November’s unemployment figures came out today. They were quite staggering in October (240,000 jobs lost) and were even worse for November (533,000 jobs lost). The worst may be yet to come.
Social unrest will force Obama to put the issue of job creation at the top of his agenda when he takes office in January. His massive 2 year public works plan aims to create 2.5 million jobs – a new-new deal of sorts. This may help to improve dismal worker moral, but these are only temporary jobs (there are only so many bridges that can be built); the positive effects will be short lived; and 2.5 million is paltry given the losses to date and the new jobs necessary to keep the unemployment rate from rising higher.
In order for sustainably low unemployment, the private sector needs to play the key role, not the government. Only the private sector can re-allocate our unemployed to a long-lasting job.
Currently, US companies are cutting jobs at shocking rates. It is impossible to get through a financial publication without reading about another company cutting its labor force by 10%. When will the carnage end?
7% unemployment is expected by year-end, and 10% unemployment isn’t outside the realm of possibilities for next year. This would be the worst recession for the job markets since 81-82.
However, many of the largest employers in our country are spending more time begging on Capital Hill than improving their out-dated business models. Obama’s plan may be our only option until serious structural changes are made in our private sector’s largest employers. Say it ain’t so.