Saturday, March 30, 2013

Displaced Workers

A few weeks back an NPR report on labor displacement in the homebuilding industry caught my attention. The report provides a clear and easy to understand example how the process works.
Professional CAD system

Labor displacement is an economic term defined by the Bureau of Labor Statistics (BLS) as: workers 20 years of age and older who lost or left their jobs because their plant or company closed down or moved, or there was insufficient work for them to do, or their position or shift was abolished.

I know, economics - god love you if you are still interested and continue to read. Nonetheless for an overview of how the BLS reports on this material, read Marut Tasci's (Federal Reserve Bank of Cleveland research economist) article, Displaced Workers and the Great Recession. Mr. Tasci does a nice job of making the statistical part of this subject digestible.

Both reports touch on an extremely important subject. Change in the labor market. Of course there is always change and when we forget this there are problems. Just ask some of the transition UAW workers, individuals still working in the auto manufacturing industry that were there back in the day. They, and others like them are retiring out or moving on, but not without having to deal with profound change.

But don't get me wrong, I am not taking sides at least not at ground level. I do believe the digital revolution has and is causing a paradigm shift, but this is hardly new news. Still personal stories coming out of all of this can be overwhelming. They are clearly under-appreciated by policy makers where pressing economic/budgetary realities make consensus on social safety nets and mental health support systems,  practically nonexistent. Something akin to micro economic depression is upon us (well the majority of us anyway). Workers of all types know there's a lot "off" with the way things are, yet don't have the time or resources to stop the merry-go-round long enough to deal with what ails them.
A Rust Belt reminder 

Where we go next as a nation concerns me greatly. At the moment we are struggling with profound workforce issues. Education (access, cost, type) and the role of government in (workforce) education is a major part of my concern.

The company presented in the NPR report has become far more efficient (not by hiring a slew of highly educated workers, rather by employing the products of such) enabling them to do more with less. Data from Mr. Tasci's article shows that a hefty percentage of displaced workers returning to work are doing so with earnings discounted 20 percent. We can infer they didn't have the right skill-set or education, that they had to settle. The economy won't see any of the missing 20 percent any time soon. In fact, there's a downward multiplier effect as family budgets get tighter and less of what remains is spent on things other than necessities.  

It's a leaner and meaner Marketplace and I expect lots of Great Recession analysis will be forthcoming. In the meantime, business has long since moved on.

What about you?

Is it apparent to you that you are a Free Agent worker, completely responsible for your own career path, re-training and education?

Travel well.
John Jeffrey Lundell

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