3 Reasons Short-term Politics Can't Solve a Long-Run Jobs Crisis
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America’s future is being jeopardized by the failure of politicians to think long-term about the jobs crisis. The President will have to transcend pure partisan politics if we are to make progress on what has become an economic and social tragedy.
We face three separate serious unemployment problems which will unfold over the next few decades. The first is right now. With unemployment at 8.6%, we will have to add roughly 160,000 jobs per month to see unemployment fall to slightly below 8% by November 2012. This is very unlikely to happen; and if Europe blows up, unemployment could go back up, perhaps dramatically. Right now, over 40% of our unemployment is long-term, which is completely new for America. So we are building an inventory of the long-term unemployed, of men and women out of the job market for years.
The second unemployment problem is that this situation will persist for the next decade. According to calculations made by the Brookings Institute's Hamilton Project, if we added jobs at the rate of 208,000 per month, we would get back to full employment in the US around 2024. This rate of 208,000 per month is the best yearly rate achieved in the last decade - in 2005. It is unlikely that we can achieve this; but even if we do, we face a bad-to-mediocre job market for much of a decade. This means that high school and college graduates will enter the worst job market of 60 to 70 years; and that long-term unemployment will probably stay at levels we have never seen before. Current research shows that men and women who experience long periods of unemployment early in their careers never make up the difference lost.
The third problem is that through out this entire period, our economy and the jobs market will be going through a fundamental structural change. According to leading macro-economist Alan Blinder, who spoke recently at at Next American Economy seminar in New York City, the combination of the on-going revolution in information technology and globalization could mean that as much as 25% of our labor force will face international competition - this is 25% who essentially never dreamed they were subject to much if any global competition. This structural change implies both some actual job loss, a lot of wage pressure, and an unprecedented level of employment insecurity.
It is hard to overstate how bleak this picture is, or how difficult its consequences will be. Obviously, there is a lot more to say of substance on this topic. But for now I want to look at the politics of the next year and make 3 assertions.
1. We are not even close to grappling with this multi-decade problem. The current crisis is the worst employment problem we've faced in more than half a century. I cannot remember a single, even short, discussion of this issue in the Republican debates. But I think the Obama Administration has consistently missed an opportunity to focus on this area also. We've reduced a multi-decade crisis to a debate over a one- year extension of the payroll tax holiday
2. It is highly unlikely on all current evidence that the presidential campaign will focus on the jobs crisis. In 1963, President John Kennedy and Senator Barry Goldwater, apparently anticipating that they would oppose each other in the 1964 elections, discussed a multi-debate campaign in which they would even travel together for some of the time, and debate their very different visions. We would all be better off if this up-coming campaign was something like that. But that's not where it's headed. It will be a big money, big advertisement budget, highly negative, divisive, low-on-ideas campaign. And the American people will be worse off for it.