http://www.time.com/time/business/article/0,8599,1861115,00.html"This doesn't seem like a simple cyclical shift in unemployment," says Thomas Lam, an economist who tracks the U.S. economy at the Singapore-based United Overseas Bank. "What we are seeing is a structural problem in the U.S. economy, and that means it will take a lot longer for the unemployed to find jobs." (President-Elect Obama announces his plan to create 2 million jobs by early 2011)
Unlike other economists, Lam looks beyond the total jobless number to something called employment flow, which tracks the numbers of people moving from the ranks of those receiving a regular paycheck to those who aren't and visa versa. What Lam has found is disturbing. Currently, people out of work have just a 22% chance of landing a new job within the next month. That already makes this a worse market for job seekers than at any time during the downturns of the early 2000s or 1990s, which is as far as Lam's data goes back. And remember, we haven't got to 8% yet.
The underlying problem is something called misallocation of human capital. It's a fancy term for the idea that in the past few decades the U.S. may have been producing too many MBAs and not enough RNs. Economists used to talk about it as one of those long-term risks that most people shouldn't worry too much about. Now the problem, like the dangers of sub-prime lending, obscure financial instruments and so many of those other things we didn't worry about, seems to actually be a problem.
The financial sector is shrinking. Technical assistance jobs shipped overseas aren't coming back. And an aging population requires different services. Not all of these things are new, but it seems we have hit some kind of breaking point for the US job market.
Does everybody understand this? The problem is not just a downturn in business, but that whole sectors of employment are shrinking, some of them permanently.
it may easier for a higher educated population — college graduates now make up nearly 30% of the workforce, up from 22% in 1992 — to make job transitions.
No, it won't. On the contrary, too many college-educateds have too vague of job skills to be competitive.
But it will take time, and could be particularly painful for, say, investment bankers who have become used to fat salaries.
In general, high-paying jobs will be hard to find. Instead, look for jobs that are not so high-paying, and are easier to break into. Instead of trying to make a decent living through higher pay, figure out how to live decently on lower-pay, by having good habits that are more efficient of what you do make.
Obviously, for example, buy NOTHING on credit, except maybe a house. Don't PAY interest, COLLECT it.
That was about the only thing I did right when I was young. We lived in a "rough" part of town, had old hand-me-down furniture, and paid cash for all our cars. We paid our house off early. By not paying interest, and living reasonably frugally, we had a savings rate around 20% or so.
We foolishly thought well of ourselves, because, hey, our savings rate was higher than in Japan! In retrospect, it could have been higher.
Some other things to do, are to be a little shrewder with spending and with investment. I can help you with both issues, lessons learned from experience.
If you can learn to live on LESS money, you have a better chance at competing for such money-making opportunities as will still exist.
