The Recovery Will Be Jobless

In the end, there’s probably no more important economic indicator in the mind of the public than employment. It doesn’t matter whether you’re losing your own jobs, fearing that you’ll lose your job, or just seeing your friends and family lose their jobs — it’s definitely the big one.

As the recovery rebounded from the last recession, many scoffed that it was even a recovery. It was always noted that the recovery was actually a jobless recovery, and thus not a very good one. Certainly it was nothing like Clinton’s recovery form the recession in the early 90s.

Well expect the next one to be even worse from a jobs standpoint. Perhaps much worse.

As we noted yesterday, we’re not looking at just a recession or even a depression. We’re seeing wholesale destruction of old business models that won’t come back — like certain forms of media, industrial production and brick & mortar retail, to name a few. Whatever happens to the economy, these industries won’t rebound. Something new and better will fill their place, but it will be different and importantly require different skills.

What it means is that a lot of workers, ranging across income and education levels, will need some serious job retraining. Think of all the journalists, or anyone who specialised in structured credit for the last 10 years. Even people with a lot of potential human capital will  find extremely long lead times between jobs, longer than usual. Again, the businesses they used to work in just aren’t going to come back.

Note that long lag times between jobs isn’t necessarily indicative of an unhealthy economy. If it’s the result of major creative destruction and lightning fast innovation it can be the sign of an extremely dynamic economy. But for many people (voters) it sure won’t feel like one.

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