I read an interesting article in the New York Times the other day (“Job Losses Hint at Vast Remaking of Economy”) whose punch line was basically that a significant portion of the jobs that vanished as a result of the current downturn are not going to come back. McKinsey partner and Harvard Business School (HBS) professor Bhaskar Chakravorti had a more optimistic message in an interview for HBS’s Working Knowledge (“Creative Entrepreneurship in a Downturn”) in late February that new needs will emerge in this time of crisis and resources will be available at a relatively lower cost. That will constitute a kind of “private stimulus” that will contribute to getting us out of the current mess.
It seems as though we are seeing and hearing different things regarding the job situation, how bad unemployment could get, and what we should do to improve the situation. A significant portion of the stimulus plan is going to pay for those infrastructure jobs that the Administration says are needed because our infrastructure is crumbling. Well, they have a point there. However, it is a “shot in the arm”-type solution that will get a number of folks out of unemployment in the short run only – until those bridges or roads are fixed. And then what?
We should focus our resources, we being the government, the corporate community, and society, on thinking about what will be reservoirs for those jobs that in the long run will sustain the economy. Green technologies are big and we all sense that anything related to reducing our dependence on oil and our environmental footprint will be increasingly needed and popular in the years to come. There is also a sense however that a bubble might be forming in the green tech / cleantech world and there will be winners and losers. I guess Venture Capitalists live by that risk, one home run out of 10 tries, but the likelihood or imminence of that bubble bursting might discourage some investors.
Then, related to the jobs that are not coming back (re. the NYT article), what about the folks who got trained on those jobs and are not skilled at anything else really? If the plan is for all those people to go back to unskilled jobs, that is not going to help them (low salaries) or the broader economy as a whole.
As to the question that the Administration does not want to ask bluntly, what about the jobs that should disappear? I don’t want to be too hard on General Motors and Detroit and I know that pension plans have weighed significantly on their accounts and thus have given us a biased view of those folks’ profitability but it is not as though we have not seen the Big Three’s competitive positions eroding in the past 20 years – and mind you, they have certainly been trying to do something about it, but it has not worked so far.
I found ironic actually that GM recently announced that they would discontinue Saturn as a brand whereas when it was introduced Saturn was supposed to lead the way and show the world how differently GM was going to make cars from then on.
So, the temptation is to have GM and the other car makers throw the towel and let markets do their magic (or damage…). Of course, the human price would be huge because of the millions of folks depending on the Big Three directly and indirectly for their livelihoods – but supporting those companies over time just because they provide jobs does not make any sense either. And how about diversification in the Detroit area? Easier said than done for sure – but depending so much on the Big Three is not healthy for the Greater Detroit area – that is certain.