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August 27, 2013


Our economy is currently undergoing restructuring from manufacturing to service, and as remaining manufacturing and other routine tasks are being robotized and/or sent elsewhere and with all of the employment chaos such restructuring entails, education lately has been getting a bad name. Story after story tells of college graduates who cannot get jobs to match their skill sets and are having to take lower paying jobs and stay home with their parents in order to pay off their tuition loans. (They cannot marry, have kids and live in exurbia; talk of the American Dream is just that – a dream headed for nightmare.) The economy is not working for them; it is working only for the already rich and secure.

A further problem for the economy given the shortage of jobs and wage inequality during this transition is that by taking lesser jobs they are replacing those with yet lesser skills who then become unemployed, and because of their lesser skills, are likely to remain that way either until the next bubble or when the restructuring is completed, if then. This outcome thus punishes both the skilled and lesser skilled with lower wages for the skilled and perhaps none for the lesser skilled, which in larger context with such low wages means that aggregate demand in the economy is reduced because there is less money in circulation, which in turn adds to unemployment in ancillary and feeder commerce and industry. So why go to school? To stagnate in mom and dad’s basement while paying off your loans while having to take a job beneath your abilities? To mark time? To tread water? To wait for Godoy? Is this your fate?

Another of the current problems from the public side in this connection is that we are not as a matter of labor economics matching what skills we need in the marketplace with what education we provide for the attainment of such skills. Sociologists are probably not in short supply right now, for instance, so degrees in Sociology are a mismatch for what is needed. Yet there is such a crying need for skilled workers in the skilled trade sector that employers here are asking the government to provide visas for aliens to come to this country and do such work.

Still the Congress balks at investing more funding for vocational education. I have read that some welders are demanding and being paid $50 an hour. It must be clear that if skilled workers are making that kind of money or anything near it, their increased taxes paid back to the government would quickly erase such a public investment and make the government a good and continuing profit as far as the eye can see. The increased wages would also be good for aggregate demand because hundreds of thousands of newly employed workers would have money in their pockets to spend – and would spend it. Finally, if such formerly unemployed people come off unemployment compensation, food stamps etc., the government saves money on the other end of this win-win equation and provides jobs that cannot be outsourced to China as well.

The Congress needs prodding – badly. This is not “spending;” this is “investment.” Giving Wall Street another tax break is spending; the treasury receives nothing in return. Equipping Americans to make good wages repays the treasury and then some – and continuing. It amounts to an exercise in capitalism without risk, but since “the government” is involved, tea partiers and the hard right will have nothing to do with it. Whose side are they on? Can’t they understand arithmetic?

We have had other such restructuring of our economy in the past. The most noticeable one was our move from an agrarian to a manufacturing economy in the early 20th century. Improved farm machinery and equipment drastically reduced the need for human labor and the countryside started emptying into the cities, a process that is continuing, though at a far less drastic rate. Some (and I am not one of them) say that was the basic reason for the Great Depression – the exodus from the farms into urban situations which could not provide enough jobs for all and the resulting massive unemployment which caused over the cliff lack of demand (under consumption) and the deflation that led to depression. We are taught that innovation is good, but I would guess that many displaced farm workers those days  were Luddites since they were displaced by innovation, much as were English textile workers who long before embraced anti-innovation and resisted and even destroyed its new labor-saving machinery.

So why pursue a college degree and live a life of poverty in the basement while paying off your tuition loans (which cannot be discharged in bankruptcy, thanks to Republicans and generous “campaign contributions” from Wall Street bankers)? Here’s why. This restructuring is not forever. Faint outlines of needed NEW skills are already emerging. One should ferret out such likely needed new skills out front and pursue further education in order to take these jobs and the higher incomes that come with them before the word gets around and such jobs are filled.

There are also second job possibilities one could pursue during this transitory period, albeit likely that they are at or near minimum wage. One could even enroll in some community college or union program  which leads to a journeyman’s status in the building trades , perhaps training at night and/or weekends, all in order to match one’s skills to specific demands of the labor market. There are ways to leave the basement and live a life while waiting for nuances in the new economy to provide new jobs which will finally match your academic skills, and if the transition is delayed, you are still making a good living during the interim and now have an address in exurbia.

Finally, and not to be crass, but there could be an employed man or woman who are living with their parents in a situation paralleling yours who might just happen to also be loveable and marriageable. Two incomes might get both of you out of your respective basements sooner rather than later.

Meanwhile, in view of current wage inequalities, I recommend that you look out for Number One by agitating for a substantial increase in the ridiculously low federal minimum wage (which could amount to a raise if you are toiling at such a starvation rate of pay).

It takes planning and execution to leave the basement, but there are those who depart from the  subterranean to daylight every day. Join the exodus. GERALD  E

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