3/21/2012 5:23 PM ET|
Are American workers getting lazy?
Boomers lowering unemployment the wrong way
The flip side of the problem, of course, is that we need younger workers to pick up the slack from retiring baby boomers. We need them to take over jobs, produce stuff and pay taxes.
Instead, the young are having trouble getting started even as boomers are leaving at an increasing pace.
You see, in addition to the workforce churn caused by the recession, we have an underlying demographic changing of the guard. Older, highly skilled and motivated workers are leaving -- choosing retirement, having it forced on them or becoming "self-employed" or "consultants" -- often euphemisms for "laid off and can't find a job worth taking."
Companies are left with the prospect of replacing theses workers from a narrower field of less-efficient replacements. That translates to lower productivity, higher labor costs, rising prices to make up the difference and slower economic growth.
It's one reason that, even though the economy is running 5% below its potential output (a loss of nearly $1 trillion in economic activity), inflation has returned to pre-recession levels and is above the Federal Reserve's 2% target. Simply put, the economy has slipped a gear when it should be upshifting instead.
It's these retiring boomers who have been pulling down the unemployment rate so dramatically of late. If the drop were driven by new high-paying, high-quality jobs, the improvement would be showing up in growth in the gross domestic product, wages and spending, says Société Générale economist Aneta Markowska. That's not the case.
And that calls into question the validity of interpreting the recent drop in the unemployment rate as an unabashedly positive sign. In addition to some seasonal factors that may be distorting the numbers, it's masking ongoing problems.
Yes, job creation has improved. But, as Fed Chairman Ben Bernanke recently warned, the drop in the unemployment rate from 9.1% in August to 8.3% now overstates labor market strength because of people leaving the workforce. The chart below illustrates the precipitous fall in this measure -- a fall that, according to UBS economists, is well outside the realm of historical post-recession experiences.
In a traditional recovery, the participation rate increases as new jobs bring people back into the workforce. This time, the opposite is happening. That's because as older workers (with high participation rates) retire or die, the overall participation rate is pulled down as younger workers (with lower participation rates) increase as a share of the population.
UBS economist Maury Harris crunched the numbers and found that of the 5.5 million workers who left the workforce after 2006, only 20% left because they were discouraged by being unable to find a job. The rest were a result of demographics.
What's more, the trend is set to continue, adding more downward pressure to unemployment and productivity while pushing up labor costs and inflation for years to come. Harris believes the aging of baby boomers will drive the labor participation rate down to 62.7% by 2020 -- a level not seen since the 1970s.
Hitting the limit
The consequence of this, all other things being equal, will be a drop in labor-market efficiency. In layman's terms, that means pressure to raise wages to get the right workers in select, high-skill industries. It also means fewer overall jobs created, rising prices and lower profitability as companies try to pass on higher labor costs to consumers.
This can be seen in the Beveridge Curve, a wonky tool economists use to measure the relationship between the supply (unemployment) and demand (job vacancies) of labor. The curve has recently shifted and flattened. Translation: It's harder to find the right worker for the right job.
As a result, there are now 3.7 workers for every job vacancy versus a historical average of 2.6. This is why we see both large numbers of unfilled jobs and millions of unemployed workers. They don't match up. It's like trying to fit a square peg into a round hole.
According to Harris, this shift has increased the economy's natural unemployment rate by 1.6% to something around 7.2% by his estimates. That means unemployment will be as low as we can get it without creating big-time inflation.
And it means that in the best-case scenario, seven of every 100 Americans who want to work won't be able to find jobs. That won't feel like a recovery.
That scenario points to a dire need to invest in the economy. We need corporations to tap their massive cash reserves for new machinery and worker training. We need state-of-the-art infrastructure systems and education to support those efforts. We need a more-efficient health care system. We need convince Americans young and old that work pays.
What it all means
The key and most immediate takeaway from this jobs picture involves the Fed: Despite an unhealed labor market, the Fed's stimulus efforts -- one of the few things bolstering the economy right now -- can't continue. Fed officials will have to break their pledge to hold interest rates near 0% through at least 2014 or else risk fueling growth-killing inflation.
I'm not the only one worried about all this. Federal Reserve Bank of St. Louis President James Bullard recently warned of the dangers of his colleagues' obsession with juicing an economy with an increasingly dysfunctional labor market.
For investors, it's critical to consider how these labor-market dynamics will limit the Fed at a critical time. Markowska believes Fed policymakers are worried that if growth slows again, it could exacerbate the job-market issues by increasing long-term unemployment, pushing more people out of the job market and increasing the natural unemployment rate.
