Boom. Bust. Underemployment.

Sunday, November 29, 2009
Posted in category Economics

Yahoo published a piece on the “real” unemployment rate last week, putting that number at 17.5%. That’s still a government statistic, so you can bet it’s understated. The looming problem for many families is underemployment. The guy who came to fix my cable TV issue (Wide Open West) was an experienced and skilled carpenter who worked on luxury houses during the boom years, when McMansions became the norm. He told me he took his current job – because he needed a job, any job – for one-third the salary of his carpenter job. These stories abound, especially in my neck of the woods. Keeping up with current bills plus rising costs, while taking a reduction in wages, is a stressful and nightmarish situation to endure.

Yet when the government uses interventionist measures to “create jobs,” they measure those numbers and claim success merely because a job – any job – was created. The qualitative aspect that is missing, however, is what kind of job is created – unskilled labor? temporary work? low-wage job? The government never takes into account the people that lose higher-paid, skilled jobs and have to accept a lower-level job that keeps them underemployed.

The effect of the boom period is to lure people into living a more prosperous lifestyle based on their new wages (including overtime payment), even when they aren’t living beyond their means. Many times, they are appropriately raising their lifestyle to accommodate what they believe to be their new level of prosperity. The fallout and bust can no longer accommodate all of the home builders, electricians, carpenters, machinists, and other skilled workers whose labor was in high demand during the false prosperity years. And what about the marginal jobs that were in demand because of too many people with too much credit, such as home media consultant, home interior consultant/designer, etc.?

Then there are all of those specialty stores that were opened by entrepreneurs looking to cash in on hobbies and luxury buys that were fueled by the Fed’s boom – stores specializing in birding, scrapbooking, spas and gamerooms, fireplaces and grills, perfume, expensive trinkets, party supplies, smokers’ supplies, kitchen gadgetry, feng shui, and overpriced gym equipment. And remember all of the shops that opened up to sell flooring, carpeting, tile, and blinds? Everyone had magical equity in their homes and used them as ATMs to fund their home renovations, hence all of the businesses popping up to accommodate the demand.

The number of businesses that opened up to meet the needs of eclectic discretionary purchases was unsustainable from the beginning. In my neighborhood, most of these businesses that sprang up during the boom have already closed.

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5 Responses to Boom. Bust. Underemployment.

  1. Brandon says:

    November 29th, 2009 at 9:55 am

    On http://www.shadowstats.com it estimates unemployment at 22% and like you said Karen the 17.5% figure reported by Yahoo is understated.

  2. Michael says:

    November 29th, 2009 at 11:53 am

    Of course, the government can’t create jobs. The government merely redistributes resources from one caste to another to create this illusion of “creating” jobs. Jobs, prosperity and consumption are only made available through the free market, and not through government coercion. Yet the government sells this to the masses through their lame-stream media mouthpieces. The gullible bite. Then they vote accordingly.

  3. liberranter says:

    November 30th, 2009 at 6:28 pm

    Just wait until the Obamunist, through his kept Congress, enacts the much-discussed “surtax” on wages to fund the empire’s military misadventures abroad. “Underemployment” will quickly escalate to “unemployment” on a more massive scale than seen in decades, if ever. On the bright side, it might just serve as the proverbial straw that breaks the camel’s back.

  4. Shannon says:

    December 2nd, 2009 at 3:23 am

    Of course, all these jobs created are minimum wage dead ends where most college graduates are finding themselves while competing with unemployed persons who are older with more job experience.

  5. Clark says:

    December 3rd, 2009 at 8:31 pm

    http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html

    The Decline: The Geography of a Recession

    A color coded U.S. video map showing unemployment by county from January 2007 to October 2009. It looked so pretty in the begining. You can watch the unemployment spread across the U.S. kind of the same way the housing bubble grew, only backwards. I wonder if Obama & his job creation team are worried the map will fade to black? For many, factoring in things such as underemployment, perhaps the map has already faded to black?

    I found this map at http://www.grabtheapple.com/

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