George Rebane
Here's a quick back of the envelope look at the employment situation over the next decade when we take into account accelerating technology that increases worker productivity. GDP growth is taken at the indicated 2.5%/year. This post is really as a 'memo to file' since people have asked me how I come up with the 70 million un/underemployed in the next decade with unemployment at 35%. Even with GDP growth at 5%/year, the 2022 unemployment does not come down below 17%. The blue numbers are inputs. I have posted the actual Excel spreadsheet here so that readers may play with it and insert their own numbers - Download Employment2022.
To see what is required to achieve "full employment" (4% unemployment) over the next ten years, we would have to keep our population growth low, kick our economy into a historical rocket ride (4%/yr), and reduce the technology contribution to productivity to 2.5% or lower. See below.
Where do you get your numbers?
Posted by: Paul Emery | 30 January 2012 at 02:49 PM
PaulE 249pm - mostly from the BLS. The growth rates are in the current literature - e.g. Kurzweil et al for technology impact on productivity. The model speaks for itself. For example, I've kept the fraction of work age people in the workforce as constant, although it has been dropping for several decades now. Things might look a little better if I kept dropping that number which includes people who have given up looking for work.
But the spreadsheet is to serve as a stake in the ground for discussing employment in the pre-Singularity years. No one in the mainstream wants to talk about what this portends, you only hear it from expensive news letters and investment services.
Posted by: George Rebane | 30 January 2012 at 03:52 PM
Frightening, Dr. Rebane. First the population projections are an additional 107 million people in the next ten years? Wow. A lot of mouths to feed. Scary. Next, new technologies we can only imagine will replace workers. Some will be employed in jobs that do not even exist today. I remember going to Disneyland as a lad and looking at a display in Future World. Machines will do the work for us and will be enjoy life with more recreation time. Articles of that era (especially business journals) pointed to buying stocks in RV manufactures, sportswear, and the like as we become a nation of vacationers. In reality, we work longer and harder to maintain an every increasing standard of living with little time off or disposable income to enjoy the fruits of our labor. Your stats may be too low considering this simple prediction: http://www.smartplanet.com/blog/thinking-tech/our-rising-robot-overlords-what-is-driving-the-coming-upheaval/8336 In 1990 I was scouring the hillside around here looking to buy some raw land. My friend who sold only raw land around here for his livelihood (since Vietnam) told me something that put chills down my spine. While climbing hills out in Camptonville, he said "Someday Camptonville will be considered close to town" Perhaps he will be proven right, but I probably won't live to see that day. Unfortunately, I might live to see the day in your 2022 scenario.
Posted by: billy T | 30 January 2012 at 07:17 PM
This scenario is a bit overdue, but my wife and I have been aware of this from the first days of our marriage, 30 years ago. Discussing the book to some extent has guided our future.
http://en.wikipedia.org/wiki/Player_Piano
Posted by: Douglas Keachie | 30 January 2012 at 07:28 PM
The youth unemployment problem is already hitting Greece, and Portugal at 30.7% and 46.6% respectively, it is Spain where the youth unemployment pain is most acute: at 51.4%, more than half of the youth eligible for work does not have a job! The regular unemployment rate in Spain is almost 23%. I could not find any good numbers for the youth unemployment rate in CA right now, but I will bet it is rather high.
Posted by: Russ Steele | 30 January 2012 at 09:32 PM
I saw the country heading towards a service industry employment base back in the 80's. When I was elected Supe we tried to diversify our county to insulate us from the vagaries of a reliance on one or two industries but we were unsuccessful. I remember seeing the stats for the folks leaving the county for hood paying jobs in Placer and Sacramento counties and low pay service jobs folks coming up the hill to take the jobs here. It was easy to see the problem and when housing prices started rising it got worse. Now we see the departure of young families and the takeover of county jobs by the government. One only needs to see the Lassen and Plumas county examples of what happens when the government is the largest employer.
Posted by: Todd Juvinall | 31 January 2012 at 08:01 AM
ToddJ 801am - Lassen and Plumas counties? Tell us more.
Posted by: George Rebane | 31 January 2012 at 08:20 AM
The government employees represent a disproportionate share of the labor force in those counties. That was my point. The commute out of the county to te south and west was explained a few years ago better than I have here. I would suggest you look at the traffic totals coming and going down HWY 49 and 20 and it may be clearer. Russ probably has the link.
Posted by: Todd Juvinall | 31 January 2012 at 10:19 AM
Agreed. Todd, please elaborate. A bit off topic, but I remember when the buy local campaign and sustainable community thing was kicking off. The guest speaker used Boulder, Co and Bellingham, WA as her examples of buy local communities and the positive effects on the community. I did my own research at the time. The number 1 and 2 employers in Boulder were the University of Colorado and Microsoft, respectively. The average age was way below Nevada County, with a much higher percentage of young folks and and much, much higher percentage of single people. Think the average age was 42 if memory serves me correctly. Great place for bike paths and mass transit and start up businesses. Next I researched the city official records for Bellingham, WA. Largest employer was Western Washington State University with a large percentage of young people again. Comparing Boulder, Co and other college towns to Grass Valley/Nevada City was indeed comparing apples to oranges. Thus, please Todd, tell us more. Perhaps Glen or Lake Counties could be included, as there are many similarities to Nevada County, particularly Lake County with similar demographics, size, distance from larger urban areas, medium incomes, etc.
Posted by: billy T | 31 January 2012 at 10:34 AM
So it is obvious, then, we need a UC campus here. I don't think we can sell too many folks on the joys of scuba diving the Idaho-Maryland Mine....
Posted by: Douglas Keachie | 31 January 2012 at 10:43 AM
LOL Doug. It has taken me awhile, but I finally can see the wit in your posting. Having a UC campus here will afford us locals the opportunity to go down and protest the rising tuition costs without making the long trip to the tide pools, whether we have a dog in the fight or not. Maybe my hero Lt. John Pike (aka Sgt Pepper) will make an appearance and nonchalantly and casually spray us. I do idolize that man's calm demeanor. Fun times ahead.
Posted by: billy T | 31 January 2012 at 11:22 AM
I hadn't thought of that aspect, but, yes, that would make things very convenient, BillT. BTW how's your worm farm doing on Towntalk?
Posted by: Douglas Keachie | 31 January 2012 at 11:34 AM
Oh, Mr. Keachie, it was a one day thing. Moving on. Can't get traction, nobody cares. Did recognize your "me thinks" post, though. Farm to nowhere. Dr. Rebane, have your figured in the Green Jobs to be descending on us in your equations? 500 million dollars is nothing now days. It is kinda of like saying 1/2 a billion, which is chump change. Of the 500 million dollars our government wisely spent, we have created a whopping 8,000 jobs. That is what I call green sprouts. Enough to move the needle. Of course, of those 8,000 jobs, only 1,336 have remained in their green jobs after 6 months. Ah, another farm to nowhere. http://www.realclearmarkets.com/articles/2011/11/03/obamas_green-energy_jobs_lie_99347.html
Posted by: billy T | 31 January 2012 at 12:07 PM
opps again. I meant this one http://www.usatoday.com/news/washington/story/2012-01-30/obama-green-jobs-program-failure/52895630/1
Posted by: billy T | 31 January 2012 at 12:15 PM
The Congressional Budget Office on Tuesday predicted the budget deficit will rise to $1.08 trillion in 2012. CBO also projected the jobless rate would rise to 8.9 percent by the end of 2012, and to 9.2 percent in 2013.
Posted by: Russ Steele | 31 January 2012 at 02:16 PM
And the CBO calculated that with present policies (tax and spending) set to kick, the 2012 GDP will 2.1%, and drop to 1.0% for 2013. They're keeping their mouths shut beyond that. But have fun and lower the GDP growth rate in my little back-of-envelope (BOE) model. It will tie with the predictions the CBO and other high-falutin' economists are making.
Posted by: George Rebane | 31 January 2012 at 02:58 PM
Dr. Rebane, it saddens me to inform such a learned man as yourself that your numbers are bogus. This brings me no pleasure to proclaim this disheartening bit of news. The CBO came out today and said the BLS's numbers are as bogus as a three dollar bill. Take solace in the fact you were not the first, nor last, to fall for BLS's reports. Yes, there are always revisions after the fact which usually do not grab the headlines. This is not a revision. The real unemployment rate is 10%. Back to your little BOE model. Olive juice. http://www.zerohedge.com/news/latest-congressional-budget-outlook-2012-2022-released
Posted by: billy T | 31 January 2012 at 08:38 PM
BillyT 838pm - your reference cites the CBO saying that unemployment in the 2012-2022 interval will be 10%. Is that what you are taking as revealed truth about the future?
My BOE model is just that and the starting numbers about working age cohort and workforce fraction comes from the BLS. The CBO does not develop these numbers independently, but does take them from the BLS. However, the CBO can only project futures based on what Congress tells it will happen in the out years as far as spending and borrowing go. Do you recall the last time Congress or the CBO were right about anything?
So, you're welcome to put in other numbers into the BOE model and see the results. My growth rates for population, workforce, and productivity are not holy - use your own. BOE is a simplified 'what if' model that still provides some fairly insightful results when you consider that it doesn't take federal budgets and borrowing explicitly into account. Enjoy.
Posted by: George Rebane | 31 January 2012 at 09:22 PM