Long-Term Unemployment, and the Skills Erosion Myth

Whatever the direction of Friday's jobless number, it can't be stressed enough that unemployment of the kind we're suffering at the moment is a wholly unnatural phenomenon wrought by government distortion of wages and benefits, and sagging investment that results from policies in favor of a weak dollar. It will be addressed further along in this article, but joblessness today remains high largely for those two reasons.

But first, one aspect of Friday's report that is easy to predict concerns the long-term jobless. Whether coming from the left or the right, reportage on this subset of the unemployed will almost certainly read like this recent account from a national right wing political magazine:

"The longer people stay unemployed, the more they lose their skills, including the habits of work. Many of them become demoralized and drop out of the labor force altogether (an especially dangerous development when demographic trends are already shrinking our labor force). At that point they become immune to even the best countercyclical policies - which, in any case, we do not have."

Readers can take it to the bank that the above will inform nearly all analysis of Friday's number, and because it will, they should save what is precious time by skipping the commentary on the long-term unemployed. They should because it's quite a bit of nonsense.

The argument that seemingly supports this static view of the economy is that the longer individuals are out of work, the more they forget the skills that made them productive workers to begin with. At first glance this notion seems compelling in that we all know to varying degrees how difficult it is to resume prior productivity once back from a vacation.

Also, it could be argued that the long-term unemployed perhaps suffer a confidence problem. For having been out of work for quite some time they lack the self-belief to energetically seek new work, and then potential employers perhaps wonder why they were jobless for so long.

Both are initially intriguing, but don't stand up to greater realities. Put simply, unless we're the beneficiaries of large inheritances, great investors, or both, we all eventually have to find work. We may not get the kind of work that we love, but we all eventually find our way back into the workforce; time away from the office or plant not a factor.

After that, it should be said that the underlying beliefs about the impact of long-term joblessness assume a static economy where today's skills apply to tomorrow. The reality is of course much different from this most backwards of views.

He forgot the major one.

“I’m afraid to hire anybody because if Obama gets re-elected he will turn us into France and I will be forced to give gold-plated Cadillac benefits to everybody. It will also become illegal to fire them.”

Whenever I look around me, I see validation of what this author decries. The less you work, then--the less you work. The more unemployment insurance you have, the more you take. I think this writer does not have children, or maybe not older children, and does not understand that idleness carries with it its own sort of momentum.

I still say, the healthiest way to confront unemployment is to get a job as soon as possible, and not enjoy the temptation of an insurance-financed "vacation."

It's just human nature, especially in a culture where the Puritan ethic diminishes with every year spent in public schools.

Employers ask this question now. How long since you were last employed?

If you answer more than a few months, they say your skills are out of date.

Employers are able to get the cream of the crop these days. They want current employees of other companies that can bring in the bacon right away. And they are getting them.

If your current training path evaporates because the technology has been superseded or failed, then Good Luck finding a job.

The premise of this story is false.

I know it from personal experience.

—“I’m afraid to hire anybody because if Obama gets re-elected he will turn us into France and I will be forced to give gold-plated Cadillac benefits to everybody. It will also become illegal to fire them.”—

That is why, at age 57, I went back into IT contracting. They don’t “hire” me, I make good money, and they want me for what I can do after 31 years in the industry, as opposed to attempting to mold me for long term growth in the company, which usually starts with low experience and zero benefit being brought into the company in the short term.

It’s a win-win.

It seems to me that Tamny reinforces what he's trying to deny:

We may not get the kind of work that we love, but we all eventually find our way back into the workforce; time away from the office or plant not a factor.

If you can't get the job that you love back, couldn't that be because your skillset is no longer in demand? Further, his blanket statement seems stupid in that some job skills erode faster than others due to knowledge advancements and technology (e.g., a skilled surgeon versus a bricklayer). Finally, given two people with identical skillsets, if you've been out of work for 99 weeks and another guy has only been gone for a month, which one do you think is likely the better worker? While the factors discussed here don't explain all the problems of long-term unemployment, summarily dismissing the effects of that absence the way Tamny does is simply wrong.

At age 60, I never abandoned IT contracting.

I'm now more valuable to my clients than ever, based on knowledge and experience.

Unless some dreaded disease gets me, I'll go until 70.

That article is utter nonsense.

There is a wage for everyone that will match their economic value to a job. Some people through good DNA, training, education, experience, and etc., bring higher value to a job and receive higher pay. So long as the governemt does not interfere, the market will find equilibrium and everyone who is willing will have job.

It may not be a happy place for many but, in the absence of a benevolent and all loving nanny state, it is work or go hungry and people will work.

The skill level and education level of this country is abysmal and many of our brethren cannot command a decent wage because of it. So rather than work for the piss poor pay they are worth they live off of those that do work and thereby drive up the unemployment rate.

—Unless some dreaded disease gets me, I’ll go until 70.—

That is my fallback plan.

Heck, I was cobol for 25 years of that past. Now I’m learning ASP.Net MVC3

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