Unemployment Rate Jumps to 26-Year High (Update2)

Unemployment Rate Jumps to 26-Year High (Update2)(bloomberg.com)

7 points by newacc 16 years ago | 5 comments

patio11 16 years ago |

I think we're seeing a growing divide between two economies which are very, very dissimilar to each other: people who have commercially valuable skills, and people who do not.

In good economic times, the structural changes in the economy are largely masked: construction had an insatiable need for strong arms to carry materials and swing hammers, and the service industries were booming. In weak times, companies start to look around the office and say "Hey, who here is worth the price differential versus an 18 year old in $COUNTRY_ABSTRACTED_TO_AVOID_COMPLAINTS_OF_RACISM"

There does not seem to me that there will ever be an obvious economic reason to prefer a, e.g., a 40-something barely literate American with an arrest record over four outsourced workers. Only one of those counts for our unemployment rates, though.

The unusual deepness of this economic funk is also testing received bits of wisdom, such as "a BA automatically means you have economically viable skills."

Dilpil 16 years ago |

I wonder how much of this increase is due to the way unemployment is calculated. When workers stop looking for a job, they are no longer counted as unemployed. When they start looking for a job, I assume they are once again counted.

Given that we had been hearing a good amount about economic recovery and lowering unemployment, is it possible that formerly discouraged workers got back into the job market? Nothing fundamental seems to have changed since 6 months ago.

vanekl 16 years ago |

And it's falling if you're skilled.

lallysingh 16 years ago | |

Yeah, strange. At work I've been doing a lot of technical interviewing, and there seem to be lots of people hiring good programmers.

On the other hand, these are some persistent layoffs.

Are the workers made unnecessary by either lowered product demand or increases in productivity? The former means a big % of our economy could depend on a boom/bubble structure. The latter means that these people will need some serious retraining/adjustment before they're back in the workforce.

vanekl 16 years ago | | |

One, the US is in the midst of a major restructuring of the economy. It's going to take time. A lot of us are going to be playing musical chairs until a more efficient allocation of our labors occurs. It's as much about /how/ our talents should be allocated in this new economy as opposed to our talents. That's a subtle difference, but an important distinction.

Two, Americans don't move around as much as they used to. We used to move about once every 5 years. Now, when a recession hits, we don't move to where the jobs are as much. That slows the recovery down.

Three, there are major pieces of legislation that have not been resolved. That does not help the business community decide whether it's OK to hire. The quicker the legislation is handled (one way or another), the faster the restructuring of the economy and the faster people will be put back to work.

Four, "productivity" in the midst of a recession is just a fancy name for fewer workers doing more work because their co-workers were let go. This new-found "productivity" wont last long, and will go back to the mean as soon as rehiring starts.

Five, there will /always/ be a demand for people to fix other people's screw-ups (if you're in the IT industry). The last two jobs I was on they were looking for somebody who can migrate their ancient systems to something more modern. People are figuring out that's it's really easy to build things, but quite a different matter when it comes time to migrate.

Six, we are working our way through a large bubble. This recession says more about the bubble than the skills of the labor force. But, yes, major labor adjustments will be made.

Seven, businesses are scared and banks wont lend to small business. It's not that labor is unnecessary, but that next to nobody wants to take the risk in a down economy, or those who do can't get the capital. Some well-managed companies haven't laid off anybody and are thriving (e.g. Apple). Google has started re-staffing, so they see things picking up. It will take time, but it's getting better. The well-managed companies see the shift and are first movers.

Eight, this economic restructuring is normal. It's scary if you've never lived through one before, but it's by no means unique. It's actually more than normal, it's occasionally necessary to force a restructuring and wring out the excesses.

Nine, things are better than they appear on the surface. We have started the recovery but it's hard to tell because the lagging indicators are still down. Just because pessimism is in vogue doesn't mean things are getting worse.

Lastly, we have finally slipped our shackles. No more WinTel. Instead, we get to figure out the best way to handle multi-core. RDBMs are no longer de rigueur; we get to apply NoSQL where it makes sense. Hardware is so cheap that instead of doing backups we just use clustering or multiple-allocation. RAM is so cheap that we can put the whole internet in it. Disk is morphing to solid-state right before our eyes. The opportunities are far greater than they have ever been. And those of us who have been keeping up will lead the way.