The Christian Science Monitor‘s Mark Trumbull has an excellent new piece, “Six Reasons Why America Can’t Create Jobs.” Namely:
1) ‘The rent-a-worker economy’: a reliance on contract workers and outsourcing. Contract workers are easier to let go when conditions worsen. And having made do with less, many companies are eager to try to do the same even when conditions improve.
2) ‘The résumé gap’: a lack of skilled workers, or least of workers with the skills businesses want.
3) ‘Rise of the “plutonomy”‘: an increasingly skewed distribution of wealth is bad for aggregate demand because the rich don’t consume as much of their income as poor and middle-class people do.
4) ‘The China syndrome’: China can make high-tech products too, and often more cheaply than we can, even after taking productivity differentials into account.
5) ‘Somebody start a company!’: ‘. . . start-up activity has plunged. Running 25 percent below its 2006 peak, it is at its slowest pace since the Labor Department began tracking the activity in 1994.’ Reasons cited are tight funding and ‘high uncertainty and low confidence about launching new ventures in a weak economy.’
6) ‘When a home is a dungeon’: The mortgage debt overhang is still large — 11 million Americans are “underwater,” i.e., they owe more on their mortgages than their homes are currently worth. For this and other reasons, consumers are less willing to spend, even relative to a year ago.
The article tries to end on a hopeful note by citing some companies that are actively hiring, but it also notes, ‘Still, overall the country would need to generate about 21 million new jobs by the end of the decade in order to return to a 5 percent jobless rate.’ Let’s do the math: September 2011 to December 2019 is 8*12 + 4 = 100 months. So the economy would have to generate an average of 210,000 jobs per month for the next eight years (and four months) to get unemployment back to its average rate for 1997-2007. Keep that number in mind every time you see a monthly employment report. Number of times since last summer that the U.S. added 210,000 jobs in a month: 2. And the total for August was 210,000 jobs short of that goal.