With the economy still swirling around in the toilet and the politicians attempting to use the unemployment numbers to support their various positions, we are treated to a monthly dose of "the unemployment rate went up, down, or remained at fill-in-the-blank" from the news media. Often, this is published with the same matter-of-fact indicator status that one might use to confirm body temperature. Are we getting better? Are we still sick?
One number that they talk about not being counted are the number of people who have "given up", people who have been out of work so long and been unable to find work -- so they have essentially given up looking (or at least going through the vehicles typically used to track unemployment). Of course, this number gives come conservatives fits. "How could you just 'give up' when you don't have a job" is one of those threads on conservative channels that I've blog coverage of.
But there is a hidden side to the unemployment numbers, and my guess is that it would probably be a better measure of the "health" of the economy if you could adequately measure it. Think about all of the people that you know who are frustrated or unhappy in their current jobs. Think about all of the ones that are actively searching for work even though they currently have a job. Now imagine the number of employed people who are working and would like a new job, but have given up their search.
Most of us work under "at will" employment conditions. Basically, this is sort of an agreement between you and your employer that says, if you don't like it, you can always quit and do something else. As a society, we've established this as a theoretical free-market check-and-balance against the demands of the work environment. And it works. Sometimes.
When someone is hired for a job, they often came from an existing job. When the job market is bad, people don't get hired and they don't change jobs. They are stuck in their existing work environment. Sure, they may have been looking for work from the safety of their existing job, but they have been looking for work. But if you already have a job and you make the effort to look for work -- if the economy is bad and there are limited opportunities -- at what point to you take that time and energy and focus it on something else? What does 'giving up' look like when you already have a job?
While it may be impossible to estimate the number of people with jobs who have given up looking, you can imagine the hidden cost on the economy. When it comes to marketing through customer service and front-line employees in the service industry, employee happiness is often correlated to positive customer experiences. And regardless of how much work they do and how much output you get from them, your unhappy, wanting-to-change-job employees are probably giving less than 100% of what they are capable of -- it's like an audience watching a bad movie, just because they haven't walked out of the theater doesn't mean that you have their interest.
What Real Economic Recovery Looks Like
When I hear the government and the media promote declining unemployment numbers, I prefer to look at the situation in a different light. Back in the dot.com era, the job market was so strong that many companies couldn't find bodies to hire. During that time, we often had to hire people who sucked simply because they were the best available body -- and you didn't feel bad about cutting somebody loose who sucked because they were likely to be picked up by some other company. We truly were free agents at that time.
In a recent piece, economist Paul Krugman called what we're in a depression instead of a recession. He noted that, while it wasn't as bad as the Great Depression, just because things don't suck as bad doesn't mean that they don't suck. How will I know that the Great Economic Downturn is over? It will probably start with a few handfuls of key employees jumping ship for another company. Then, like when key Google people started jumping for Facebook, established companies will start adding salary and benefits instead of cutting them -- they will need to remain competitive. Next, you'll start getting lots of emails and phone calls again, from recruiters desperately wanting you to consider some company.
Sadly, I don't think that we're anywhere near the start of that world, because it isn't going to come from austerity, belt-tightening, and tax breaks for 'job creators'. If you look back to the dot.com era (not as a bubble but as the time when there was economic job security in as much as there were opportunities to work for anyone that was willing), then you might suspect that real recovery will only take place when we experience some of the conditions associated with a bubble or a boom -- namely more job opportunities than we have bodies available.
So what do the dot.com era, the housing bubble, the social networking boom, and the green tech boom have in common? In the early days of all of these growth spurts, a new market appeared. In the race to compete for these opportunities, people invested time, effort, and money chasing the potential windfall -- like sailing and trying to catch that puff of air to fill your sails and carry you along.
Some of these booms are short-lived. There are only so many opportunities for an entrepreneur to build Angry Birds and dominate the iTunes App Store before their software becomes yet another game in the half a million apps. Large competitors learn from the fast-swimming pioneers. But a bigger part of the problem that we have is that the entrenched interests in our system have enough influence to strangle the life out of the up-and-comers, like traditional energy interests lobbying to undercut green tech or the ILECs strangling the competition out of broadband.
Remember back around 1998 and the Internet Tax Freedom Act?
You might call it early-boom, but 1998 was in the time before e-commerce had really taken hold. There wasn't a lot of money being made on the web. There was no streaming media. Traditional media was still the main source of content. There were no blogs, no Adwords, or Adsense. Maybe it's because there was so little money there or maybe it was a brilliant, prescient moment -- but somewhere within the halls of the government, they managed to come together and protect the Internet from being taxed.
I write this not from some sort of pro-tax/anti-tax canard; but rather, here is one example government legislating the protection of potential economic bounty -- the future interests of competition -- from the lobbying, money, and powerful influence of the existing, entrenched players. Imagine if, back in 1998, Time-Warner had the foresight to see their empire collapse. Imagine if media companies could have lobbied for a tax on streaming traffic -- or perhaps a tax on any content that wasn't streamed.
Today, the entrenched players can clearly see the potential money in the Internet and they work to reshape their control market using things like DMCA, SOPA, and Net Neutrality. Imagine if, instead of attempting to rein in these markets, we were pushing to expand the markets through things like universal broadband internet access. As strange as it may be to imagine, there are people without access to the Internet. Remember when Google announced it's extremely high-speed Internet access initiative? There was almost a mini-boom of cities lobbying to win that contest. Why? Because the benefits of ubiquitous high-speed Internet access is easy to understand -- not to mention that it would also likely translate into jobs.
I Know, I Digress...
Sometimes when you are sailing and there is no wind, you find yourself scanning the water looking for signs of a breeze. The media is always looking for stories, looking for changes to report. Most recently, as a result of the holiday shopping window, they report that consumer confidence is higher than it's been in quite some time... but employment prospects look to remain flat in early 2112. They take you on a roller coaster ride with the news.
Recovery? For some, that may be as simple as having money to spend -- or less of a sense of guilt (or a political agenda) for not spending it. And while the economist definition of a depression or a recession may be measured by an economic tick here or a stock-market indicator there, for me, I'll believe it when I feel the winds of an economic boom blowing and that sense of energy and excitement of new possibilities on the horizon. Until then, we just have to fend off the damned cannibals that want to keep us trapped in a stagnant life raft. Does anybody have a motor and a compass?