via Morning Edition, NPR

As the Mayor’s Conference takes place in Washington D.C., city governments are dealing with severe problems at home — from high unemployment to funding cuts. Steve Inskeep talks to Mick Cornett, the Mayor of Oklahoma City, about how his city has managed to avoid some of these problems.

By Ben Casselman
via online.wsj.com

The U.S. job market is showing signs of a sustained recovery. But the country’s prolonged struggle with unemployment will leave scars that are likely to remain for years, if not generations.

The latest labor-market snapshot, out Friday, gave cause for continued, if tepid, optimism. U.S. employers added 200,000 jobs in December, and the unemployment rate ticked down to 8.5%, its lowest level since early 2009.

But economists gathered here for the American Economic Association’s annual convention took a longer and generally dimmer view. Even if recent progress continues, the recession already has had a lasting effect on a generation of workers. Worse, the crisis has laid bare problems in the U.S. labor market that won’t quickly recover when the economy eventually rebounds. And the longer that unemployment remains high, the greater the risk that it will create structural problems that will endure.

The economists here, mostly academics, are studying the causes and effects of the jobs crisis from different angles, and they frequently disagree. Nonetheless, a few common themes emerge.

Long-term unemployment may be a bigger problem than high unemployment. Americans have been understandably frustrated by the slow pace of job growth. But economists say much of that slowness is explained by the weak economic growth since the recession ended more than two years ago. In that sense, the problem isn’t the “jobless recovery” but rather that the recovery itself has been so weak. If the recovery gains steam—as some economists believe has been happening in recent months—the growth in jobs should pick up as well.

Unprecedented rates of long-term unemployment could threaten the economy’s recent gains. Some 5.6 million Americans have been out of work at least six months, 3.9 million of them for a year or more. Research shows that the longer people are unemployed, the less likely they are to find jobs. Economists aren’t sure why—to what degree it’s because workers’ skills deteriorate, or because they find ways to cope and give up looking for work, or whether the stigma of being unemployed for so long makes companies unlikely to hire them—but the effect is the same: Many of the people out of work the longest likely will never work again.

The risk, economists say, is that the U.S. will develop an underclass of semipermanently unemployed workers, with severe consequences for productivity, public finances and even social stability. Europe, which faced a similar problem in the 1980s, is still dealing with the consequences.

“We know that once you get into that type of situation it’s very hard to get out,” said Steven Davis, a professor at the University of Chicago’s Booth School of Business.

Many problems predated the recession. The recession caused a dramatic rise in unemployment, but it also revealed deeper challenges that had been brewing for decades. By a wide range of measures, the U.S. labor market has over the past two decades lost much of the edge it enjoyed over other developed countries. The big gains in education in the early 20th century have slowed. Americans are moving less frequently and changing jobs less often, making the job market less flexible. And most critically, a smaller share of Americans are working. The labor force participation rate—the percentage of adults who are working or looking for work—peaked in 2000 and has been falling for more than a decade.


Economists don’t agree on what is behind the shift, although the aging of the baby-boom generation is almost certainly part of the answer. But whatever the reason, the effect is a labor market that recovers less quickly when it runs into trouble, a trend that was evident in the slow pace of hiring after the recessions of the early 1990s and 2000s. The recent recession exacerbated the trends, but it didn’t create them, said Harvard economist Lawrence Katz.

“Even if we had never had the Great Recession/lesser depression and the world had stayed the way it was in early 2007, we were already in a pretty sluggish labor market,” Mr. Katz said.

The recovery is only the beginning. Increased hiring and a falling unemployment rate are good signs, economists say. But even if the unemployment rate were to return to a healthy level by the end of the year—an outcome almost no experts predict—the labor market would still be far from healed. The length and depth of the crisis, unprecedented since the Great Depression, will have a lasting effect on both individuals and the economy as a whole.

For individuals, a growing body of research points to long-term effects of unemployment, especially during recessions. A recent paper by Mr. Davis and Till von Wachter, a Columbia University economist, found that workers who lose their job when unemployment is low—below 6%—lose on average 1.4 years’ worth of earnings, a substantial blow. But those who lose their jobs when unemployment is above 8% lose twice as much, 2.8 years’ worth of their pre-job-loss wages, which the authors call “staggering.”