Yet the window to act is closing. Move too soon, and the Fed risks losing inflation-fighting credibility. Wait too long, and it risks being seen as overtly political as Election Day approaches. Markowska believes action on additional stimulus, if it happens, will come in April or June as fresh data point to an emerging slowdown. Otherwise, Fed policymakers may have to wait until after November.
Plus, the upcoming Q1 earnings season could very well be the first featuring an outright contraction in year-over-year corporate earnings since the recession ended. Overall GDP growth has been disappointing as well.
None of this is good for people looking for jobs. And as investors, it means we need to stay nimble because the risks are high.
More broadly, this is a reminder that there are deep structural problems at play not easily solved with cheap credit from central banks. We face a situation of rising interest rates, higher inflation and lower employment -- even as the unemployment rate falls because fewer people are looking for work. And don't forget, unless we get the young adults revved up, America will face a gray tsunami as more seniors, collecting government benefits, rely on fewer and fewer taxpaying youngsters.
Flat wages, a rising cost of living, unattractive jobs and the specter of more taxes. I guess that's why many in my generation just don't see the point of getting up and going to work in the morning.
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VIDEO ON MSN MONEY
We're tired. You see, 3 years ago, when you began laying off your staff in an attempt to cut costs and maximize profit you left those of us you retained doing 2-3 times the work we were hired to do. Yet we were grateful to have employment and so we rose to the occasion, hopeful that we would be rewarded when the recession ended. We worked through lunches without pay, we came in early and left late. We hardly grumbled when you told us you could no longer match our 401k or pay out year end bonuses. When our annual review came around and you told us how great we were, and how sorry you were that you couldn't give us a pay increase, we smiled and assured you we understood, that we were a team.
Then the recession ended, business picked up again. WE got the company though it and we survived! Except the promise of reward was never kept. The jobs you dismissed as part of the RIF during the lean times never came back. We were told that this was to be the new normal, that we had to continue to do more, work lean, apologize to our families and be team players for the company. Work harder, earn less, be grateful.
But we're exhausted. And we don't care anymore about you. You see, the secret to why the American worker was so efficient is because we had an understanding that you valued us, that we WERE the company, that you cared about our personal success as much as we cared about your professional success. When you stopped caring about us, we stopped caring about you. You thought you were too big to fail, but now it turns out you're too big to succeed. If you want the prosperity of America, you need to connect with your employees, treat us like family and support us as the foundation that your empire is built on. Stop taking us for granted, get down on your hands and knees and beg us to take you back like the unfaithful husband you are. It's not too late, but you have to do it quickly.
The American Worker
It's not right to accuse people of getting lazier... although I think it's fair that the workforce is lacking some discipline. But those who have worked hard , produced, have made a livable wage, invested and saved, are also the same people who have gotten hammered by greedy corporations, individuals, and investment houses. I don't blame anybody who decides to leave the workforce or tries to make it on their own because there isn't anybody who will hire them for other than a low wage... despite their experience and knowledge.
I made $25 an hour in 1997 when gas was $1.30 a gallon. Today I make $21 an hour and gas is close to $4 a gallon.
My boss used to have 2 1/2 people doing the job I now do alone. I have no benefits other than vacation time. (Fortunately my husband's company provides health benefits.)
No matter how hard I work or what value I produce, I can't get a sufficient raise to come near where I was 15 years ago. When our wages decrease and the cost of goods increase, we fall farther and farther behind.
No, we're not lazy. We're just discouraged and tired and know that we will never have a retirement.
"Workweeks have been maxed out. Manufacturers are increasingly turning to expensive overtime to fill orders."
Wow. Whose fault is that? Whose fault was it for laying off all the "experienced" workers in the first place? I mean, who had to cut costs again, and in so doing shot themselves in the proverbial economic foot?
Whose fault is it for deciding that they aren't going to TRAIN new workers? Wow. I mean, you go to a job, you get a job, and then your expected to know everything about the job without any training ON the job?
Who the HELL is the ****, that wrote this story, and came up with those egotistical numbers, that didn't take into account ON THE JOB TRAINGIN!? Who the HELL ARE YOU CALLING LAZY!?!
Seems to me, the only LAZY people around here, are the owners of the business, who decided that ON THE JOB TRAINING IS NOT COST EFFECTIVE!
Lazy!? LAZY!? I'm working my **** off with 6 day work weeks, because my corporate masters want to keep pulling in as much money, because they don't want to pay the additional health insurance for extra workers. Hell, every time we did hire somebody, I was trying to give them ON THE JOB TRAINING, and the Person In Charge, would BITCH ME OUT! For showing the new guy HOW TO DO THE DAMN JOB!
