

The New Joblessness - quizbiz
http://www.nytimes.com/2009/07/26/magazine/26FOB-WWLN-t.html?_r=1&ref=magazine

======
byrneseyeview
_one out of six construction workers is out of work._

That's insane! More than 80% of construction workers are still employed? We
were only building ~25% too much?

I would expect the construction sector to shrink by something more like 50%.

~~~
mahmud
My hunch sides with yours as well, but I think they're discounting the HUGE
segment of undocumented day laborers. When I left the U.S. a little over a
month ago, we had hispanic day laborers loitering outside grocery stores in
midday in northern virginia. Normally you wouldn't see them after 9AM or so.

The "undocumented" workers are undocumented only in government reports, but
their impact and contributions are felt throughout.

~~~
maigret
In France they got a law to help restaurants. Effect of the law? No additional
employment - and - productivity decreased. Why? Most restaurant used the
additional money to hire officially people working unofficially before that...

~~~
ovi256
For those who want to know, they changed the sales tax on restaurant meals
from 19.6% to something much lower like 5.5%.

------
SamAtt
I have to wonder how much of this is a chicken and the egg thing. Ever since
the beginning of this crisis the media has been hammering the same meme: "This
is as bad as the great depression"

So now we're almost a year later and everyone stands around shocked at the
fact that jobs are being lost even faster than in a normal recession. But job
loss, at it's heart, is mostly just companies gauging how many employees
they'll need for the future and making adjustments. So if every news agency is
telling these companies we're at the start of a great depression what else
would you expect them to do but to cut jobs at an even higher rate?

How many tech companies have we seen in the last year who cut jobs before they
even noticed a revenue drop? Jason Calacanis says he had enough money to keep
Mahalo running without revenue through 2011 yet he cut jobs and moved his
operations overseas. How is that not panic?

~~~
steveklabnik
I don't mean to take away from your main point, because I agree with you,
but...

> But job loss, at it's heart, is mostly just companies gauging how many
> employees they'll need for the future and making adjustments.

Sometimes, it's also because people can't afford to have said employees. I
used to work at a pizza shop, and when the state raised the minimum wage $2/hr
over the course of a year... we had to get rid of people, and drop other
people's hours, and raise prices. We simply couldn't afford to give the
majority of our employees a pay raise.

Sometimes, there's just no money in the bank.

~~~
andyking
In Britain, the minimum wage is £3.53 when you're under 18, £4.77 when you're
18-21 and £5.73 when you're 22 or over.

When I was still at school, I worked part-time in a big chain store. A lot of
the time, when someone turned 18, they were suddenly "not needed as often" and
had their hours cut and were first in line when the shop was laying off. I got
laid off about two weeks after my eighteenth birthday and the shop suddenly
hired a bunch of new 16-17 year old kids...

Still, they went bust about two months after that!

------
joshu
I wonder if radically different worker efficiencies would account for this.

That is to say, if worker X1 is 10% as efficient as normal, and gets laid off,
it contributes one whole unit to the unemployed but one tenth of a unit to
productivity loss.

~~~
RobGR
For radically different worked efficiencies to account for a different
unemployment numbers, something about the distribution of worker efficiencies
has to have changed since the last recession. But workers have always had
different levels of productivity and efficiency, and in hard times the less
efficient are more likely to be out of work.

As work becomes more skilled, the differences between the average and best
workers tend to increase, but the amount by which work has become more skilled
and technical between the last two recessions, and say the 2d and 3d last
recessions, does not seem to be revolutionary. The mathematical relationship
the article notes did not have to be gradually adjusted as the workforce
became more technical over the last 60 years; rather, it held until it
suddenly broke now (if you believe the article).

An alternate explanation, would be that 1) economists and their mouthpieces
don't know as much as they pretend, and 2) there is a high liklihood that this
is the start of a big depression, not a "really really bad recession", and
most businessmen are correctly assessing that liklihood, and rather than
expanding their businesses to meet a fantasy future bigger market, they are
waiting for the market to shrink to match their business.

Another, less dire reason for these numbers might be a general shift towards
more home-based and freelancer type employment; such employment may be
undercounted in the economists' numbers.

~~~
bwd
It seems likely that there are multiple effects here. Perhaps work has become
skilled enough to produce large enough differences in productivity that it
necessitates an adjustment to the model. This might help explain why the
recent recessions were considered fairly jobless relative to those that came
before. It might also help in explaining the increasing compensation gap that
we see.

It may also be the case that businesses are delevering in the same way that
households must. This would be a rational reaction to the dangers of debt
financing that have been placed in stark relief by the crisis. Businesses that
are reducing their dependency on debt by switching to internal financing will
have less capital available for expansion.

The rising cost of benefits may have also started to effect the demand for
full time workers and pushed businesses over into hiring temps and part
timers.

------
kqr2
Given the failure of risk models in this situation, it's not surprising that
unemployment models are not that accurate either.

------
mattyb
_It’s hard to give a definitive explanation for this trend, but among the
reasons are a decline in innovation in the aftermath of the tech boom, leading
to fewer new businesses..._

Was this just a decline in tech innovation? I wonder how much tech companies
contribute to overall workforce numbers (in addition to IT departments of non-
tech companies, I suppose). Also, was there really a decline in innovation, or
just a decline in eagerness to start a business based on such innovation?

~~~
spamizbad
I wouldn't exactly phrase it as a "decline in innovation" but post-tech boom
innovation has gotten harder for numerous reasons. Off the top of my head, I
can think of three culprits dragging this down in the tech industry
specifically:

First, the general malaise people feel about tech IPOs after the ultra-hyped
tech bubble burst. This is a real shame because this wasn't necessarily
something perpetrated by the tech industry itself; it just saw dollar signs
and got played by Wall Street.

Second is the decline of venture capitalists, who lost virtually all of their
sex appeal with the dot-com bubble. They're now seen as "vulture capitalists",
devious characters that tempt young entrepreneurs to sign away control of
their start-ups for the small chance of seeing their dreams come to fruition.
Is that reputation deserved? I don't know, but I've heard enough horror
stories to be extremely apprehensive about taking the VC route.

Third is Sarbanes Oxley, which has made it extremely costly for small
operations to go public. SOX is fine for larger organizations, it just needs
some tweaks and and certain exemptions for smaller organizations.

Due to these factors it seems like the tech industry is taking smaller risks.
Entrepreneurs are building companies to "flip" to Microsoft or Google rather
than building the next Google or Microsoft. Sure, we're creating new
businesses, but they never evolve past the 'start-up' phase; they merely get
absorbed into a larger entities. You create significantly fewer jobs
integrating start-ups into big organizations than you would by taking the
growth route by building a medium and then large-sized business.

So with the cost of growth and failure higher now than it was in the 1990s, is
it any surprise we're not bolder, and witnessing a so-called decline in
innovation?

------
Ardit20
_The pressure for another stimulus (and greater deficits) would be intense_

I guess the newspapers would want some of that money? Only recently on telly
here in the UK they were saying that only 20% of the stimulus had been spent,
so there is time to either spend that 80% on something else or more
efficiently, or just wait for it to be spend first before asking for another
stimulus.

This is after all the tax payers money and I think most tax payers would
rather have that money back and decide themselves what to spend it on.