Mr. von Wachter and colleagues also found that unemployed workers’ earnings fall 1% for each additional month they are out of work, and that those losses can last for years even after they find another job. Other researchers have found that unemployment can take a toll on family relationships, mental and physical health, and even the economic prospects of jobless workers’ children.

“There are people who are going to bear scars for the rest of their careers,” said Henry Farber, an economist at Princeton University.

For the broader economy, the stakes may be even higher. The long-term decline in manufacturing has eroded a major source of stable jobs that pay well. The construction boom of the mid-2000s helped offset those losses, until the housing market collapsed and took home builders with it. And the slow recovery has put a premium on productivity, giving companies incentives to invest in technology that lets them produce more with fewer workers—a trend that has spread from manufacturing into the service sector.

Much of the recent job growth, meanwhile, has come in the health-care and hospitality sectors, which generally employ many low-skilled workers at low wages. Those jobs help shrink the unemployment rolls, but they don’t replace the middle-class jobs that have been lost in the manufacturing and construction sectors.

“A huge issue is going to be the quality of jobs and whether we’ll have a type that generates a shared prosperity,” Mr. Katz said.

The challenge facing the country, then, is not just putting people back to work, but helping to retrain and rehabilitate the long-term unemployed, reversing a multidecade stagnation in the labor market, and finding a new source of jobs to rebuild the middle class. No one in Chicago had any easy solutions.

By Catherine Rampell
via nytimes.com

Workers are dropping out of the labor force in droves, and they are mostly women. In fact, many are young women. But they are not dropping out forever; instead, these young women seem to be postponing their working lives to get more education. There are now — for the first time in three decades — more young women in school than in the work force.

“I was working part-time at Starbucks for a year and a half,” said Laura Baker, 24, who started a master’s program in strategic communications this fall at the University of Denver. “I wasn’t willing to just stay there. I had to do something.”

Many economists initially thought that the shrinking labor force — which drove down November’s unemployment rate — was caused primarily by discouraged older workers giving up on the job market. Instead, many of the workers on the sidelines are young people upgrading their skills, which could portend something like the postwar economic boom, when millions of World War II veterans went to college through the G.I. Bill instead of immediately entering, and overwhelming, the job market.

Now, as was the case then, one sex is the primary beneficiary. Though young women in their late teens and early 20’s view today’s economic lull as an opportunity to upgrade their skills, their male counterparts are more likely to take whatever job they can find. The longer-term consequences, economists say, are that the next generation of women may have a significant advantage over their male counterparts, whose career options are already becoming constrained.

For now at least, many young women still feel that the deck is stacked against them.

“Almost everyone in my program is female,” said Ms. Baker, who hopes a master’s degree will help her get a job running communications at a nonprofit group. “That’s partly because of the program, but also because as women we feel like we have to be more educated to be able to compete in really any field.”

Women still earn significantly less than men. And in the two and a half years since the recovery officially began, men age 16 to 24 have gained 178,000 jobs, while their female counterparts have lost 255,000 positions, according to the Labor Department.

Apparently discouraged by scant openings, 412,000 young women have dropped out of the labor force entirely in the last two and a half years, meaning they are not looking for work.

Among young men, the labor force fell during the recession but has been flat since the recovery began. Today, across all age groups, an unemployed female worker is 35 percent more likely to drop out of the labor force in the next month than an unemployed male worker.

Some studies suggest that women are pickier about their job choices than men. Already earning lower pay, women are less willing to work when wages fall further, especially if they are able to rely on an employed (and these days, often newly re-employed) husband. Women are also more reluctant to work night or weekend shifts, according to government data on how Americans spend their time, partly because they have more family responsibilities.

“The jobs out there just aren’t very good, and men seem more willing to take them for whatever reason,” said Jonathan L. Willis, an economist at the Federal Reserve Bank of Kansas City. “The women are looking at those same jobs and saying, ‘I’ll be more productive elsewhere.’ ”

Then there are societal influences that affect a person’s willingness to take a lesser job or return to school.

“There is still this heavy cultural message that men should be out there earning money and supporting themselves, and they feel more distressed by losing their breadwinner role,” said Stephanie Coontz, director of research at the Council on Contemporary Families. “We’ve made much more progress overcoming the ‘feminine mystique’ than this masculine mystique.”

While these roles evolve, community colleges are reporting record enrollment.

