The Unemployables Aren’t Unemployable; Shame On You, Mainstream Media For Even Suggesting Such A Thing

Posted by politicalpartypooper on August 16, 2010

The geniuses in the White House and the so-called economists are calling it “Structural Unemployment”.  That’s their moniker for the record number of people (6.55 Million ) who have been unemployed for twenty-seven weeks or longer as of July, 2010,according to the U.S. Bureau of Labor and Statistics.  And that number doesn’t even include the number of people (8.5 Million) who have been forced to work part-time because their hours were cut or they can’t find full-time employment.

Of the long-term unemployment, economist John Lott, a FoxNews contributor, had this to say:

“While most discussions assume that the long time that people are unemployed shows the need for longer benefits, there is another possibility: the unprecedented benefits are the cause, not the cure, for the current long-term unemployment.”

You would expect nothing less from a fervent Free Trade proponent and Trickle-Down, anti-regulation-of-anything advocate.  But that’s not the point.  His assertion that long-term unemployment benefits cause long-term unemployment is bunk.  Lack of demand is what causes long-term unemployment, pure and simple.  The idea that a fellow on unemployment receiving $300 a week would rather keep receiving that than earn twice to three times that amount while working is ridiculous to even suggest.

The Economist said:

“In the latest employment report, the number of long-term unemployed rose again, as did the share of all unemployed who fall into that category—now nearly half.And then there are other issues that seem intuitively likely to be causing labour market problems. Skills mismatch between the unemployed and the jobs being created is one.”

Skills mismatch?  And people take this magazine seriously?  Nevertheless, “skills mismatch” is the very demon behind our “structural” long-term unemployment, according to just about every mainstream media outlet you go to.  I wish I had been logging all of the times I’ve seen some serious economist discussing structural unemployment with some serious talking-head-with-perfect-and-curiously-non-receding-hair.  The list would be biblical.

In essence, what the Mainstream media is attempting is to package a convenient description for a phenomenon they can’t explain or understand.  If there is long-term unemployment, it must be because the unemployed are undesirable hirables as they stand, or “unhirable “unemployables”.

But one blogger put it perfectly:

“Another thing the economists focus on is the idea of a skill mismatch. Structural unemployment, they say, occurs because workers don’t have the particular skills demanded by employers. While there’s little doubt that there’s some of this going on, again, I think this issue is given way too much emphasis. The idea that if we could simply re-train everyone, the problem would be solved is simply not credible. If you doubt that, ask any of the thousands of workers who have completed training programs, but still can’t find work.”

That’s only part of the overall answer, but a very necessary part.Instead of asking thousands of people, why not just ask yourself why there are almost six unemployed applicants for every new job created?  Surely you can come up with an answer that is better than “workers don’t have the particular skills demanded by employers.”  After all, if that were the case, we’d expect to see the proportion of applicants to openings to be much lower.

Now some stats and sources, so you can see and understand what the real structural problem has been and is.

“For example, furniture manufacturing has been transformed by offshoring in recent years. Imports have surged from $17.2 billion in 2000 to $30.3 billion in 2006, with virtually all of that increase coming from low-cost China. And the industry has lost 21% of its jobs during the same period.

Paul B. Toms Jr., CEO of publicly traded Hooker Furniture Corp., (HOFT ) recently closed his company’s last remaining domestic wood-furniture manufacturing plant, in Martinsville, Va. It was the culmination of a wrenching process that started in 2000, when Hooker still made the vast majority of its products in the U.S. Toms didn’t want to go overseas, he says, but he couldn’t pass up the 20% to 25% savings to be gleaned from manufacturing there.

The lure  of offshoring works the same way for large companies. Byrne of Accenture is working with a “major transportation equipment company” that’s planning to offshore more than half of its parts procurement over the next few years. Most of it will go to China. “We’re talking about 30% to 40% cost reductions,” says Byrne.

Yet no matter how hard you look, you can’t find any trace of the cost savings from offshoring in the import price statistics. The furniture industry’s experience is particularly telling. Despite the surge of low-priced chairs, tables, and similar products from China, the BLS is reporting that the import price of furniture has actually risen 6.7% since 2003.”  Newsweek, June, 2007

Twenty to thirty percent savings in costs, but the prices have gone up?  That would explain the corporate profits.  But that leads to another conclusion:  Demand precludes cost.  In other words, if demand for a product or sector is high, that demand will bear significant cost increases, within reason.  That’s just one example of why high corporate taxes, historically, have not led to job losses.  It’s also why even though costs were reduced when jobs were outsourced, corporations felt confident enough to raise prices within that sector.  Demand, it turns out, is even more important than we thought.

