Wednesday, February 10, 2010

The Great Depression 2.0

Wake up. For many, it's a Depression by Bob Herbert:
The highest group, household incomes of $150,000 or more, had an unemployment rate during that quarter of 3.2 percent. The next highest, incomes of $100,000 to $149,999, had an unemployment rate of 4 percent.

Contrast those with unemployment in the lowest group, annual household incomes of $12,499 or less. Their unemployment rate during the fourth quarter of 2009 was a staggering 30.8 percent. That's more than five points higher than the overall jobless rate at the height of the Depression.
It's short. Read it!


  1. The quoted unemployment figures for the Great Depression are low, because they defined "unemployed" differently; for example, women weren't counted unless they were head of household- widows, or single woemn living alone, which was uncommon then. Plus they counted only citizens; unemployed immigrant seasonal farm workers weren't counted. I've seen estimates that by modern reconing, GD unemployment rates hit 50%.

    That said, yes, there's been an enormous upwards shifting of jobs. The major reason for this is that the jobs for the lower quintiles are disappearing- the private sector hasn't created a new job in the last eleven years! For every "new" job created, one or more jobs has gone away permanently- and those new jobs require not merely education, but recent education; a ten year old degree is nearly worthless in the new job market, because the technology involved didn't exist when you went to school.

    As I discuss in my blog , this situation is only going to get worse, not better. And none of the traditional government actions will help. Raise minimum wage? That will only result in more jobs disappearing forever; just as one example, I have seen totally automated fast food machines- it is technically possible to run a burger joint employing only a cashier and bagger. Make human labor more expensive, and the investment will become economical. There already exists enough robot machinery for one janitor, supervising robots, to do the work of many- robotic vacuums, floor polishers, even wastebaskets that go to the basement, empty themselves into the dumpster, and return! There is an office building here in Indianapolis that has robot window washers crawling up and down the sides of the building.

    The lower quintiles cannot compete- and even the middle quintiles are being hard pressed. Highly trained machinists and operators of all kinds are going the way of the dodo. Ditto many purely white collar jobs. We have to find a way to accomodate this, we must design an economy and society that allows people to exist when they are not, in the old way of reconing things, necessary.

  2. Joel, I admired your summary at your blog; it's solid.

    I think we need 20-hour work weeks. The question isn't how to create work. It's how to share both responsibility and wealth.

  3. Regarding bad laws and laws that have outlived their purpose, I've long wished there was a ten year limit on laws. In most cases, they would probably be rubber-stamped for another ten, but I suspect many laws would be allowed to quietly disappear.

  4. Oh, as for hours, yes, flexibility is necessary. Maybe the 20-hour work week with a six-week annual vacation should be the standard, with the option to lengthen the workweek in return for more vacation time.