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3% Unemployment – I Remember It Well

Gorlovka, Ukraine - February, 26, 2014: Miners mine named after Kalinin work shift

It’s like a fairy tale from long ago – “Once upon a time, in our Western economies, there was 3% unemployment…”

It’s a far cry from today, as the US descends into the ugliest political contest we have ever known. Issues are ignored as the behavior of one of the two candidates dominates center stage. So it’s important not to forget the economic sentiments that underscored this campaign in the first place:

1. Job market displacement of non-college educated white men, fear that Mexican migrants will take more of their jobs, and one man’s uncanny grasp of the depth of their anger. (Trump)

2. Diminishing economic prospects of the Millennials,  their indignation over the fact that 99% of the world’s wealth is held by 1% of its population, and another man’s humanitarian vow to address these inequities. (Sanders)

Both of these positions are grounded in a universal employment crisis, and the uncertainly of the economic well-being of working people.

Economic disparity rankles us

With economic disparity in such sharp focus, I can’t help but think back to a time when unemployment was so low that as a young girl, with no post graduation training, I left high school and had my pick of entry level jobs. I was able to go quickly up the job ladder, until I doubled my salary within one year.

I kept thinking about this each time I watched my Generation X children struggling in the most meager of jobs during and after university. Things haven’t improved. These days young people my grandson’s age look ahead into a bleak economic future where even a post graduate degree won’t push them up the employment ladder. All this, while conscious that other groups in our society, notably people who worked in the manufacturing and construction sectors, have had no job opportunities for years. There is so much wrong with this—it denies the basic human desire to work, not only to satisfy a stable standard of living, but to bring meaning and a sense of order to life.

The causes of long-term unemployment

I appreciate the complexity of this. I’m aware that many forces have come together over the past few decades to bring about an untenable unemployment situation.

I first became aware of declining economic wealth during the early 1980s, when I came out of graduate school to find that everything had changed. The jobs that were there a few months ago, were gone. I completed my Masters in order to serve at a higher level, in administration, but realized after many months of searching, that this would never be available to me again. I remember it vividly because it was such a shock, and I feared for my two children, who were just entering adulthood. At the time, the Iranian oil crisis, and high interest rates created to stem an economic crisis, were blamed. But as always, there were more complex explanations underneath.

To use broad strokes in analyzing this and other periods in our employment history, here are some of the causes of job losses in recent decades:

-The Iranian crisis, and manipulation of monetary liquidity ( in the early 1980s).
-Globalizaton: Firms in industrialized countries began selling their products to other, less developed countries, in order to secure access to cheaper labor.
Displacement of men of prime working age from the work force (brought about by the 2009 recession and the decline in manufacturing and construction jobs).
-Higher wage rates negotiated by unions, leaving some out of the curve entirely.
-The downsizing of manufacturing due to technological changes.

Are we still blaming the immigrants?

In exploring the causes of this problem, one thing seems clear—there is no suggestion that unemployment in our industrialized countries can be explained away by the entrance of migrants and refugees. Rather there is evidence that they create jobs for others. What is emerging is another concern entirely—the effects of technological change.  on the way we work.

Artificial Intelligence is already a part of our lives. We hear about it everywhere, news about driverless cars, and digital personal assistants fascinate us and, at some level, excite us. The possibilities are amazing, we say.

Like always, there’s an elephant in the room

But look again. While the first wave of automation largely affected workers in factories, the approaching wave is destined to affect white collar workers as well.

Jerry Michalski, founder of REX, the Relationship Economy eXpedition, calls automation “Voldemort—the terrifying force nobody is willing to name”.

Geoff Livingston, author and president of Tenacity5 Media, writes, “I see the movement towards AI and robotics as evolutionary, in large part because it is such a sociological leap. The technology may be ready, but we are not—at least, not yet.”

He is right—we have not solved the questions of how to re-train displaced workers, how to support the thousand of workers struggling in the current “gig” economy, and how to care for workers who will be out paced entirely for the rest of their lives.
We are far from being ready.

22 thoughts on “3% Unemployment – I Remember It Well”

      1. Still the Lucky Few

        Okay, now I was able to watch the video. Whew! Food for thought! My next stop will be catching up to Dr. Michio Kaku.

    1. The fellow in the video is too simplistic. In fact, often American workers are replaced by people with H1B visas and have to train their lower paid replacements before they leave the company.

