The Recovery

Can our anemic recovery continue? It isn't even clear that we really have a recovery if you listen to some analysts. According to them, without job growth, we can't see any real improvement. Of course, there is some validity to this. If you are unemployed, things are certainly not going well. However, we always have unemployed and the question to ask is what the "new normal" for unemployment is?

There is an article in the times that points out a trend that has been going on in this country for a while. Certain jobs that provided good wages and a decent standard of living are simply going away. They are being outsourced to other countries or eliminated via automation. To some extent these jobs are being replaced by lower paying service jobs or being replace by higher paying technical jobs that require training and education. If you are in the middle, you will probably have a problem qualifying for the higher paying jobs and you may be reluctant to accept the lower paying service job. In fact, it is possible that the lower paying job won't replace the benefits you get by being unemployed.

If you are getting unemployment insurance and are eligible for Medicaid because of your low income, taking a low paying job without benefits may decrease your standard of living. In fact, we have set up many people in this country to see a reduction in their standards of living. Without a dramatic reform in the way we do health care in this country, it is somewhat unavoidable. The added cost of benefits being imposed on employer's simply makes it uneconomical to higher low priced workers.

In the scheme of things, businesses who want to be profitable simply can't afford to hire these people, since they cost more than they produce. Make no mistake about it, profitability is the key and for the immediate future American business is not going to spend unless the profit potential is clear. We have seen the increase in productivity and what we have failed to accept is that the American economy has shrunk and will grow in a health way. This is sure footed growth and the existing industries are not going to rehire all the people who were let go.

However, if history tells us anything it is that a resource will eventually be utilized. Those unemployed are a resource and sooner or later they will be absorbed into the economy, at least most of them will. Of course they may get paid less than they did previously.

Simply, businesses have shrunk in response to demand and are now at profitable levels. They will grow as demand grows, but they are not going to take wild gambles.

It's the recovery and it is anemic, but it is the only recovery we have.