The protesters marched on the highway, despondent about rapid inflation. They shut down the thoroughfare for hours. 1000 miles away, protesters flocked the capital and drove the legislators to safe haven in neighboring territories.
These were fundamentalists in Tunisia or Libya; they were students in California and state workers in Wisconsin.
The impetus for civil unrest in the Middle East is that of the “lost generation” of unemployed misdirected youth. In some regions of the world, unemployment is 40% or more. In the U.S. , it is not just the young that face underemployment but generations of workers whose skills have become irrelevant. The U.S. has the western world’s widest income distribution. The Top 10% make 6 times that of the bottom 10%, compared to 4.2 X for Great Britain and 2.8 X for Sweden[i]. The labor market has hollowed, as wages earned by shop floor workers have actually declined (when adjusted for inflation) over the last two decades.
The labor imbalance in the U.S. has far reaching implications, not only for the unemployed but for our economy as a whole. The inability of low wage earners to consume is a strain on U.S. growth.
While there is plenty of banter about the need for jobs, there is no systematic solution in place for retraining American workers such as displaced auto and steel workers. President Obama has called on U.S. business leaders to: “generate ideas for creating jobs, sustaining the economic recovery and making America more competitive”[ii].
Of course the notion of “creating jobs” is a little too convenient. Jobs are created when there is a need for them, and Americans get the jobs when they offer the most value. The problem is not that there are not enough jobs; it is that the cost-benefit for the employer often tips towards off-shoring. If our workers do not offer enough value in the form of specialized knowledge, ability to use technology, etc., jobs will continue to be shipped overseas.
This is not a protectionist rant, and my comments aren’t intended to incite a riot on free trade, or China manipulating currency, etc. I am focused on what we can control. What our nation needs is a retraining effort. The money we are spending on unemployment and other services would be better spent invested in people so that they can acquire new skill sets that are relevant in an ever changing world.
The question is who will lead, and who will pick up the bill? To prepare our workers for the future will require collaboration across business and government. Tax and other incentives need to be in place to encourage the retooling of America. So as GE Chairman Jeffery Immelt and the rest of the White House Council of Economic Affairs weighs in on jobs, I hope they emphasize that we need to create opportunities for workers, and provide them will the skill sets required to compete.
Otherwise, the marches may extend to Washington D.C. and a state capital near you.
[i] The Price of Everything Eduardo Porter
[ii] Obama wants business world’s best ideas on jobs USA Today