The Commonwealth Blog

Jobs

Jul 25, 2012 @ 2:23 PM by jzipperer

News Analysis
By Alex Wolinsky

According to the National Bureau of Economic Research, the Great Recession came to an end in June 2009. National output figures support this assertion, as GDP has surpassed its 2008 prerecession peak and continues to rise.

Despite this, much of the economy appears to remain depressed, and we currently approach the end of a fourth year of abysmal employment numbers. Unemployment currently stands at 8.2 percent of the labor force, well above the approximately 5 percent jobless rate prior to the recession, and its decline is excruciatingly sluggish. As a result, jobs and the labor market remain decisively at the forefront of political discussion.

A traditional recovery — one achieved through expansion of America’s conventionally strong industries, namely manufacturing and construction — might not, however, be effective or even desirable. This is because the economy has in the last decade undergone a revolution, of sorts, in which the driving force is no longer the production of physical goods but the conception and implementation of ideas. Indeed, as noted by UC Berkeley Economics Professor Enrico Moretti in his recent book The New Geography of Jobs, the most depressed areas of the country are those that have historically relied on manufacturing as an economic engine, and their situation has only worsened since 2008’s meltdown.

One might wonder why a recovery with its roots in traditional sectors is not an ideal target — after all, shouldn’t an economic rebound driven by any industry be appealing? There are reasons to believe that such a recovery might be short-lived and could even compromise the long-run economic well-being of the country. The United States is no longer the world’s dominant manufacturer, and it’s unlikely that it will ever regain that role. The reason for this is that other nations — especially China — possess larger pools of unskilled labor and thus far cheaper production overall. American workers produce far more goods per hour of labor, but attempting to compete with China’s sheer manpower is essentially hopeless and even counterproductive, because doing so would consume labor resources better allocated elsewhere.

So if not through an expansion of manufacturing and a proliferation of blue-collar jobs, how can America's leaders take action to combat unemployment?

One answer being proffered is as simple as it is clichéd: support greater access to higher education, and encourage youth to pursue advanced degrees. According to the 2009 American Community Survey, only 27.9 percent of Americans aged 25 or older have a bachelor’s degree, and a mere 10.3 percent possess advanced degrees. Given the level of expertise required for jobs in ideas-based fields, these numbers, especially the latter, are wholly inadequate.

At its peak, manufacturing directly employed nearly one-fifth of the labor force. The nation’s emerging economic engine cannot hope to approach this figure unless a larger proportion of the population acquires the necessary skills. An expansion of education might thus be in order to secure the nation’s economic future.

• For a list of programs examining the employment problems of today and tomorrow from a variety of angles, see The Commonwealth Club's August series The Future of Work