Abandon all hope ye who look for a quick turnaround
1 comment October 3rd, 2009
And I thought I was a pessimist.
According to a study released last week by a pair of economists at Rutgers University, the economic slowdown will persist long after even I had predicted.
Think 2017. That’s how long the authors expect it will take to get back to pre-2007 levels — and that doesn’t factor in job growth.
It is, to say the least, a sobering report, calling the first 10 years of the century the Lost Employment Decade. In fact, it marks the first time since the Great Depression that we’ll record a loss of jobs over the course of a decade.
To put this new experience into perspective, during the final two decades of the 20th century, the nation gained 34.4 million private-sector jobs. Today, it appears that we are “destined to lose more than 1.7 million private-sector jobs” in this decade, according to the study.
But then there’s the growth of the labor force. The Bureau of Labor Statistics expects the work force to grow by 1.3 million people through 2016. So just to stay even, we’d have to find an additional 1.3 million new jobs as well as the 7.6 million lost through September.
One of the more ominous developments found by the authors, James Hughes and Joseph Seneca, was the decline of the service sector. In previous recessions, it represented a small part of the job losses, with most of the drops coming from manufacturing and construction.
In the 1981 recession, for example, job losses in the service sectors — which covers a broad swath of industries, from financial consultants to attorneys to hotel employees — registered about 2 percent of overall job losses.
Lately, however, the number has skyrocketed, accounting for more than 50 percent of job losses, according to the study.
Hughes and Seneca cite a few things that have hampered job growth throughout the decade, including the cost of health care benefits. Indeed, why create more jobs when the cost of the additional workers’ health care benefits could bankrupt you?
On the other hand, some companies may have registered productivity gains, enabling their output to grow without adding to their employment rolls. This could indicate a more efficient economy at work.
Still, the bleak reality has some far-reaching implications, including a significant rise in the competition among states for industries that will bring jobs.
This, of course, means there are opportunities out there for communities like ours. And while cities and counties have limited control over their overall economic environment — state policies tend to be larger drivers, not to mention that Midwestern communities lack Arizona’s climate and California’s coastline — taking advantage of any growth means we will succeed only if we step up our game.
As always, companies looking to relocate have a number of priorities: ready availability of educated or trained workers, access to the company’s markets, a public infrastructure that provides a high quality of life to its workers and high-performing schools.
Looks like Rockford has its work cut out for it.
Contact Business Editor Annette LaCross at alacross@rrstar.com or 815-987-1295.
