Wednesday, August 24, 2011

"Harsh truths" about today's unemployment

Fortune columnist Nina Easton takes a hard look at the data on unemployment; it is not a pretty picture:
  1. Almost half of the unemployed have been out of work for a year or more.  They have lost skills and good work habits.  Hiring managers will reject them out of hand.  Many of them will never work again. 
  2. The federal government has 47 different training programs costing $18 billion a year.  Yet many employers have difficulty finding qualified workers.  
  3. Extended unemployment benefits (up to nearly two years) are making the unemployment rate higher because the unemployed often do not get work until their benefits run out.  Coincidence? No. 
My take on this: much of our unemployment problem is microeconomic in nature; workers in certain industries (finance, construction, real estate) and areas (Nevada, Arizona, Florida) have to adjust to a completely new landscape.  Macro policy measures, such as more quantitative easing by the Fed or another short-term tax cut, are unlikely to make much of a dent in the problem.  Also, as Easton notes, does our society really want to give up on a generation of workers?  That is the path we are on.  With paralysis gripping our political system, businesses need to start thinking of their own solutions. 


  1. Dr. Allen, I think there are two generations lost here - the one mentioned in your post and the college grads who, although educated, do not have the skills that are needed to fill the scarce positions available.

    It worries me that economic uncertainty fears will keep both generations from participating in the workplace and that we'll have a non-diverse workplace that doesn't understand how to create products and services that appeal to baby-boomers and millenials, the two generational waves that will drive demand.

    In Spain, they have the Ni-Ni generation ("Ni estudios Ni trabajo" no college and no job), who were people who dropped out of school to take good paying jobs in construction and hospitality services - both tied to tourism and foreign investment. Come the economic bomb of 2008 and they have nothing and depend on family.

    It would be a total shame if we ended up in a similar situation but with a generation that is educated and ready to work.

    (I've told you in person, but I'll do it again, I love your blog, keep it up!)

  2. Your last sentence says it all. Stop relying on the federal government for solutions. Communities and businesses must take matters in the own hands for this to improve.