One of the most jarring complaints voiced by voters in the most recent mid-term elections was that, for them, the 2008-2010 Great Recession has never ended.
Thorough investigation of these complaints disclosed that a majority of American households now have less wealth than they did 25 years ago. This disturbing statistic was disclosed by the Center for Economic and Policy Research in a report on the 2013 survey of consumer finance. This analysis shows little or no gains, especially for the older age group as they near retirement.
The report emphasized that such near-retirees have not benefitted by the impressive recovery of the stock market since 2010, and seemed to have seen their assets peak in 2007, just before the United States and most of the rest of the world fell into recession.
A major factor in this decline has been the value of this age group’s homesteads. As brought to light in previous studies, the value of their life-long home ownership was on a constant incline from the post-World War II period, all the way up to 2007. Even during the several recessionary interludes, most homeowners experienced a positive rebound at the recessions’ end, as home values resumed their climb.
While the Millennials and other younger-generation groups have been hit by job scarcity and wage stagnation, the post-recession has not had a salutary effect on most of the middle class, allowing only limited savings for a retirement that has become lengthier. This indicates the Social Security age of 65, established in the mid-1930s, is far from valid today, forcing many to stay “on the job” well into their 70s.
Part-time jobs also are becoming an ever-increasing component of additional employment. This category, which classifies 30 hrs. or less in that part-time classification, allows businesses to refrain from such expenses as healthcare and pensions, unless and until the 30-hr. mark is surpassed.
Future inflation or deflation
If you were alive and active in the late 1960s, 70s and early 1980s, you were caught up in an inflationary spiral you thought would never end. On the other hand, today’s survivors of the 1930s Great Depression would tell you that era of grinding hopelessness is indescribable as happening to today’s prosperous United States.
The current economic financial climate can best be described as “disinflation.” It’s timely to analyze its causes, along with the extremes of inflation and deflation, and their evolution. Both inflation and deflation bear severe negative economic consequences, while the current climate of disinflation likely indicates a trend toward better times. Although the severity of either inflation or deflation may seem most economically debilitating while they’re happening, today’s global disinflationary status provides a better springboard for a more balanced world economy ahead.
The inflation experienced in the United States in the latter part of the 20th century came close to pushing the economy out of control, as the costs of goods and services kept escalating, while wages and salaries were vainly trying to catch up. The dollar’s buying power kept losing its value, both at home and abroad.
By the mid-1980s, an unusually firm but rational presidential leadership, a compliant Congress, and realistic labor unions worked together to solve such major issues as an overall updated tax system, an acceptable immigration approach and a foreign affairs policy that led to the end of the Cold War by 1990. This did much to solve foreign policy problems, if only temporarily.
The current malaise, reflective of a staggering aftermath coming out of the recession, has yet to show even minimal direction in resolving the major issues of U.S. government priorities. The lingering immigration policy and a befuddled approach to foreign affairs are stickier than ever since the Cold War’s end led the parade.
While inflation has been increasingly undercut by the decreasing buying power of the U.S. dollar, America’s current economic problems are dominated by the greenback’s ever-strengthening buying power. This is cheapening the impact of wages and most goods and services. But it also is endangering the record export volume and revenues, achieved by an increasingly versatile and technologically superior American product range eagerly desired by a developing world economy.
While “runaway inflation” put intangible holdings — such as stocks, bonds and cash — in mortal danger, deflation is having a similar effect on commodities such as oil, steel and copper, as well as gold and silver.
As the lessened buying power of static income decreases, the impact of lower consumer demand also is felt. This reverse downward spiral lessens the profitability of business, industry and commerce in general, squeezing the wherewithal necessary for future growth potential and improvement. While the United States faces the peerless economic rewards that 2015 could offer, a determined confidence-inspiring leadership, plus congressional cooperativeness similar to that which existed in the 1980s, could make this potential an actuality.
Key jobs crisis worldwide
While a preponderance of both U.S. and foreign job concerns are increasingly focused on the scourge of growing unemployment in the face of generally weak economic recovery conditions, little is known, and even less confronted, of the fast-growing number of critical job openings that remain unfilled worldwide. This paradox is caused by the following salient factors:
1. The post-Great Recession has created a major upward shift toward skilled jobs that are urgently needed. The nature of manufacturing, especially in the United States, has shifted dramatically from mass production of construction, automotive and high-volume products to an evolutionary technology, calling for an expansion of mechanical skills.
2. As the United States and several of the world’s developed and developing nations are attempting to fill these gaps, the availability factor has simultaneously narrowed, as a combination of trade school closings and the occupational interests of the emerging younger generation has shifted career interest more into professional services, such as medicine, law, finance and architecture.
3. As the 2015 U.S. economy expectations swing into increasingly higher gear, both in production and productivity emphasis, as well as the volume of personnel needed, the problem becomes ever more acute. With the demand far exceeding the current candidates available, it is likely that major U.S. multinational corporations will be bidding for the available talent, driving salary and benefit structures even higher.
This will be further complicated by the shift of manufacturing businesses from Germany, Japan and South Korea, which are establishing “finishing” operations in the United States and will be in the competitive race for skilled hands-on mechanized workers to fill this accelerated gap.
The nation’s, and likely the world’s, leading advocate and spokesman for confronting the jobs crisis rationally is Dr. Edward E. Gordon, who is the author of “Future Jobs: Solving the Employment and Skills Crisis.” As this problem has become more aggravated, his lectures, consultancy and recent participation on a White House initiative have put him in the position of advising U.S. businesses and think tanks, which are finding his expertise helpful in planning for both long- and short-term problems in increasing numbers.
In our recent discussion with Gordon on this “professional skilled worker shortage,” increasingly worrisome in the U.S. and other major manufacturing nations, he referred to the Boston Consultancy 2014 report, “The Global Work Crisis,” which reveals that a labor surplus of between 17.1 million and 22 million will exist in the United States by 2020, three times the current shortage level.
Other nations facing similar problems of multiplication of this current unresolved problem are: Germany — 2.4 million by 2020; China — 24.5 million by 2030; Brazil — 8.5 million by 2020 and 40.9 million by 2030; and Canada — 3 million by 2030. Poland, Russia and South Korea will add millions more to these skilled worker needs if no resolution is found.
Already considered the global pioneer of calling attention to this fast-developing crisis, Gordon is much in demand, and is encouraged that business and industry leaders are setting up discussion groups and problem-solving lectures to help put momentum behind this ever-mounting crisis. According to Gordon, this problem has been sadly neglected too long by the world’s leading governments and needs maximum private-sector solutions to stem the negative tide.