Where Did the Jobs Go?

Most people who’ve lost their jobs are sliding down the employment ladder — presuming they’ve managed to get back on the ladder at all.

The latest Bureau of Labor Statistics report on “displaced workers” (economist-speak for people who’ve lost their jobs) finds that 56 percent of the people who’ve lost their jobs since 2009 are employed again, and more than half of those re-employed people took a pay cut in their new job. Some key points:

 --In January 2012, 56 percent of the 6.1 million long-tenured
     displaced workers were reemployed, up from 49 percent for the 
     prior survey in January 2010. 

   --Forty percent of long-tenured displaced workers from the 2009-11
     period cited insufficient work as the reason for their displacement,
     and 31 percent cited that their plant or company closed down or 
     moved. 

   --Nearly 1 in 5 long-tenured displaced workers lost a job in
     manufacturing. 

   --Among long-tenured workers who were displaced from full-time wage
     and salary jobs and who were reemployed in such jobs in January 2012,
     46 percent had earnings that were as much or greater than those of
     their lost job. 

From our latest at the Huffington Post:

We need to do something we just aren’t good at: having a serious debate on how to tackle a near-term problem while also looking at what to do for the future. As the candidates for president and Congress begin offering up their ideas on “jobs,” voters need to consider whether their proposals are aimed at creating jobs quickly or whether they’re aimed at strengthening the job picture over the long haul, say the next decade or two.

The truth is the country really needs both, but we can’t expect short-term cures to fix long-term problems (like job losses due to globalization or technology), and we can’t expect long-term solutions to kick in quickly. You probably won’t hear any subtleties like this on the campaign trail. Generally speaking, politicians are in the confusion business, so drawing these kinds of distinctions isn’t their strong suit. Here’s a quick tour of some of the jobs ideas out there and their short-term and long-term implications.

Our latest Huffington Post piece points out that an episode of Friends is actually prescient about a problem facing young people in the workforce: it’s getting harder to get ahead on jobs and wages, and has been for some time. Still, some bets are better than others, and education does pay off in higher wages and lower unemployment rates, as this Bureau of Labor Statistics chart shows:

Today the Bureau of Labor Statistics will release the latest monthly jobs report. With luck, it’ll be fairly optimistic. But before the bloviating gets too far out of hand, you might want to get some perspective. The Federal Reserve Bank of Atlantic has come up with a “jobs calculator” that lets you figure out how long it’ll take, and how many jobs have to be created, to hit any specific target for unemployment.

For example, the current unemployment rate is 8.3 percent. If you wanted to cut that down to 6 percent in 12 months, the calculator will tell you what it takes: payroll employment would have to grow by 363,813 jobs per month. In January, payroll employment rose by 243,000 — and the calculator helps put that in context. Because there are plenty of people who’ll want you to think the jobs situation is either better or worse than it really is.

(A hat tip to @AnnieLowrey on this one).

There’s a fierce debate over whether college is a worthwhile investment, given the high level of student debt. Still, there’s no question that, statistically speaking, college graduates earn more and are less likely to be unemployed than those without a degree.

The real myth is that being better educated automatically makes your job safer in today’s economy. Technology and globalization mean some kinds of high-level professional work can be done anywhere in the world. A study by the National Academies reported that Australian radiologists already read MRIs of American patients, Costa Rican accountants help prepare the tax returns of U.S. businesses, and big companies like GE do much of their R&D overseas.

Another from our 12 Myths About the Jobs Crisis slideshow.

Over the last half-century, the United States (along with the rest of the Western world) moved to a service economy. And services are usually provided where the people are, as you can see in this chart of projected growth in service jobs by geography.

There’s at least one plus here, which is that the majority of service jobs aren’t going overseas. Most, but certainly not all, require face-to-face contact. But as Richard Florida noted in The Atlantic, where this chart appeared, whether or not these are the kinds of jobs that can support a middle-class life is another question.

One of the more disturbing aspects of the jobs crisis is what it does to young people just entering the job market. Studies show that people who first enter the job market during a recession often never catch up economically.

As the Real Time Economics blog puts it:

For young people trying to find work — both men and women — the scars of their early-career unemployment could last a lifetime. Mr. James notes that the early years of a career are meant to be a critical period for developing new skills, advancing up the job ladder and boosting earnings. On average, Mr. James says, two-thirds of lifetime wage growth come in the first 10 years of a person’s career. Millions of unemployed young people are missing out on those opportunities.

(Library of Congress photo)

Once, there was an iceman working nearly every street in every town in America, including one of our grandfathers. The disappearance of the iceman and the rise of the refrigerator says a lot about how technology affects jobs — and points out what the presidential candidates are desperately avoiding when they talk about the economy.

My grandfather was an example of the “creative destruction” of jobs that economists (and lately presidential candidates) embrace. Technology both creates and destroys jobs, usually at the same time, and ideally because a superior product came along. Refrigerators were better than iceboxes. Eventually even my grandfather admitted it. If you look at the overall economy, the loss of ice routes was more than made up by new jobs making refrigerators.

The key word in creative destruction, however, is “creative.” Now we’re living in another time not unlike the 1930s, with a jobs crisis that’s partly a massive failure of financial markets and partly a huge technological shift in the nature of work. There’s no question the Great Recession slammed the global economy. But one reason why the jobs market has been so slow to recover is that technology is enabling us to do more work with fewer people — or with people anywhere around the world.

Check out the full blog, “The Iceman Goeth: Politicians Ignore the Biggest Threat to American Jobs,” at the Huffington Post.

In the long run, our rising national debt is one of the most dangerous problems our government has, and we have to tackle it. Unfortunately, what’s needed to control deficit spending—cutting federal programs and raising taxes—slows economic growth and job creation in the short run. On the other hand, letting deficit spending mushroom could up-end the entire economy down the road. Sometimes politicians talk like this is a simple problem to fix. It’s not. It’s going to be very tough. Some argue that we can let the federal red ink flow forever, but the only honest debate is over how quickly to move.

Another from our 12 Myths about the Jobs Crisis slideshow: