"This chart shows real GDP in the U.S. and the level of total civilian employment from 2002-2011. The total output of the U.S. economy in Q3 of this year finally increased to a level above the output in the fourth quarter of 2007, when the recession started (blue line). In other words, the U.S. economy has now made a complete recovery from the 2007-2009 recession. But the labor market is still struggling to recover. We have 6.6 million fewer jobs today in the U.S. than in December 2007 when the recession started (red line in chart), along with a 8.6% unemployment rate, and thus another "jobless recovery." On the other hand, it's remarkable that the U.S. economy is now able to produce more output than in 2007, but is doing so with 6.6 million fewer workers, as a result of significant gains in productivity brought about by the severe recession. Therefore, the chart helps to tell the story of two different sides of an economy in recovery:
We've seen huge gains in productivity and a recovery in output, but at the same time we see a labor market struggling to recover, with the possibility that it will take many more years or even a decade to regain all of the millions of jobs lost during the recession." - Mark J. Perry, Ph.D., visiting fellow, American Enterprise Institute. From the Atlantic Monthly's Most Important Graphs of 2011.
This is arguably the most important national public policy issue of our time. A related question to ponder here is: To what extent is it also a business ethical problem?
Perry says it may take a decade to regain all the jobs lost. But after 15 years--nearly a generation--many more will be looking for work than in 2007. So we will need a lot more than 6.6 million more jobs by then. And what will the majority of those jobs pay? With manufacturing happening mostly in the developing world (and success stories such as Germany) it's difficult to imagine how the American middle class can rebound.
Fareed Zakaria says we need more innovation and infrastructure. But I don't see how that can be sufficient, especially as we need good jobs even for those without college degrees. Newt Gingrich says we need to roll back child labor laws to teach underprivileged children good work habits. But what we surely need instead is a better trade school system. Joseph Stiglitz says we need a massive Keynesian government spending program akin to WW II. But this time, to transition to a robust service economy with much more investment in education. I would add that we also need a new Green Corps to transform our infrastructure and transition out of what has become a perpetual wartime economy.
Ultimately, we need to work together as voters, consumers, and businesspeople to create and maintain good domestic jobs for everyone. Not just the privileged technocratic elite. How has Germany managed to retain quality heavy manufacturing for example? Perhaps we should try and learn from Europe for a change. Iceland provides lessons too since it managed to bounce back from economic disaster without bailouts or austerity measures. But these countries notably have something the U.S. seems to have precious little of these days:
That is to say, a real social contract in which most everyone understands that long-term stability means looking out for one another. It means maintaining infrastructure and innovation certainly. But also social safety nets, trade schools, and paid internships. Businesses should reconsider for example the ethics of unpaid internships, which are now standard entries into successful careers but tend to shut out most everyone not already born into wealth. This is hardy meritocratic. Or patriotic.
This country is so vast that it has always been difficult for people in one end to see how their interests are tied with those at the other end. But if we are to remain a nation, we need to start seeing ourselves as a great society again.