The Homa Files

Punchline: Many outsourced jobs will never return, and median income will likely continue to fall. But, the jobs of well-educated Americans, although hardly immune to foreign outsourcing and technological displacement, have been less vulnerable to these trends than the jobs of Americans with fewer years of education.

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Excerpted from WSJ: The Jobs Picture Still Looks Bleak, April 12, 2010

The U.S. economy added 162,000 jobs in March. That sounds impressive until you look more closely.

• At least a third of them were temporary government hires to take the census—better than no job but hardly worth writing home about.
• The 112,000 real new jobs were fewer than the 150,000 needed to keep up with the growth of the U.S. population.

It’s far better than it was—we’re not hemorrhaging jobs as we did in 2008 and 2009—but the bleeding hasn’t stopped.

• The economy has shed 8.4 million jobs and failed to create another 2.7 million required by an ever-larger pool of potential workers. That leaves us more than 11 million jobs behind.
• The number is worse if you include everyone working part-time who’d rather it be full-time, those working full-time at fewer hours, and people who are overqualified for the jobs they’re in.

This means even if we enjoy a vigorous recovery that produces, say, 300,000 net new jobs a month, we could be looking at five to eight years before catching up to where we were before the recession began.

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Outlays from the federal stimulus have already passed their peak, and the Federal Reserve won’t keep interest rates near zero for very long.

And even households whose incomes have returned are likely to be residing in houses whose values haven’t—which means they can’t turn their homes into cash machines as they did before the recession.

Consumers have been shedding their debts like mad—often simply by defaulting on loans — but, their remaining burdens are still heavy. Debt averages $43,874 per American, or about 122% of annual disposable income.

Most Americans’ biggest asset is their homes. The “wealth effect” of the rising stock market is felt mainly by the richest 10%, whose net worth is largely stocks and bonds.

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What’s likely to slow the jobs recovery most, however, is the indubitable reality that many of the jobs that have been lost will never return.

The Recession has accelerated a structural shift in the economy that had been slowly building for years.

Companies have used the downturn to aggressively trim payrolls, making cuts they’ve been reluctant to make before.

• Outsourcing abroad has increased dramatically.
• Companies have also cut costs by substituting more computerized equipment for labor.

These cost-cutting moves have allowed many companies to show profits notwithstanding relatively poor sales.

Those who have lost their jobs to foreign outsourcing or labor-replacing technologies are unlikely ever to get them back. And they have little hope of finding new jobs that pay as well.

This shift also helps explain why …

• The unemployment rate for Americans with college degrees is now only 5%
• It is 10.5% for those with only a high-school degree, and …
• 15.6% for Americans with less than a high-school diploma.

The jobs of well-educated Americans, although hardly immune to foreign outsourcing and technological displacement, have been less vulnerable to these trends than the jobs of Americans with fewer years of education.

Full article:
http://online.wsj.com/article/SB10001424052702304222504575173780671015468.html

This entry was posted on April 12, 2010 at 7:45 am and is filed under Employment - Jobs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.