  1. You are so right! The causes of unemployment, the disappearance of manufacturing jobs, and other economic problems of our countries are complex situations. It is foolish to blame them on immigrants or on a President who has very limited power to influence business owners on their hiring practices. But we individuals are also responsible, to the extent that we are “living in the past” and not educating ourselves about robotics, automation, artificial intelligence, international trade, etc.

    1. Still the Lucky Few

      More importantly, I think, governments need to address the economic security net, so that people who will never fit into the mold don’t suffer unnecessarily. And there are many people who will fall into this category!

  2. I agree. Automation is going to wipe out a lot more jobs. Also the Wall Street Journal points out the long boom after World War II was unusual and we can’t expect it to go on forever.

    Americans expect the economy to be buoyant, not boring. Yet this expectation is shaped not by prosaic economic realities but by a most unusual period in history: the quarter-century that began in the ashes of World War II, when the world economy performed better than at any time before or since.

    Even if we supply a financial safety net for people displaced by automation, that doesn’t solve the problem of them finding a purpose in life, a feeling of connection. There’s a reason for the current drug epidemic.

    1. Still the Lucky Few

      That period was unusual. We were luckier than ever before or since that era—hence the name of my blog! I don’t believe the drug epidemic is tied to boredom, though (or having too much money) More like some serious psychological problems—untreated conditions like PTSD and ADHD play a part. Most of them need help, which they cannot get if they have no financial security.

  3. And who has the answers? It behooves all of us to consider these issues and join with others to solve them instead of waiting for a single person — a president — who will miraculously solve all our country’s problems.

    1. Still the Lucky Few

      No one person can work alone to solve the complex problems of a country—despite what one candidate claims. Thanks, Ann.

  4. I don’t know enough about your country, let alone my own country – in relationship to employment/business and how to get ahead, from wherever…

    But it feels similar to what is happening here, even though I’m on the edges of it all…

    (I have recently moved to a very quiet neighbourhood – both day/night – and make sure I don”t start falling out of my brain – I’ve been listening to a type of talkback radio – learnt a heap about life here and overseas, for sure. As some of your know from another blog including Ken Bone’s red sweater causing a rush in shops to buy one)!

    1. Still the Lucky Few

      I seldom listen to radio (use internet and television for my news), but in the past, I always had the radio on. Yes, it can be a learning experience!

    1. Still the Lucky Few

      That’s the reason I wrote the article. I am currently researching driver less cars, and the impact they will have on jobs. Quite scary!

  5. I know it’s popular to say our education system is crap, and maybe it is at the higher levels, but I’ve volunteered in Kindergarten and I see what elementary school kids are learning. It’s astounding. In order to “graduate” from Kindergarten, almost 60 years ago, I had to bounce a ball 10 times and say the Pledge of Allegiance. My granddaughter had to, among other things, successfully identify the subject and verb in a sentence, and construct a paragraph. (California public schools, low-to-mid socioeconomic location.) Where is this brain drain occurring, where the smart kids disappear somewhere before the need for H1-B visas? A thoughtful, motivating post, Diane.

    1. Still the Lucky Few

      It’s a few years since I taught primary school, but I thought the level of skill you talk about for kindergarten children is quite inappropriate. They should be learning social skills and having creative opportunities, plenty of time for more formal learning! I’m just now learning about H1-B visas, so can’t comment on that. There is always an outcry about how poorly prepared young people are when they graduate in Canada also. What’s needed in response to automation is life-long retraining of adults, as their jobs shift and change.

  6. This is a complicated subject, and you’ve made some strong points. I’m very taken with these lines: “There is so much wrong with this—it denies the basic human desire to work, not only to satisfy a stable standard of living, but to bring meaning and a sense of order to life.”

    1. Still the Lucky Few

      Thanks, Yea. In researching the effects of automation on our economy, I tend to refer to unemployment first, since that is the most pressing issue. But in looking far into the future, when AI may have caused a situation in which a great percentage of the population may not be working at all, it boggles the mind to think about how people will spend their time. Big implications for mental health, and our society in general!

  7. This is one of the most cogent explanations of the economy of the United States I’ve read this election season. Thank you for its clarity and logic. You’ve given me much to think about.

    1. Still the Lucky Few

      Thank you Aunt Beulah. Every time I write a piece, I learn so much myself! I’ve always wanted to understand the US economy better.

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