Both men and women are going back to school, but the growth in enrollment is significantly larger for women (who dominated college campuses even before the financial crisis). In the last two years, the number of women ages 18 to 24 in school rose by 130,000, compared with a gain of 53,000 for young men.

The education gap aside, in some ways young women will already have an advantage over men in the coming decade. Many of the occupations expected to have the most growth, like home health aides and dental hygienists, have traditionally been filled by women. That is not to say that men cannot take those positions, but they may not want to.

“Today young girls are told they can do anything, go into any occupation. But if boys express any interest in traditionally female occupations, they get teased and bullied,” Ms. Coontz said. “Lots of guys are not understanding what’s happening to traditional low-income or middle-income male jobs.”

Jobs in the male-dominated manufacturing industry and in other sectors involving manual labor have been, and still are, in structural decline. These careers can also be hard to maintain indefinitely because youthful strength eventually fades. And now many manufacturing workers do not have pensions to carry them through when their bodies do break down.

“It doesn’t surprise me that in a poor economy women are ramping up their schooling,” said Heather Boushey, an economist at the Center for American Progress, a left-leaning research organization. “The real question is: Why aren’t more men doing that too?”

The main risk in going back to school is the accompanying student loan debt. Tuition increases have been outpacing inflation for years, a trend accelerated by state budget cuts.

“Our funding per student has been cut 25 percent in the last three years,” said Stephen Scott, the president of Wake Technical Community College in Raleigh, N.C., which is one of the fastest-growing community colleges in the country. Consequently, class sizes have risen, and so has tuition. But the students — again, mostly women — still pour in.

“We now have 6,000 students on a waiting list because we didn’t have the resources to offer more classes,” he said.

Those attending more expensive private schools, like Ms. Baker, will have an even tougher time guaranteeing that their educational investment pays off. Including the loans that financed her undergraduate education at Wartburg College in Waverly, Iowa, she will complete her master’s program next year owing about $200,000 in debt.

“I have to have faith that I will eventually get a good job that pays enough to pay my living expenses and pay back my loans,” she said, “and hopefully make me happy in the process.”

By Adam Davidson
via npr.org

Three months before the Japanese attack on Pearl Harbor, Angus Echols, a member of DuPont’s executive committee, began shaping the chemical giant’s plans for the coming decade. The U.S. would soon be at war, he explained in a series of memos and high-level discussions, and the company needed to aid the effort. But it also needed to think far ahead. When the war ended, Echols argued, women would want to buy cheap stockings. And where was DuPont on this crucial matter?

Echols got his way. While DuPont provided nylon (among other things) to the U.S. military for parachutes and tires, its research department studied how to make stockings on the cheap and did work that eventually led to Orlon and Lycra. And eight days after the Japanese surrender, DuPont announced that it would shift nylon production from war materiel to ladies’ undergarments. Not only did veterans have solid jobs to return to, but the company dominated the burgeoning synthetic fiber and plastics business for decades to come.

The image of thousands of industrial researchers in white lab coats and thick black glasses may seem antiquated, but corporate research and development is more important to our economy now than ever. Whereas a company used to be able to invent some new thing — nylon stockings, say — and spend a decade making money off it, today’s products have much shorter shelf lives. The venerable Western Electric 500 telephone — you know, the boxy one with the slanted face for the dial or, later, touch pad — was developed in 1949 and remained one of the most popular models through the 1980s. Now a phone like the Motorola RAZR or the first-generation iPhone goes from coveted totem to valueless relic (to hipster accessory) in a year or two. I recently visited an Amish buggy auction where salespeople were showing off the awesome features — easy-clean windows, retractable carved wooden cup holders — on the new year’s model. These days, all successful U.S. businesses have become innovation-based companies.

As consumers, we don’t care if our products are invented in the U.S. or in some other country. But as a work force, we should. While much has been written about Chinese factories’ stealing U.S. manufacturing jobs and destroying our businesses, the two countries have reached an uneasy, unspoken economic agreement over the past decade. American firms find they can compete with low-cost manufacturing by constantly developing new products. This has worked out well for U.S. companies — though, notably, not for U.S. manufacturing workers — because there are much fatter margins in owning the intellectual property of a hot new thing than there is in churning out a huge volume of cheap components. And these higher margins manifest themselves in higher salaries for American workers.

