated people struggling to find employment) does not bode well for the future of worker satisfaction and the sustainability of any economic progress that may be summarized as a "recovery" of sorts.
Deficit hawks will warn against an increase in spending just to employ those who need meaningful work. It really does not matter what these people are doing as long as they apply their skills. That is why I mentioned a while ago that we just need to start building pyramids. Our multi-generational prospects to better society cannot afford to miss any opportunity to employ people in areas where they want to work and where they can apply human capital.
Cross-posted at macroindex