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The New Economy – A Pretty Scary Graph!!

So what does the new economy look like for the unemployed?  It looks like something never seen before.

As you can see in the chart above – the average length of unemployment associated with this recession is unprecedented.  Why?  All along economists and analysts have said that it would take longer to recover the jobs lost in this recession than it has after previous recessions.  Technology and drives to reduce costs have simply eliminated the need for many employers to require as many workers as they have in the past.  Outsourcing has certainly taken its toll.  Slow economic growth has led many employers to be hesitant to hire.  Oh – and we also are paying unemployment benefits for YEARS (unprecedented).  We hear “Why should I work when I can make almost as much collecting unemployment” every week!

I have some opinions on how this cycle will change.  China is in a period of inflation – and their wage costs are increasing as well.  It’s only a matter of time before the costs of manufacturing (including shipping materials to their country of destination) in China will equal that of the US.  As those costs come closer to the costs of manufacturing in the US – companies will have less incentive to manufacture there.  We’re already seeing the auto industry increase hiring and I believe that will slowly start to trickle down.

Unemployment compensation will begin to run out forcing people into the workforce.  I have almost 50 open positions today!  Once people are forced into the workplace this trend line will change.  Yes wages have fallen, and eventually people will re-enter the workforce for salaries lower than when they were laid off.  Sounds un-fair, and maybe it is, but it’s just how I see it.

We’re in for a rocky period.  Every day there seems to be conflicting views on the direction of the economy.  Uncertainly breeds inaction in hiring.  That’s what the graph shows and also what we’re seeing here.

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