You might like this little tidbit from  six years ago:

“If one thing illustrates the kind of year the Bush administration has stumbled and bumbled its way through in 2004, it was the comments earlier this week by the president’s chief economic adviser, Greg Mankiw.

Mankiw wrote that the movement of U.S. jobs overseas due to cheaper labor costs – “outsourcing” he dubbed it in a remarkable display of political tone deafness – would prove “a plus for the economy in the long run,” and was simply “a new way of doing international trade.” “

My, my, my, how the chickens have come home to roost.  Here’s a confirmed list of companies exporting American jobs overseas.  And here’s something from The Economic Policy Institute:

The Economic Policy Institute estimates that between 1993 and 2000, our lopsided trade policies, reflected in the explosive increase in the U.S. trade deficit, cost Americans a net 3 million jobs and job opportunities. The growth in the NAFTA trade deficit alone is associated with nearly 900,000 lost jobs and job opportunities through 2002.

That’s eight years ago.  If that number doubled over the next eight years, it explains the 6.55 Million Long-Term Unemployed in America.  And that’s just NAFTA.  We haven’t even begun to count the effects of exporting jobs to China and India.  These fellows try:

  • Forrester Research Inc. predicts U.S. employers will move 3.4 million white-collar jobs and $136 billion in wages overseas by 2015. The outplacement firm Challenger, Gray and Christmas estimates the number of service-sector jobs moving overseas each year will hit 588,000 by 2005. A University of California at Berkeley report finds 14 million jobs are at risk of being sent offshore, and predicts job losses will exceed the Forrester study’s projections.
  • Gartner Inc., a high-tech forecasting firm, estimates 10 percent of computer services and software jobs will be moved overseas by the end of this year, while a study by Meta group projects 40 percent of corporate tech operations will move offshore by 2008.
  • A survey by Deloitte Research found the world’s 100 largest financial services firms expect to shift $356 billion worth of operations and about two million jobs to low-wage countries over the next five years. Another Deloitte survey of 42 global telecom operators projects 275,000 jobs in the sector will be sent off-shore by 2008.
  • (2002 AFL-CIO)

That last section was all taken from The AFL-CIO’s website in 2002.  Where are we today?  Right where they predicted, and headed right where they said we would go.  You can’t move 40% of one sector’s jobs and 10% of another’s and millions more from a third and not expect long-term unemployment.  That there is even a mystery over this is as frustrating as it is mind-boggling.

But don’t count on hearing the why and how from Anderson Cooper, Bill O’Reilly, or Chris Matthews.  They either don’t understand it, or don’t want to.  I’m guessing it’s the first one.  Our Mainstream Media won’t talk about this and you sure as hell can’t count on your elected official to comment on it, except to say what politicians have always said: “We ought to do something about that.”  Yup. We ought to.  But to even suggest “protectionist” policies to anyone in Washington or on the Conservative side is akin to being a bomb-carrying leprechaun in Buckingham Palace.

They’ll tell you that tariffs and taxes are protectionist and evil!

Since when has protecting American jobs been evil? Will someone please answer that question for me?

The unemployables aren’t unemployable.  They’re just the victims of a vicious policy of exporting American jobs and wealth to foreigners.     Ω



One Response to “The Unemployables Aren’t Unemployable; Shame On You, Mainstream Media For Even Suggesting Such A Thing”

  1. Bill the Broker said

    NBER Working Paper No. 13450
    Issued in September 2007
    NBER Program(s): DAE ITI

    This paper calculates the Anderson-Neary (2005) trade restrictiveness index (TRI) for the United States using nearly a century of data. The results show that the standard import-weighted average tariff understates the TRI, defined as the uniform tariff that yields the same welfare loss as the existing tariff structure, by about 75 percent. The static deadweight welfare loss from the U.S. tariff structure is about one percent of GDP after the Civil War, but falls almost continuously thereafter to less than one-tenth of one percent of GDP by the early 1960s. On average, import duties resulted in a welfare loss of 40 cents for every dollar of revenue generated, slightly higher than contemporary estimates of the marginal welfare cost of taxation.

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