Shortly into his presentation, Krugman threw an employment slide out that I’d never seen before, but that didn’t take long to make an impact. A graphic representation of the ratio of employed people in the country, it was frightening in progressed more or less steadily until the onset of the recession, at which point it dropped off like an Olympic ski jump—only without the curve at the end to hurl you into the sky. The figures it showed were no less unsettling; U.S. employment has dropped from around 65 percent in 2000 to just under 59 percent today.
Take a long look at that last number again, and then compare it to the latest unemployment figure of 9.8 percent. Now, while a substantial proportion of the gap is undoubtedly made up of those who are retired or not yet of working age, it’s still a sobering thought: at present, almost half the population of the country isn’t working. It’s an even more sobering thought in a world where expert opinion puts a return to a “normal” level of unemployment around 5 years away. Want some worse news? Krugman thinks it could take even longer. “We have a long, long haul before we’re fully recovered.”
It’s difficult, of course, to separate world trade and employment in a globalized world—one where we’re “interdependent” with trading partners, no matter how far up or down the economic food chain they may be. Thus, when Krugman says that world trade has “fallen through the floor” in way that has “literally never happened—including during the Great Depression,” it should be cause for concern.
There was, however, one small—albeit slightly cold—crumb of comfort for those concerned about U.S. unemployment to take from Krugman’s speech: he thinks that globalization has more or less hit its peak at this point. The reason that could be construed as good news? One of the key drivers of globalization has been the rise of freight containerization—something that has allowed materials and goods to be shipped around the world easily, hastening the growth of global markets. As transportation costs (read: oil prices) continue to rise, however, Krugman sees potential for a reverse trend: “insourcing”—or hiring of employees at home—as global shipping becomes less affordable.
Not exactly reason to start dancing in the streets, I suppose, but at this stage we’ll take any good employment news we can get.
--Posted by Phil Stott, Vault Staff Writer
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