What Causes Unemployment?

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  #1  
Old 02-03-2011, 05:49 PM
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Default What Causes Unemployment?

I heard an interesting factoid on one of the political shows on TV the other day. The discussion was on the economy and why it's taking so long for our economy to recover, as measured in improvements in the rate of unemployment.

The statement was made that if our national efficiency was the same today as it was as recently as 1993, there would be no unemployment. Improvements in our national productivity alone has resulted in the elimination of over 15 million jobs since that time.

The point being made, of course, is that the dramatic improvements in economic efficiency by the U.S. has resulted in the under-employment of it's growing workforce.

Like many discussions like this, one can't simply take one statistic and make broad conclusions. As an example, if we were only as efficient as were were in 1993 (as measured in economic output per man hour), unemployment would probably still have occurred, just for a different reason. If we were still only as efficient as we were in 1993, the economic activity and output would simply have shifted to somewhere else in the world where the cost per unit of output was less.

We'd still have unemployment, just for a different reason. I might even argue that an important cause of our current unemployment--our dramatically improving productvity--may actually be a good thing in the long run. Much better than having unemployment or underemployment occur as the result of our economy becoming less productive than other parts of the world.
  #2  
Old 02-03-2011, 11:24 PM
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Default

Other factors including steady population growth the annual acceptance of at least a million legal immigrants, many of whom are highly educated and skilled, push up unemployment even more. And there is no magic wand to make American manufacturers suddenly able to find anxious customers for their better, competitively priced products.

If you were President you too would like nothing better than see unemployment disappear. Simple math would tell you the most cost-effective way to create jobs would be to divert expenditures from the the war effort to rebuilding the country's infrastructure. Other cuts can be made elsewhere, but they are small potatoes compared to the costs required to rebuild. We cannot continue to fear those "straw men": the deficit and 'pork'. Somebody's bridges, roads and power plants have to be rebuilt, be they in New Jersey or Nevada. Making reconstruction a national priority will put dollars in the pockets of millions not presently working. Just like unproductive unemployment benefit dollars, productive work dollars will go right back into the economy. But what is rebuilt with work dollars will make us even more productive, and in some areas, able to attract new world customers for our technology and our products.

Government intervention has blunted the severe recession. Now is not the time to stop spending money and make our priorities reducing the deficit and failing to fix things which need fixing just because they are found in the district represented by a member of the opposition.

I know some of you absolutely hate that new buzzword: "Invest". But that's what we have to do.
  #3  
Old 02-04-2011, 10:13 AM
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Default While the article linked below is dated 2005 the subject

is still appropriate and front and center at the root of this countries employment and stability:

http://www.thetrumpet.com/?q=2011.878.0.0

I lived my entire career in manufacturing, participating in both the growth and demise of manufacturing like automotive, machine tools, appliances, steel production....to name only a few.

In the 60's we were looking at Japanese steel for use in appliance manufacturing at GE....for one reason and one reason alone.....cost. Labor content is typically the smallest part of most consumer products; usually 20% or less. Hence material savings were a big opportunity. Then came powdered metals and structural plastics. All aimed at reducing the biggest slice of the manufacturing pie....cost of materials.

The results led to cost reduction and the associated employment with the new efficiencies. Emerging countries like Japan were front and center to capitalize on the American needs.

The next big target became labor. Americans, especially organized labor were the most inefficient and highest paid in the world.

Let me cite one personally experienced example. In the appliance business in Louisville, KY the average labor costs were well over $20 per hour. More like $30 plus per hour with all compensation and benefits....sweepers were over $17 per hour!!! We then proceeded to look for labor reduction opportunities outside the USA but as close as possible to avoid high transportation costs. Enter the Mexican Border Zone manufacturing called the Mequilla. Comparably equipped appliance and component assembly labor costs.......$.39 per hour including benefits. That is thirty nine (39) cents.

Before we would take an assembly offshore, we used to meet with the union to negotiate a reduction in labor costs. Without fail, each and every time the union refused. We gave fair warning we would take those jobs out of Louisville. They still refused to budge. Their philosophy was (and still is) the whole loaf or nothing.

Appliance Park employment in the early 60's = 10,000 plus.
In the early 70's = 22,000 plus.
Late 90's early 2000 = less than 10,000.
Today less than 3000....with 6 major manufacturing buildings moth balled.
A multi million square foot warehouse mostly empty. Some of it leased out to foreign companies.

In recent years the trend has been to out source customer service.

As recently as last week we hear that Dell is closing it's manufacturing here in the USA while opening a new state of the art facility in China!!!!!
GE's new wind energy development and manufacturing is not here in the USA it is in Europe some where.

Yes there have been efficiencies made due to automation and new technologies. Not enough to offset anywhere near the loss example I present above....multiplied by most if not all manufacturing, labor intense consumer products.

This country will not achieve the greatness of the past until such time as it can employ our growing population. That will only happen when we can compete with the rest of the world. That is not likely to happen. HENCE.....
continued unemployment. Continued government hand outs and entitlement programs. Continued increases in government spending. Continued loss of the tax paying base. Continued deficit growth.

By now most have given up as this post is very long. But at least I feel better. Personally.....but not about the direction of the country.

It is all about companies being held to investor returns and providing the very highest earnings. All supported by the lemmings in Washington who are on their payroll in one form or another.

The USA cannot be what it once was by being a minor entity service provider.
The other trend???? The rich do get richer!!!

All the above has transpired and continues regardless who sits in what chairs in Washington!!!!!!!!!!!

btk
  #4  
Old 02-04-2011, 10:31 AM
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Default And another log on the fire:

http://www.zerohedge.com/article/lab...sh-26-year-low

btk
 

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