Closer Look at Unemployment

The Unemployment numbers in the United States have remained high for 2 years and all the stimulus spending have not been able to bring it down. While the unemployment rate has always been known to economist as a trailing statistic to GDP it is still not tolerated to be this high by the American public for this long.

Looking more closely at the numbers we can see that the bottom three industries with the highest unemployment rate are construction at 20.6% of the industry is unemployed making up 12.1% of all unemployed persons, manufacturing with 10.6% of the industry and 10.9% of all unemployed, and the leisure and hospitality industry with 12.2% of the industry unemployed making up 10.7% of the total. The best performing industries are financial services, education and health care, and government jobs.

What the government of the United States needs to do is look at each of these areas and address how the numbers got there and what needs to be done. Manufacturing is the hardest sector to fixed. It is entirely based on supply and demand, the government stimulus will not directly impact this industry. A large reason for remaining stubbornly high is companies that laid off worker during the 2008 recession realized that by making a smaller workforce more productive it didn't need to have as many employees as it earlier thought. Manufacturing jobs will not be coming back in the near future. These employees need to be retooled to work in other areas or new manufacturing jobs need to be created by new technologies and products. One thing the government could do is encourage research and innovation. I would even go as far as new government investment on the scale of the "Manhattan Project" needs to happen but for a civil purpose.

Hospitality and leisure jobs will come back in time. Right now Americans are not taking vacations like they used to because of the unemployment and weak economy. In time these jobs will come back, the economy will recover and Americans will go back to taking vacations, I am not worried about this sector. The IEA recently released 60 million barrels of oil to drive prices down which is a temporary fix that might encourage a few families to take that vacation but will not make a significant improvement in my opinion.

Construction unemployment can be easily linked to the housing bubble burst. The housing market still hasn't recovered and the United States will not see new housing developments being built in the near future. The construction industry is where the government can step in and make the biggest difference. The government needs to reintroduce public works projects like those of the Great Depression. Obviously they can't go back to dam building but there are new projects to update America's infrastructure like repairing what was done last time such as roads, bridges, and water systems. Also new technologies like fiber optics and high speed rail could be funded by the government to create thousands of jobs. To pay for this the government needs to look at what it is spending today on unemployment benefits, what it could make from taxing those now employed workers, and any income the rails, toll roads, and any other income sources. As more jobs are created through infrastructure spending, manufacturing jobs should follow closely and leisure jobs just after that.

There, thanks to ideas from FDR and Eisenhower we just fixed the economy.