Why Job Growth Will Be Weak—And Painful—This Time
Big Three, Small Business
The new world order of borrowing and spending will also continue to affect the auto industry. U.S. auto plant employment, which dipped below 100,000 in 2009, won’t be a growth spot. Even at its current level of 112,000, it is half of what it was after the recession of 2001.
General Motors' new plant to build lithium ion batteries for green cars, which received Energy Dept. funding, will employ only about 100 people.
The days of producing more than 18 million vehicles—as was the case not too many years ago —are long gone. The number of auto parts jobs will reflect that. More than 100,000 in that category will disappear in the ten-year period ending in 2018, according to the BLS.
“It’s also a major fundamental change,” says Goldstein. “Who's going to provide the financing for [car] deals. People will get pushed back down to the used-car market.”
The credit-retail-housing triangle is also a major consideration for small business, a tradition job-creation engine.
“Absolutely,” says Martin Regalia, chief economist at the U.S. Chamber of Commerce. “Is it really a new norm? It is certainly a situation where we are not going to see the wealth gains driving a high rate of expenditures. It is certainly not going to be the profligate spending we say years ago.”
Regalia say that during extensive travel ahead of the holidays, he found members had adopted “a survival attitude.”
“Many have laid off individuals or cut them back,” says Regalia. “If things improved, they might be able to add hours or rehire. In terms of ret new job creation, I didn't hear much of that and none of them are talking about doing so on the expectation of [better times].”
Such pessimism is to be understood after a brutal recession and the somewhat jobless recoveries that followed the relatively shallow recessions of 2001 and 1990-1991.
Other economist say deep recessions—such as the one in the 1980s—bring strong recoveries and thus expect similar conditions this time.
“The primary structural problems I hear most frequently, they think there's a new norm of housing, those jobs are gone permanently, I kind of doubt that myself,” says Chris Rupkey of Bank of Tokyo-Mitsubishi. ”Structural changes play out over a decade. I'm a little skeptical about a jobless recovery.”
“It’s a hangover more than anything,” says Erin Armendinger, managing director of the Jay H. Baker Retailing Initiative, Wharton School. “Consumers will go to spending Retailers will go back to opening stores. We will find a way to give and get credit again.”
Role of Government
The Obama administration is trying to help that process for both business and consumers, by providing TARP money for small- and medium-sized businesses and buyer incentives on durable goods from autos to energy-saving devices.
The government is also intent on funding private sector job creation, which may underscore concerns about structural obstacles to a jobs recovery as much as social policy.
Some of the nation’s biggest unions have been working closely with the administration on job creation measures and are pushing for yet more.
Not only is there a firm belief that government needs to fill a void until the private sector recovers and contributes in a meaningful way but a new strategy is needed.
Unions say ever-increasing productivity is hurting job creation and a new focus is needed on the withering and neglected manufacturing sector, as well as a move away from low-skill, low-pay jobs.
“If nothing is done we have a pretty bleak prospect,” says AFL-CIO economist Thea Lee. “We’re in a deep hole in the labor market.”
The AFL-CIO, like others, is pushing for massive investment in infrastructure and green technology.
Education and health care are often cited as areas of potential growth, which will help the services sector, which looks threatened for the first time.
“The service sector can't grow if the other sectors can't grow,” says Anna Burger, secretary-treasurer of Service Employees International Union, SEIU, which counts 2.2 million members and is the fastest growing union in the U.S.
The SEIU, whose ranks also include government workers, would also like to see fiscal relief for cities and states, including the replacement of public jobs that were lost and the creation of new ones, in such areas as child and home care.
“We can create more public jobs at a faster rate,” says Burger. “Unless we invest in jobs, the process will be slow.”
Few these days would see to argue with that time frame. Even Nobel Laureate and legendary supply-side economist Martin Feldtsein is wont to say that it will take years to replace the jobs that have been lost.