If you’re expecting the unemployment rate to start going back to what used to be its normal level, you are likely to be sorely disappointed.
Think about it. There are perhaps only three major entities that exercise some degree of control over the situation - corporate America, the government and the banks.
As far as corporate America is concerned, the present situation is more than acceptable, just as it is. The level of unemployment isn’t so high as to rupture the demand for its products, yet it is high enough to give companies the pick of the litter when hiring. Furthermore, by loading the work of those laid off onto those remaining, the productivity rates have been soaring. And a big added bonus has been the low level of interest rates that has gone hand in hand with unemployment, as these two expense-reducing benefits make their heady way down Corporate Easy Street.
It’s definitely not in its playbook for big business to concern itself with the trials and tribulations of middle America. Nor does it lose any sleep over the fact that America’s students, such as those involved in the OWS movement, are paying more and more for educations that end up dumping them into a jobless wasteland. No, it seems safe to assume that no unemployment relief will be coming from this direction.
And to think that the government - meaning this Congress - is going to step into the breach, is beyond laughable. That crowd couldn’t even pass a jobs bill that made tons of sense and that paid for itself. What the legislators can do, however, and this involves both the Inflexicans and the Wimpocrats, is cut services and government jobs while making sure they don’t make enough noise to annoy the wealthy. The war cry for cutting, cutting, cutting has reached such a crescendo, that it no longer involves just jobs, but entire federal departments. And as for the entitlement programs - Social Security and Medicare - it’s beyond scary that those the senior citizens are counting on to protect these lifelines are the Wimpocrats. Looking down the road, it seems fairly certain that the only impact the government will have on the jobs situation is going to be negative.
That leaves the banks which we would love to think will suddenly decide to loosen up and breathe new life into the small business sector where many, if not most, jobs are actually created. But don’t hold your breath. Banks across Europe are in big trouble and it’s likely to be contagious. How do we know? Well, just this afternoon Moody’s downgraded a dozen banks - not in the economic shambles of Greece or Italy or Spain or Portugal or Ireland - but in the flagship nation of Germany. And then, as if to add insult to injury, the Fitch rating service came along 30 minutes later and said the problems will cascade across the pond into the good old United States. This is like the mother of all echo effects. We pollute Europe, with our exports of toxic assets wrapped up in improperly-graded bundles of sub-prime mortgages, and now, it seems, Europe is about to return the favor. The net result, of course, is that the American banks are going to do nothing but hold on for dear life as the tsunami heads this way. Consequently, the prospect for relief from this sector is about as likely as a Republican-sponsored tax hike on the wealthy.
So, get used to high unemployment. There’s no hero in sight to make it go away and the risks that it poses are all too real. It’s been at its present level for so long we may have become somewhat numb to the fact that it is really on the edge, but it surely is.
And you know what can be found on the other side of an edge…