America’s Unemployment Problems may be Structural

by David Usher

Despite the political rhetoric from both parties I believe America’s unemployment is structural rather than episodic for a number of reasons, not the least of which is the impact of technology. I’m not a Luddite by any means, and have embraced technology in myriad forms. Nevertheless, I think we are experiencing slow job creation which is technology driven tied to the anchor of an education system that does not match the requirements of today’s economy.

Growing the economy is complicated by the structural changes and dislocations from accelerating technological change which are ‘eating’ traditional jobs, jobs that previously required humans, often low-skill, low-priced humans. What’s happening now is some higher skills are being replaced by technological efficiencies.

Already in many industries and occupations, we have seen that digital and robotic technologies have permanently displaced jobs and some skills. With investments in these technologies companies can increase economic output without the corresponding increase in jobs that was both expected and experienced by workers in the past as America exited economic downturns. The upshot is that many jobs simply will not return and these doldrums are more or less permanent.

As only one example among many, think about the implications in the not too distant future of cars and trucks that drive themselves more adroitly and safely than people can. Google and several other companies are developing such vehicles and as states allow them to to be registered and operated, we can expect more jobs to disappear.

The high skills required to service this new economy are in short supply because the education system lags the pace of technological change. Meanwhile, our self gratifying culture works against people who would otherwise desire to learn the skills and work hard to succeed. The resulting ‘entitlement mentality’ promoted by some political ideologies pervades far too many lives. We see it in the growing expectations of a government that cannot afford these demands in an economy that is predicted to grow at half its historic rate into the future.

There are no simple economic fixes that many politicians promise. If the solutions were easy and obvious rather than driven by power and ideology, Congress would not be the dysfunctional institution it has become. Nevertheless, continued government spending to make up for a dawdling economy will no longer provide the jolt needed for recovery, let alone a healthy government fiscal condition.

We need a structured but light regulatory framework free of burdensome government interference both in the private sector and in the education establishment so that the accelerating technologies can be developed, harnessed and managed by a workforce equipped for the high-skill jobs that today’s and tomorrow’s economy requires.

2 thoughts on “America’s Unemployment Problems may be Structural

  1. Several small businesses tell me they have not had any applicants with the basic skills for such jobs as small engine technician, electrician, HVAC technician. Amid widespread unemployment, people can’t be found to work in many skilled specialties. We have a great mismatch of education and opportunity.

  2. In 1912 Hilaire Belloc, a Franco-Brit, published The Servile State, concluding that technology would lead to a rich owning class, a well paid technician and management class, and a very large class of people with few skills who must be forced to work, and thus servile.

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