What if the Unemployment Rate Were 90%

The Reported Unemployment Rate is Misleading

Stories of Seclusion: Diary of a Laid-Off Man

Today's installment in my PsychologyToday.com series, Stories of Seclusion, tells the composite story of how a middle-aged man reacted to being "laid off."

The Incredible Disappearing Job: A five-point plan for creating jobs

As most people know or at least intuit that the low unemployment rate masks the real job situation for many millions of Americans. 

My Time.com essay today, The Incredible Disappearing Job, offers a five-point plan for addressing the problem.

Economic Misfits: When You Don’t Fit In Our Economic World

Some people don't find desirable paid work throughout their lifetime. What might they do? What might society do? I tackle those questions in my PsychologyToday.com article today. HERE is the link.

The True Underemployment Rate

A more accurate way to compute the underemployment rate would include:

• Unemployed and actively looking for work (currently 9.8%)

• Discouraged workers. Those who'd like to work but have given up. (another 10%)

• Underemployed. Those working part-time who'd like to work full time (another 10%)

• Misemployed job level. Those working at a lower-level job than they're qualified for (I estimate another 15%)

• Misemployed interest area. People who dislike their field of endeavor but felt forced to be in it because of a lack of jobs in a field they're interested in, for example, the arts. (I estimate another 20%).
  

In sum, I believe that well over half of Americans are not doing work they're satisfied with. (And that doesn't count the many people who don't like something about their particular job: their boss, coworkers, the employer's ethics, etc.)

What to do to reduce the underemployment rate?

• A national jobs database so employers and employees could more efficiently be matched.

• Career advising starting in the 8th grade so more people could, early on, identify a well-suited career goal.

• A public service announcement campaign encouraging people to hire tutors for their kids, personal assistants for themselves, and companions for their elderly relatives. That would create millions of pro-social jobs that currently don't exist.

• Have all high school students take a course in ethical entrepreneurship. People with new business ideas create jobs while meeting the citizenry's unmet needs.

America the Jobless

To keep clients from giving up, career counselors need to appear optimistic. And to avoid our feeling disingenuous, in reading the tea leaves, we unconsciously tend to overweight the positive.

But I just read the cover story of the March 2010 issue of The Atlantic: "How a New Jobless Era will Transform America." (Thanks to reader Scott Steinbrecher for emailing it to me.) After reviewing a wealth of research, it concludes that, especially for men and for people without a designer-label sheepskin, ever fewer people will be earning a middle class living.

The article's negativity somehow gave me license to, for this article at least, to replace my optimistic bias with a truly honest appraisal of America's job future.

My career counseling clients, especially the men, are having a helluva time landing a decent job. Perhaps I'm a lousy career counselor or my clients are a bunch of losers but I don't believe either. I think the unemployment rate and even the underemployment rate grossly underestimates how difficult it is to land a white-collar job that pays a middle-class wage.

The severity of the problem is made clear from an example cited in that Atlantic article:

Last spring, an organization called JobNob began holding networking happy hours to try to match college graduates with start-up companies looking primarily for unpaid labor. Julie Greenberg, a co-founder of JobNob, says that at the first event, on May 7, she expected perhaps 30 people, but 300 showed up. New graduates didn’t have much of a chance; most of the people there had several years of work experience—quite a lot were 30-somethings—and some had more than one degree. JobNob has since held events for alumni of Stanford, Berkeley, and Harvard; all have been well attended (at the Harvard event, Greenberg tried to restrict attendance to 75, but about 100 people managed to get in), and all have been dominated by people with significant work experience.When experienced workers holding prestigious degrees are taking unpaid internships, not much is left (for everyone else.)

