Sunday, September 7, 2008

What Can We Do About Unemployment?

In the middle of all of the buzz around the two recent political conventions, another unpleasant issue came to the forefront again — our steadily rising unemployment here in the US.

There are a lot of opinions of the subject of unemployment. Some come from academic experts and TV talking heads. And then there are the perspectives of those who have been there. As a member of the second group, I can confidently say that many of those who haven’t been there really have little idea of what they are talking about. So can I take this opportunity to tell it like it is?

For one thing, few issues have been so cloaked in denial. Incumbent politicians no matter what their political stripe want to paint as rosy a picture as possible about the employment landscape. After all, negative news in this regard usually leads to their unemployment after the next election. With unemployment figures being released by government agencies and worked over by political spin doctors, it’s no wonder that many have not grasped the serious problems in our job market until recently when things have gotten too bad to try and hide it anymore.

When I first took a college course in economics discussing unemployment, there was a term used called
full employment which said that at around 5% unemployment, everybody who was really looking for a job could find one. Especially the commentators who favor conservative economic policies would hang their hat on this to say that the economy was just fine. If those few people were having trouble finding work, a better education for them would fix that just fine, they said. But maybe not.

ith our unemployment rate being at about 5% in recent times, if we really had full employment, why are so many employers getting inundated with dozens or even hundreds of resumes? Maybe there are a lot more people looking for work than the government unemployment figures indicate. For one thing, jobless claims in the way of unemployment compensation are used to assess the job market. But what happens to those who exhaust their benefits? What about those who become so discouraged that they give up looking for a job? And perhaps most importantly, what about those who are forced to accept a much lower paying job than their previous one just to try and stay afloat? They may be underemployed, but they are ignored as part of the unemployment problem because after all, they are working. But this recently issued worker report card has the ugly details.

In its first national labor scorecard, the Rutgers School of Management and Labor Relations said more than 10 percent of Americans are unemployed, discouraged from seeking work or underemployed. That is a nearly 25-percent increase from one year earlier.

So the first step in getting government to try and help people who are out of work is to acknowledge their existence. But the more difficult step is to figure out what (if anything) the government can do to help. After all, not everything is within its control.

In my view, there are a number of recent trends that are making unemployment more difficult for today's job applicants.

Internet job postings are more of a curse than a blessing. At first blush, the opposite should be true! After all, the job seeker can now sit at his or her desk and scan hundreds of job openings on the computer. What’s not to like? For one thing, companies are now routinely bombarded with more resumes than they can sometimes even read let alone respond to with interview opportunities. The result is that an already selective job market can become ridiculously so. To take an extreme example, a job applicant who meets say, 99% of the posted job requirements may not even get an interview since that employer is in the position to hold out for candidates who meet 100% of the requirements. In this context, the department title of Human Resources in many companies takes on an Orwellian identity in that they no longer look to make use of people for the resources they can offer but are instead putting their energies into looking for reasons to reject them to keep the number of applicants to a manageable number. So it should not be surprising that according to almost all job search experts, looking for jobs on the Internet has a low percentage of success that too many people nowadays rely on exclusively instead of other job search techniques like networking that are considered far more effective.

Businesses more than ever are trying to make do with the absolute least number of employees possible. When the economy is going through difficult times, businesses understandably cut back. But even when profitable times return, the mindset of making do with fewer people still remains. And for companies that provide increasingly more costly health insurance for each of its employees, there is a powerful incentive to make do with fewer employees even if it means paying the existing ones overtime to get the work done. Having said that, for many non-hourly employees, unpaid overtime is part of the deal associated with keeping ones job.

In addition to American jobs lost to outsourcing are jobs lost to immigrant workers. Most of us know about the jobs that immigrants do “that Americans won’t do”. (By the way, anybody who watches
Dirty Jobs on the Discovery Channel knows there are no jobs that Americans won’t do — they just don’t want to be paid slave wages to do them!) But not as well known are the professional jobs that go to H1-B visa holders under the questionable claim that we have a shortage of graduating science and engineering students. (Note: Although I usually disagree with Lou Dobbs’ extreme immigration views, I think he is correct on the H1-B issue.)

In a 2006 New York Times op-ed column by David Brooks
The Nation of the Future, this supposed shortage of scientists and engineers is addressed:

What about the shortage of scientists and engineers? Vastly overblown. According to Duke School of Engineering researchers, the U.S. produces more engineers per capita than China or India. According to The Wall Street Journal, firms with engineering openings find themselves flooded with résumés. Unemployment rates for scientists and engineers are no lower than for other professions, and in some specialties, such as electrical engineering, they are notably higher.

Especially as an out of work electrical engineer, I can tell you that the older more experienced professionals are having perhaps the greatest difficulty of all in finding work. But I will address that in my next article along with some possible solutions to this whole mess.

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