Screw the a-hole that wrote up this story.
Here's a lesson. You get what you pay for.
If you treat employees like they are worthless; if you have an attitude that good workers are a dime a dozen; if you manage from a stand point of "if you don't like it, you're always welcome to quit;".....you will never realize the true potential of your workforce.
If you take the time to get to know the lower level employees, find out what they struggle with, not only in their job but in their personal life; pay a decent wage, provide opportunities for advancement, and reward initiative.......you will find most people will go above and beyond for you.
Is it cheaper to overwork and underreward your workforce? Of course. Does it realy help your bottom line? Maybe in the short term, for a year or two. Eventually you end up burning out your workforce. That's what's happened here. In a bid to drive profits and appease shareholders, most major corporations have lost sight of the fact that their lower level employees are the ones to drive their buisness. Rather than face the truth of their actions, CEOs have surrounded themselves with "Yes Men" and created a culture in which speaking up is frowned upon. We are expected to put up and shut up and kiss their behinds because they have blessed us with employment. What they forget is that our employment has blessed them with a successful company.
You cannot be successful in business if you treat your employees like crap. Look at the most successful companies today, Google, Apple, Microsoft, etc.... what do they have in common? THye treat their lowest level employees as well as their CEOs. They have perks, lots of perks. People WANT to work for them. They fight for those positions and they do whatever is needed of them to make sure they KEEP those positions. They feel valued. Their opinions are taken seriously.
Stop trying to copy Toyota with your silly 5s campaigns. Stop expecting Americans to work like Chinese. If you want to be a succesful American company, try to emulate the companies in America that are currently successful. Do that, and we'll be back on top in no time.
Our generation and ones coming up now have watched simultanious wars, terrorist attacks, a massive recession and watched as wall street raided the pension plans, lost the savings of hard working citizens, lost 8-10 million jobs because of the greed taking place all across the country. We watched as our government has gone in debt almost to the point of collapse to support the promises of the past and the responsibility of the present and can tell with an absolute certainty that our generation will suffer a seriously decreased standard of living despite Both parents working and their kids working at 14 now in many states. We are either without health insurance or are struggling to hold onto it, while paying into social security which wont be available to us when the time comes and see one wall street firm after another swindle all the money out before crashing and declaring we have no idea where the money went. We have watched energy prices skyrocket, and stay there not just a 12month blip but year after year higher and higher, watched a loaf of bread go from $1.49 to $3.79 in a mere 5 years, inflation in 5 years the used to take 20years. All while people lose their homes their cars, and banks increase fees not to cover increased costs, but to increase already bloated profits and even more bloated bailouts. We drive on crumbling roads and collapsing bridges, yes they have actually collapsed and if your honest with yourself you know the roads are bad. You can expect to hit potholes in between the bumps and pay the repair bill for both. And meanwhile our strongest competitor in manufacturing pays their workers $1 an hour, which is right about what we will have to work for if we are to even begin to compete. This is our future and what a bright one it is.
So is it any wonder why current and future generations dont want to work harder or longer for less and less. It is because the game is up; we have seen behind the curtain and know the game is rigged and getting worse, we have concluded that the game is no longer worth participating in or believing in. In Animal farm the old horse worked until he could no longer walk and was sold out exactly when it was his time to retire and enjoy the small amount left of his life. But the animals that watched this injustice knew better than to fall for the trick again, and so a revolution was created to forge a different future. Where will you be when history calls on you?
I think it's the companies that are being lazy, not the employees.
Add to the fact that I am tacking care of my disabled mother, raising a family, and trying to pay off loans I feel financially stretched. I do not get to destress as I am either working, eating, making phone calls to correct the mistakes of almost every company I have had to do business with, and sleeping (usually about 6 hours a night).
Am I lazy? nah. Am I burned out, disillusioned, and depressed? Sure. I am starting to realize its not worth working to make someone else a ton of money, while at the same time trying to survive, take care of others, and ultimately in the end put money into government programs that will never benefit me( especially social security), and trying to save for my own retirement.
The fact is: not only do I have to work hard now, but I will have to work until I literally dig my own grave and lay in it.
There is nothing wrong with the American worker. Workers are putting in longer hours and are working harder than ever before. Companies are piling more work to each existing worker rather than hiring a new worker. It is sort of like slavery in the early American history. Many workers fear loosing their job so much the don't dare quit to find a better job for fear that they will find themselves unemployed. Therefore many just put up with what is handed to them and work harder.
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