Thursday, May 06, 2010

They Ain't Comin' Back

More evidence that even as the economy recovers, job growth will continue to lag comes from a story in today's WSJ based on a survey of CEOs (sub req):

Despite improved employment expectations, jobs remained a weak spot. The majority of CEOs surveyed, 72.2%, said the pace of new hires would remain stable. Most also expected the unemployment rate to remain in the still-high range of 9.1% to 9.5% in December 2010.

Indeed, goods-producing industries continued to shed jobs in April, according to the ADP report. Service-providing industries added jobs, leading to the overall increase.

Employment is following a gradually rising trend, said Joel Prakken, chairman of Macroeconomic Advisers. "But the gains are fairly modest so far, not yet the kind of gains that would be necessary to push the unemployment rate down or to be consistent with a stronger recovery," he said.

But even more disturbing is the prospect that many of the jobs that have been lost will never come back. Another story in today's Journal looks at what the future might hold for the unemployable man (sub req):

That would be good news, but not good enough. It's hard to exaggerate how bad the job market is. Here's one arresting fact: One of every five men 25 to 54 isn't working.

Even more alarming, the jobs that many of these men, or those like them, once had in construction, factories and offices aren't coming back. "A good guess…is that when the economy recovers five years from now, one in six men who are 25 to 54 will not be working," Lawrence Summers, the president's economic adviser, said the other day.

This is not one of the many things that can be blamed on subprime lending, inept regulators or Goldman Sachs. "The Great Recession has reinforced prevailing labor market trends that were under way long before the recession," David Autor, a Massachusetts Institute of Technology economist, observed in a recent paper commissioned by two Democratic-leaning think tanks, the Center for American Progress and the Hamilton Project.

Demand for workers who haven't much education--which includes many men, particularly minority-group men--is waning. A shrinking fraction of them are working. Some are looking for work; some have given up. Some are collecting disability benefits or an early-retirement pension. Some are just idle. On average, surveys find, the unemployed in the U.S. spend 40 minutes a day looking for work and 3 hours and 20 minutes a day watching TV.

One in six America men being in a state of permanent unemployment has profound implications for the United States economically and culturally. A life lived on the perpetual dole doesn't mesh well with the expectations of the American Dream. If this indeed is the situation we find ourselves in five years from now we'll have become much more like Europe much sooner than most have would ever thought possible.