Tuesday, August 16, 2011

The Future Is Now

From a comment left over at Dave Schuler's blog:

Tyler Cohen: Few people want to come out and utter the possibility [about the currently unemployed - ed.]: “They’re just too stupid and too stubborn to lower their wage demands."

This just doesn't match up with the reality I have experienced personally. When you offer to work for less, or take a job that pays less than what you made before, the employer will invariably say, "Well, you will just leave for another better paying job at first opportunity, so I won't hire you." (It doesn't seem to occur to them that this is always true, but that's another issue.)

This has been my experience, which makes it merely anecdotal. However, I know a large number of unemployed people these days, and every single person who has been out of work for longer than two months has had this same experience, multiple times. There are no exceptions, and this is something I ask about when meeting new people who are unemployed. So I am certain that this is actually how employers are treating potential new employees offering to work for less, in the Orlando area at least. I have no reason to suppose that most other areas work differently.

Offering to work for less will not get you a new job when the current employees will work for less (rather than lose their jobs) AND when there aren't enough jobs for everyone that wants one.

So it comes down to this: The cause of all this unemployment is that there aren't enough jobs.

There aren't enough jobs because there isn't enough demand for businesses to expand (especially when they are upping their productivity levels by working their current folks until they fall apart), nor enough demand for new businesses to form.

There isn't enough demand because functionally people have less to spend. The problem of newly unemployed people spending less is obvious. The same is true for part-timers who used to be full-timers. However, people with jobs who have had their hours cut (if wage earners) or their salaries reduced (if salaried) also have less to spend. Additionally, as (medical) benefit expense goes up, more gets passed on to the workers, thus reducing their effective spending power further. Add in reduced quality of jobs because of globalization, too.

On top of all of that is the personal debt overhang. Personal debt is at huge levels in the nation. That means more and more of diminishing income levels are going to servicing debt, or should be.

And realize that debt is ultimately just a way of satisfying demands now that otherwise couldn’t be satisfied until the future. That’s great as long as the future remains safely in the future. But what happens when the future is now? That is what we are experiencing.

No comments: