Labor Market Malaise: Jobs, Education, and Trudging Toward the Near Future

Declining economic conditions may very well require a reevaluation of labor and education in the US. Such a reevaluation may require radical changes in contemporary everyday cultural norms with respect to job searches, labor, education, and creating wealth. Despite a harsh economic climate and the specter of another global recession, there is still reason to have hope and there are still opportunities for entrepreneurs going forward.

I. The Labor Market and Education

MarketWatch's Ruth Mantell had an eloquent article Monday on the status of the US labor market. Mantell: "Marked by declining earnings and benefits, job quality has been eroding for years, spanning Democratic and Republican administrations. And the future looks rough for many, experts say." Mantell discussed the experiences of Jim Fertig, a 65-year-old from Ohio who lost his accounting job in March 2011 and is now working as a part-time telemarketer. Fertig regards the job as being without responsibility; Fertig said that the job is boring. Likewise, 54-year-old Michelle was laid off in late 2008 and now works taking insurance claims; similar to Fertig, "her new job is a step down from her prior work in pay and responsibility."

While taking a look at the stock market may lead one to believe that a recovery is at hand, Mantell's analysis portends that "competition is intense" for American workers -- and in the midst of a recovery, "some workers with new jobs are taking cuts in pay and responsibilities." According to economist Henry Farber, "job losers who found new positions earned on average 17.5% less in the new [jobs]" they took on. Mantell: "With persistent high unemployment, there's downward pressure on wage growth." To say the least, for right now it's an employer's market. Even worse, according to economist Austin Nichols, "There's a widening gap between the haves and the have-nots."

According to Mantell's analysis, "education plays an important role in job quality." In this way, in the current global financial crisis, "men who did not finish high school have been hit particularly hard; their weekly earnings are down 28%. Meanwhile, women with college degrees have enjoyed a gain of 35%." Whereas education may have been previously regarded as the key to success in the US labor market, current trends related to student loan debt and unemployment seem to reflect cracks in the belief that a college degree is the first step toward prosperity.

Zero Hedge had an interesting story published Feb. 27, 2012 on tips for surviving a possible second phase of the global financial crisis. SmartKnowledgeU's chief investment strategist and founder JS Kim discussed how gold and silver may be viable investments in the wake of a second phase of the global financial crisis. In one video entitled "How to Survive Financial Armageddon", Kim suggested that young people between ages 18 and 34 not currently taking classes in higher education for a specific trade may want to delay beginning college owing to possible inflationary worries from central banks. In the video, Kim suggested a better use of funds would be to put the money away rather than spending funds on higher education. Kim: "As far as the information and knowledge crucial to surviving this economic crisis, there's nothing you're going to learn in business school...of any value that will teach you how to build wealth."

Kim went so far as to suggest that young people work in online communities to barter between themselves in order to possibly avoid inflation. Kim: "Bartering is a great way to get around the devaluation of currencies that central banks are going to inflict upon the people." Kim suggested that rather than pursuing college, young people could pursue passions that would help to improve individuals' lives, e.g., entrepreneurship via the Internet. Kim also suggested purchasing gold and silver in order to survive the financial crisis. Kim's discussion portends that perhaps education is not as valuable as is commonly believed. Kim used the analogy of tobacco in comparing the ignorance of the dangers of cigarettes to contemporary ignorance regarding monetary policy and the banking system.

Both Mantell's and Kim's analyses portend that economic conditions in the US are declining with respect to the labor market. Per Mantell's discussion, even in light of education and experience, Americans are finding themselves effectively relegated to part-time work in mundane occupations that offer little responsibility and few benefits.

II. The Specter of Global Recession

In light of oil prices, there is reason to believe that any such recovery in the US could hit a roadblock in 2012, spurring more unemployment in the months and years to come.

Reuters reported on Sunday that a rise in the oil prices is raising the "specter of global recession." From the article: "A jump in energy prices is jamming the slow-turning cogs of an economic recovery in the West, but that may be nothing compared to the economic shock an Israeli attack on Iran would cause." According to the Reuters article, "Wall Street bank Merrill Lynch said this week that oil prices could climb to $200 over the next five years." Rising oil prices are spurring fresh worries that the global economy could be headed toward recession in the near future.

According to a recent article from USA Today's Adam Shell, three "doomsaying" economic experts believe that economic Armageddon is ahead. The three experts, Harry Dent, Gerald Celente, and Robert Prechter, are "super-bears" who are warning "that the worst of the financial crisis is still to come." Dent believes that "another stock market crash is coming due to a bad ending to the global debt bubble" though Dent said that such a crash would not come until 2013 or 2014.

Celente discussed that "Americans should brace themselves for an 'economic 9/11' due to policymakers' inability to solve the world's financial and economic woes. The coming meltdown...will lead to growing social unrest and anti-government sentiment." Interestingly, Celente also commented that "societal unrest in the form of street protests and increased crime are possible, too." Prechter believes "that the major US stock indexes, such as the Dow Jones [Industrial Average] and [the S&P 500], will plunge below their bear market lows in March 2009 during the last financial crisis." Even so, according to Shell, "these dire forecasts differ sharply with the brighter outlooks being espoused by the bulls, or optimists, on Wall Street." As for how to avoid the financial crisis, Dent "recommends buying short-term US Treasury bills and the US dollar, which will benefit from safe-haven cash flows... [S]tocks will fall sharply in value."

In light of labor market issues, bearish sentiments, and doomsday fears, I found it interesting that Mantell's aforementioned analysis reads something like a treatise on Marxian economics. In Mantell's article, you have it all: alienation, commodity fetishism, concentration of wealth, capitalist exploitation, reserve army of labor. And despite doomsday prospects, to be fair, there is another side of the coin whereas one could believe that the economy will slowly and steadily recover and that the American economy has been through worse in the past. Nevertheless, if only for the time being owing to unemployment issues, it does appear that American society and the government are reevaluating the value of higher education.

A SmartMoney article from Feb. 24, 2012 discussed how new research shows that federal spending on higher education is making college more expensive. For those who are familiar with Austrian School economics, this should come as no surprise. If the government begins to take a closer look at higher education in relation to student loans, future students may find themselves in a situation where pursuing a degree in disciplines that are, let us say, not as profitable as other disciplines is impossible. Ergo, no more degrees in subjects like art, philosophy, and history. To be fair though, with the job situation in the US being the way it is, it's getting to the point where it's as if any degree you get from college does not correlate to finding a decent job. Even one with an engineering degree may find himself working retail at Sears, or one with a law degree may find herself waiting tables at Applebee's.

In a similar line of thought with contemporary American economics, Reuters recently reported how the "new American Dream is renting to get rich." Young Americans may find themselves putting off marriage, children, or purchasing a home owing to the economy. But from this perspective, what sort of society are we evolving into in the coming decades? One where the older generation owns all the real property and has all the well-paying jobs while the younger generations and working poor are left to rent and work in retail and fast food while being saddled in debt for worthless college degrees? To say the least, such a situation does not bode well for both the economy and society going forward.

Going along with Kim's analysis above regarding entrepreneurship and bartering, younger Americans may find themselves in situations where they are effectively forced to start their own businesses and barter in order to economically function and subsist. In terms of US dollar income, such bartering as discussed by Kim raises questions about consumer debt and student loans. Hypothetically, were a group of young individuals in their 20s to pool their resources and live communally, the actual amount of income in dollars per "kibbutznik" would appear low, yet with the communal lifestyle, the actual economic activity of each individual is arguably much greater. And in terms of viable, fulfilling labor, I have to wonder how many individuals would be willing to give up working mindless, robotic low-wage jobs in fast food, retail, and the service sector in order to find more fulfilling labor in a communal setting -- perhaps through hunting, fishing, farming, teaching, taking care of children, et al.

Obviously, the prospect of communal living may be far off in terms of contemporary American society. Nevertheless, one has to wonder if the American economy and society will evolve to the point where the only individuals who survive and thrive are those who live in a quasi-communal context -- perhaps with three of four extended families within a parcel or several parcels of real property, growing their own food, raising their own livestock, educating at home or through the Internet. It is conceivable that for such a semi-self-sufficient extended familial "kibbutz" in the American Midwest, rising prices at grocery stores and gas stations would matter little.

In terms of education, entrepreneurship, and the labor market, one way or another, it appears that socio-cultural norms are on the edge of substantial change. Whether one is a bull or a bear, optimist or pessimist, most likely current economic trends are going to effectively force change not only in the process of education but also in terms of the labor market. In a situation where workers, young people, and consumers are tightening belts and pinching pennies owing to rising gas prices and food costs while trying to manage student loan and credit debt, is the idea that things with respect to labor and education are going to change in the near future really that much of a surprise?

In light of societal changes that may occur with respect to another serious financial crisis, it may be fair to say that at that point, individuals and governments on various levels will begin looking for alternatives to the status quo mixed economy version of capitalism. Gas prices, the job market, labor, education -- these may have to be seriously reevaluated and modified in the midst of another financial crisis. In the near future, individuals may begin to look for superstructural economic change on global and historical levels -- thereby asking, "After capitalism, what's next? Is there anything next? To where are we headed on a global economic level? Is it possible to formulate a blueprint as to the next stage in human economic activity?" I hope to explore these issues and more in an upcoming article.