Partly as a result, the U.S. still dominates the world of research and development, as it has for more than a century. The country spends nearly double the annual R.-and-D. budgets of Japan and Germany combined. But China’s decadelong rise from a nonplayer in R. and D. to the world’s second-largest spender poses a serious threat. A recent study by the Battelle Memorial Institute, a research firm, predicts that China’s spending will match ours around 2022. In research terms, that is effectively today.

China already has plans to focus on exciting but vague ideas now — like green energy and bio- and nanotechnology — that will most likely become products in the 2020s. And if U.S. government labs, university departments and corporate researchers aren’t already on top of the next generation of breakthroughs, the country will very likely fall behind in 10 or 20 years when those innovations become marketable products. Our global competitiveness is based on being the origin of the newest, best ideas. How will we fare if those ideas originate somewhere else? The answers range from scary to scarier. Imagine a global economy in which the U.S. is playing catch-up with China: while a small class of Americans would surely find a way to profit, most workers would earn far less, and the chasm between classes could be wider than ever.

Unfortunately, there isn’t much to prevent this trend. Overall government research spending (relative to G.D.P.) has been heading down since its peak in the space-race years of the 1960s. And because it’s nearly impossible to imagine Congress significantly increasing research financing, any growth in long-term R. and D. will be, largely, up to the private sector.

And that’s the real problem. From a C.E.O.’s perspective, long-term R. and D. is a lousy investment. The projects cost a lot of money and often fail. And even when they work, some other company can come along and copy all the best ideas free. Charles Holliday Jr., the C.E.O. of DuPont who retired three years ago, told me that it’s tough to get investors to think more than two years ahead — at most. “The stock market pays you for what you can do now,” he said. As a result, DuPont isn’t the only American company changing the way it does R. and D. Corporate research labs at I.B.M., AT&T, Xerox and others have also been slimmed way down or cut altogether.

The government can’t simply pass a law forcing companies to think longer-term, of course. But Congress can do other things, like shift incentives away from rampant short-termism. It could, for example, reduce capital-gains taxes on stocks held for many years. Alternately, companies could create different classes of stock, giving more voting rights to those who hold the stocks longer. Another idea popular among businesspeople: enticing foreign Ph.D. students to develop their new ideas in the U.S.

The question of how U.S. companies will make a buck has probably never been more important. With one war over and another winding down, thousands of young men 25 and under, many without college degrees, will soon enter a work force with no place for them. (Their unemployment rate is nearly double the already miserable national average.) We have no idea how an Iraq war veteran will make a living a decade or two from now. We can only hope there is someone still being paid to figure it out.

By Peter O’Dowd
via npr.org

On the western edge of Phoenix, it’s easy to find vast tracts of empty land once prepped for two-by-fours and work crews. Utility stanchions emerge like errant whiskers from the desert floor.

This is the land of zombie subdivisions. Some experts believe up to 1 million dirt lots in central Arizona were in some stage of approval for new homes when the market crashed.

“It’s tragic,” says Realtor Greg Swann. “It’s heartbreaking.”

Urban planners are floating a radical solution for areas like this. It’s known as “smart decline.”

Justin Hollander, an assistant professor at Tufts University, wrote a book called Sunburnt Cities, about smart decline in the Southwest. After the bust, he says, more than a third of ZIP codes in major Sun Belt cities saw population losses.

“People are leaving,” Hollander says. “So that means all the houses, all the roads and infrastructure that supports those houses, it doesn’t just disappear.”

In some cases, Hollander calls for tearing down that infrastructure. He points to some Rust Belt cities that took generations to realize the depth of their problems.

“If you don’t do a good job, it further destabilizes the neighborhood,” he says. “It further creates a cycle of disinvestment.”

On the western edge of Phoenix, it’s easy to find vast tracts of empty land once prepped for two-by-fours and work crews. Utility stanchions emerge like errant whiskers from the desert floor.

This is the land of zombie subdivisions. Some experts believe up to 1 million dirt lots in central Arizona were in some stage of approval for new homes when the market crashed.

“It’s tragic,” says Realtor Greg Swann. “It’s heartbreaking.”

Urban planners are floating a radical solution for areas like this. It’s known as “smart decline.”

