Shifting attitudes towards employees may make this recovery the weakest in 30 years for job creation.
Julie Jacobson / AP
The United States faces a prolonged "jobless recovery" – its third such flabby recovery and perhaps its weakest yet in terms of employment growth.
After the last two recessions, there was a long lag between recovery by business and substantial improvements in the labor market. It's happening again, notes Howard Rosen, an economist at the Peterson Institute for International Economics, a Washington think tank. This time it could be worse than either the 1990-91 or 2001 downturns.
Blame it on structural changes in the economy in the past 30 years, Mr. Rosen says. For example, with US corporations so globalized, they can easily hire workers abroad, wherever they want, not just in the US. Thus, that great American jobs machine has "run out of steam," Rosen says.
A related reason for today's 9.6 percent jobless rate is the greater tendency of corporations to lay off workers quickly when sales slow.
"Companies treat workers as commodities rather than as investments," complains Rosen. This reflects a gradual shift in management philosophy to the view that the only corporate stakeholders that really count are shareholders, not so much employees.
Just look at who's raking in the most pay. The liberal Institute for Policy Studies found that CEOs who run the 50 firms that laid off the most workers since the onset of the economic crisis also took home an average 42 percent more pay than their peers in the Standard & Poor's 500 firms.
Rosen's proposed job remedy is that Washington should: (1) give incentives to business to spend more on new plant and equipment, (2) use federal money to encourage more research and development, and (3) do more to train the workforce for today's most promising job prospects. The Obama administration is proposing to allow small business to write off in taxes 100 percent of what it spends on new plants and equipment.