And it's not surprising. Unless absolutely necessary, why in the world should an employer pay an American $50,000-$100,000 a year, plus benefits including health care, social security, disability, retirement, worker's comp, 12 weeks unpaid (and some in the Obama Administration want it to be paid leave.) unemployment insurance, fear of wrongful termination suits, etc., etc.? Increasingly, employers are choosing to get work done by automation, part-time/temp workers, and offshoring. The latter is becoming ever more prevalent even for the previously thought-to-be-immune knowledge work, as Asian universities are revamping their curriculum to emphasize creativity, entrepreneurship, etc. And all those Asian workers can be hired for a fraction of the cost of an American.

Too, the uncontrolled inflow of illegal immigrants exerts downward pressure on salaries. The average illegal immigrant has little education and poor English skills and so is willing to do low-level jobs, on which they pay little or no tax. That floods the market of applicants for higher level jobs thus driving their salaries down, and making it harder to land a job at all.

I don't believe there's a solution that won't require decades. In a previous article, I've touted using K-16 schools to create a nation of entrepreneurs, but that would require a generation or two. Until American wages and benefits decline to near the world average, unless you're a star, the main source of well-paying jobs will be self-employment (often risky) and the U.S. government. And those jobs will dwindle as there's less worker income to tax and the government must stop going deeper into debt and printing more money lest China and other lenders deem the U.S. utterly credit-unworthy and/or call in their existing loans to us.

For the foreseeable future, ever more Americans will have to settle for $10-an-hour jobs, living very modestly, paycheck to paycheck, with little or nothing saved for retirement. We'll work 'til we drop...if we're lucky enough to have a job. It's part of the decline and fall of the American empire.

A Pessimistic View of the U.S. Job Market

Observers such as Harvard's Tammy Erickson argue that, at least long-term, U.S. job seekers especially the educated, will find it easier to find employment.

I strongly disagree. While the Obama stimulus plan may short-term create some government and government-mandated jobs, I predict that the U.S. unemployment rate will, over the coming decade at least, continue to increase.

The following factors will dramatically reduce the need for U.S. employees:

Ever-accelerating automation fueled by dramatic increases in the cost of employing people. Most of these costs will come as the result of the already large but likely to grow still larger government-imposed mandates on employers. Here's just one example. The Family And Marriage Leave Act, because of its heavy fraudulent use by employees wreaks havoc on workplace. That burden will become even more onerous if it becomes paid family leave, which the Obama administration advocates. In addition, wrongful termination, sexual harassment, and racial discrimination grievances and suits grow as do demands for "accommodations" for everything from depression to hyperactivity (to conform to the Americans with Disabilities Act.) Health care costs will continue to grow and be cost-shifted to employers under Obama's plan--those costs will include paying for the 45 million uninsured, who are low-income or unemployed and thus would pay little or nothing into the system, leaving the employer and taxpayer to foot their health care costs.

Globalization. Ever more work product can be transmitted over the Internet, which increases the possibility of offshoring. And while offshoring 1.0 was only modestly successful, it is being re-pursued with a vengeance because companies are now armed with the knowledge it takes to do it successfully. A net saving of 35% is now standard and Accenture, for example, has a large and growing business in helping companies to offshore employees. The public is unaware of the extent of offshoring because companies saw the anger it engendered among the public even when unemployment was low. So, now offshoring is done with as little publicity as possible.

In addition, other countries, notably China, India, Russia, and Brazil, are producing ever more and better products and services, at a much lower cost that U.S. products and services.

The continued elimination of the 52-week-a-year/lifetime employee. Workers are becoming fungible work units, used only as needed. That will mean a dramatic reduction in the number of U.S. full-time-equivalent employees.

The greening of America. Environmental restrictions and voluntary de-emphasis on materialism will result in a contracting economy and, in turn, fewer jobs.

The tax increases on companies. The Democrats, which all signs suggest will be in power for a long time, want to fund their expansion of government by printing money and increasing taxes on companies, which will reduce the amount of real dollars companies have to hire people and to develop new products, which in turn, would have created more jobs.

All signs point to these being long-term and potent factors, so I cannot envision a realistic scenario under which the unemployment rate will decline except perhaps temporarily in late 2009 or early 2010.