Justin Hollander, an assistant professor at Tufts University, wrote a book called Sunburnt Cities, about smart decline in the Southwest. After the bust, he says, more than a third of ZIP codes in major Sun Belt cities saw population losses.

“People are leaving,” Hollander says. “So that means all the houses, all the roads and infrastructure that supports those houses, it doesn’t just disappear.”

In some cases, Hollander calls for tearing down that infrastructure. He points to some Rust Belt cities that took generations to realize the depth of their problems.

“If you don’t do a good job, it further destabilizes the neighborhood,” he says. “It further creates a cycle of disinvestment.”

Hope For The Zombies

Jim Holway works for the Tucson-based Sonoran Institute, a group that promotes sustainable development in the West. And he has hope for some of the zombie subdivisions.

“I tend to assume that we will grow again,” he says. “Is it possible the forces that drove the growth in the West really have come to an end? I think it’s unlikely. Certainly this is a time for creative thinking.”

He agrees that letting land go back to nature — farming or desert — is one solution for the most unattractive zombie areas. But says the land closest to the urban core still has a chance.

And that raises another option: Start over.

Creative Redevelopment

That’s the approach the city of Maricopa, south of Phoenix, is taking.

During the boom, Maricopa planners issued 600 housing permits a month. After the bust, a single piece of land with room for 182 houses was rezoned for mixed use. The Roman Catholic Church bought it, and now there are plans for a private school, shops at ground level and loft-style housing above.

Brent Billingsley, the city of Maricopa’s development services director, says this type of creative redevelopment didn’t happen before.

“Everyone has taken this opportunity to catch our breath and take a look at how we want to grow in the future,” he says. “And we’ve been at a balance now for the last couple years and able to catch up and to be smarter.”

Still, it will take Maricopa years to swallow the 16,000 lots set aside for residential development. Public swimming pools, baseball fields and schools will replace some of those zombie subdivisions.

Meanwhile, on the west side of town, Swann just chuckles at the idea of “smart decline.”

“At some point, sometime fairly soon, this land will be profitable again, and it will turn into houses,” he says. “And you’ll drive by this five years from now, and you won’t remember that you were here because it will be completely different. That’s the way Phoenix works. Phoenix changes like dreams.”

by Jon Roberts, TIP Strategies

No topic is of more immediate, more urgent concern than America’s job situation. The unemployment rate remains stubbornly high, the op ed pages overflow with prescriptions, warnings, and admonitions, entire communities are at financial and social risk. Among all these issues, there is a deeper discussion to be had. It goes something like this: what is a job – really – and how does it fit into the larger historical framework?

Before we tackle this question, there are a few related problems worth exploring. Whose job is it to create jobs? Well, not the public sector. At least we know that from the current giddy assault on government employment. Yes, cities, states, and federal agencies hire people but we are right to be suspicious of their contribution to the economy. They are doing work that we are paying ourselves to do. Or so the argument goes. They are like paying your own kids to mow the neighbor’s lawn. Your neighbor may like it (let’s assume he does), but your family is earning no additional income. It’s not a sustainable business model.

There’s more to be said on that topic, but let’s leave it at that. Then if not the public sector, who else? The private sector? Really? In what sense is it a reasonable expectation that the “private sector” should add employees? No private business exists in order to create jobs. It really is that simple. Businesses add employees when they have to add employees. Not before, and for no longer than they are needed. Any other attitude would result in . . . (you guessed it) an unsustainable business model.

But certainly there’s more to it than that. In a healthy economy jobs are created. It is in the interest of businesses to add employees. But this “interest” is self-interest, it is not for the good of economy as such. That can’t be a business concern. Which leads us to an interesting question: Can we have a healthy economy that isn’t producing jobs? Those who want jobs to be created, for whom it is a bit of crusade (the public sector) are powerless to do so directly. Those who could create jobs (the private sector) put themselves at substantial risk by adding workers when it compromises their competitiveness – thus making their model unsustainable. We are looking at a huge disconnect.

