Sample E-mail Commentary
We have selected the following Commentary because we believe everyone, whether or
not they participate in the financial markets, ought to have a basic understanding
of what Structural Unemployment is and how it prospectively may affect them – no
matter what their ‘walk in life’.
Structural Unemployment Revisited
At 8:30 a.m. ET on September 2, 2021 the U.S. August jobs numbers were announced.
One article headline reads 'Zero
jobs number shocks markets' - reading time 1 minute. The article reports
that in circumstances where U.S. economists were expecting 75,000 jobs to be added
in August, none were added. Within minutes both the Dow and the S&P; 500 stock futures
had dropped significantly, and the price of both gold and silver had risen
- at 9:00 a.m. ET (U.S.$) to $1,875.26 (up $49.96 on the day) and $43.00 (up $1.42
on the day) respectively. I suggest you pay close attention to today's financial
markets action, in what I continue to think are less and less 'investment
markets', and more and more 'trading markets'. It seems to me that President Obama's
planned speech next week on U.S. job creation looms ever more important.
On that score, a recent article asks the question 'Can
job training help solve the (U.S.) jobs crisis?' - reading time 4 minutes.
The article reports that in manufacturing, health care, and engineering industries
"employers are struggling to fill jobs that are increasingly demanding higher skills".
It strikes me that it is a virtually certainty that such a statement is far too
broad, as it is unlikely to be applicable to all manufacturing, all health care,
and all engineering businesses. It also strikes me that the U.S. is a large geography,
and such job demand is unlikely to be evenly dispersed over the U.S. population
'where that population lives'.
The article also reports that a recent study (link provided in the article) concluded
that in the southern U.S. 51% of job openings are 'middle skill', but only 43% of
that region's workers were trained to 'middle skill' level. Once again,
the article doesn't report on other U.S. regions, leaving one to wonder whether
this is being held out as a consistent U.S. demographic, or whether other U.S. regions
could report better or worse results from similar studies.
Finally, the article goes on at length to discuss possible job training initiatives
that may be announced by President Obama next week, and programs that have been
run in Georgia and Pennsylvania with some apparent, though difficult to measure
from a long-term prospective, success.
I have discussed what I have perceived to be U.S. Structural Unemployment
issues for some time. For example, see 'Structural Unemployment' (November 11, 2021).
As stated in more than one of my commentaries, Structural
Unemployment is defined as (per Wikipedia):
"a form of unemployment resulting from a mismatch between the sufficiently skilled
workers seeking employment and demand in the labour market. Even though the number
of vacancies may be equal to, or greater than, the number of the unemployed, the
unemployed workers may lack the skills needed for the jobs - or may not live in
the part of the country or world where the jobs are available".
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It will be interesting to see whether President Obama discusses Structural Employment
when he announces his job creation initiatives. I will be surprised if he does,
because to mention it likely would be seen by many as akin to 'laughing while attending
a state funeral'. From my perspective America has a number of fundamental unemployment
issuesthat will not be resolved for a very long time, if ever. These issues
are:
- For the reasons I set out in my November 11 commentary, I believe the U.S. does
suffer to some extent from Structural Unemployment.
- American suffers from a demographic problem - many of the unemployed are 'no longer
young' and getting less so every day - and re-training is difficult.
- Many of the jobs that will come available require a level of technical knowledge
and ability that is difficult to instill in people in middle life and beyond, or
for that matter young uneducated people.
- America has a significant youth unemployment problem in circumstances where older,
experienced, out-of-work older people and even retirees are taking jobs that +/-
five years ago would have been filled by young people. Visit any American 'big box
store' and note the ages of the comparatively few employees for confirmation of
this.
- Technology is resulting in fewer people being needed to produce more. Visit any
major capital intensive processing plant today, and compare what you see with pictures
of that same plant 30 years ago. There invariably will be more - and often many
more - people in the 30 year old picture.
- The house construction industry (and construction generally) is suffering, and will
continue to suffer from what I will describe as 'sub-prime greed'. That can't
be reversed in a short time period, if ever. The old saying that comes to mind is
'you can't have your cake and eat it too'.
- Lost U.S. manufacturing jobs are unlikely to return in any meaningful number.
- There have already been too many people out of work for too long in circumstances
where every month America weakens economically when measured against its trading
partners. You might want to read 'Long-Term
Unemployment Casts Doubt on Fed's Ability to Help' which addresses this
point and links to a paper from the Federal Reserve Bank of Richmond on the
subject of the 'long-term employment problem - article reading time 2 minutes.
For me, the only thing that might make sense for President Obama to announce next
week would be some form of subsidized infrastructure spending. This spending would
be positioned to employ a great number of unskilled laborers who could be 'trained
on the job in short order', and be paid indirectly by the Federal Government to
be trained.
That said, if President Obama proposed such a thing, at this point the Republicans
are likely as not to say that the only money the U.S. Federal Government can spend
on such a program has to come out of 'yet to be determined' Federal Spending cuts.
Apparently the Republicans are taking that same position with respect to any Federal
Government subsidies in support of the damage caused last week by Hurricane Irene.
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Yesterday The Globe and Mail, a Canadian national newspaper, reported on
its front page the President Obama proposals will include:
- Aid to businesses that hire the long-term unemployed;
- Payroll tax changes; and,
- Possibly mortgage relief - all under the category of a 'jobs plan'.
It will be interesting to see what President Obama actually does propose, but none
of those three things strike me as being 'big-time' short-term job creators.
In my opinion, America needs short-term job creation, and the U.S. Federal Government
either doesn't 'get that', or simply can't figure out how to accomplish it. As I
have noted in a number of commentaries, America's road, bridge, etc. etc. infrastructure
is said to require trillions of dollars spent on it. I suggest American politicians
have an opportunity to cut entitlements seriously and use the resultant funds to
quickly employ unskilled labour in a major infrastructure refurbishment / rebuild
program. This would put spending money in the hands of a large number of unemployed,
give those people to some degree a 'new lease on life', and buy a few years of time
to 'right the U.S. economic ship' to the extent such a thing is possible.
If you think my suggestion has merit, I suggest you don't hold your breath waiting
for it to be announced
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