All these thorny questions and we haven’t even come to the really difficult one yet (what, after all, is a job?). Suffice it to say that if we ask whose job it is to create jobs, there is no easy answer – or perhaps no answer at all. We need to be asking a different question. Something like this: what are the conditions under which jobs will be created (by the private sector, of course). Are the answers easier to come by? Let’s try. Jobs get created when two things happen: there is a steady demand for product and services, and new workers are required to fulfill that demand. So what are the conditions under which this occurs? Consumers are confident and have the income (or credit) to act on their desires. And workers are able to increase the productivity of the company. Not just one of these things needs to happen. Both do. If I can increase my productivity (i.e., satisfy the demand for goods efficiently) without adding workers, I have no economic motivation to do so.

Before we leave this topic, we need to see the paradox this represents. If the only way I can sell my goods and services is to have customers able to do so, but the only way I can stay competitive is to reduce my labor costs, then who will there be to buy what I have to sell? As paradoxes go, this one is a doozy. Against this background we’re ready to ask our question:
What is a job?

Some historical context is relevant here. The concept of a job is not something we should take for granted. By that I mean people working directly for a company (an employer) who provides wages for specific activities. In fact, it’s a relatively recent development. Industry as we know it – and the structures that support industry – are a recent historical phenomenon. Prior to the 17th century, a merchant class was something of a novelty. There were farmers, to be sure, and craftsmen. Farmers typically worked for themselves, or they were indentured, but no one gave them a paycheck. Craftsmen did not go to a job in a factory and punch a clock. People did jobs, but they didn’t have a job. Even the rise of the merchant class did not immediately usher in an employer-employee structure, at least not in the corporate sense.
So you know what comes next (what always comes next in economic history). You guessed it. The Industrial Age. The 19th century changed everything. The idea of a workforce preceded the idea of a job. To put this somewhat differently, we were creating an economy that required specialized skills. Highly specialized skills – the ability to do one thing very, very well. This economy resulted in corporations, something that also had never existed before. The idea of a workforce had an almost transformative effect. If you weren’t “working for” a company, you weren’t working at all. Freelancers, housewives, apprentices – these all existed largely outside of the idea of the workforce.

Now all this is grossly over-simplified, but not entirely without basis, and certainly not without a point.
The point is that the notion of a job is not a fixed idea. It can change, it has changed, and it will (we think) change again. To explore this idea is to engage in a thought experiment. It is to imagine a growing cadre of highly talented individuals who fit their skills to the specific needs of corporations. They see that corporations have less and less need for things that machines can do. To put this more provocatively, the industrial age is over, and the machines have won (“I, for one, welcome our robot overlords,” to paraphrase from the Simpsons.). An economic model that seeks to create jobs by ignoring this reality is a failed model.

If we begin from that premise, entirely different models open up to the imagination. A flexible talent pool that moves to solve problems. A new cooperative corporate model in which consumers are themselves marketers, testers, and shareholders. Social innovators who build networks of services and products that operate first in a closed, then an open system. – Can we imagine any of this? Yes, because it is already happening. Social networking is redefining traditional sales models. “Professional services” are reconsidering where their value lies as search functions redefine legal analysis and insurance claims.

Simply put, there is no sector of the U.S. economy that is not fundamentally altering its business models. In this series of radical changes, why would we expect to solve the jobs question (i.e., to reduce unemployment) by expecting companies to hire people into permanent full-time jobs? This conception of “jobs” fits a model that simply doesn’t conform to business realities. And, for that matter, it doesn’t conform to the needs of the would-be worker.

None of this is simple. None of this will happen in a predictable way. None of this will be painless. But the changes have already begun. It works as a thought experiment not only because we can imagine it, but because we sense its inevitability.

The future of jobs is that they have no future. Passive job seekers desperately hoping to find job postings that fit their skills is the sad and painful dead end of an economic system that has run its course.

To say that the transition will be hard is more than an understatement. In fact, it will be as wrenching as the shift away from an agrarian economy was. Entire industries will cease to exist, communities will be in turmoil, families will suffer terrible indignities.

We could, perhaps, have eased the blow of this transition, but that opportunity has passed (if it ever was an option). Just as in the private sector, more efficient government is more efficient because it can do more with less. And in these times, that means fewer people. And fewer people employed (regardless of which sector) means higher unemployment.

This is not an economic forecast. Employment in the traditional sense will continue to go up and down. But the pattern, the move away from a 20th century employment model, is inevitable. Anything else is… unsustainable.



Jon will be presenting on this theme as an IGNITE presentation at IEDC’s 2012 Leadership Summit, January 29-31 in San Antonio, TX.