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Tuesday, May 10, 2011

David Brooks's "The Missing Fifth"

In a thought provoking op-ed entitled "The Missing Fifth" (http://www.nytimes.com/2011/05/10/opinion/10brooks.html?hp) in today's New York Times, David Brooks bemoans the fact that one-fifth of American men in their prime working ages are unemployed. Brooks suggests reasons for their inability to find jobs:

"Part of the problem has to do with human capital. More American men lack the emotional and professional skills they would need to contribute. According to data from the Bureau of Labor Statistics, 35 percent of those without a high school diploma are out of the labor force, compared with less than 10 percent of those with a college degree.

Part of the problem has to do with structural changes in the economy. Sectors like government, health care and leisure have been growing, generating jobs for college grads. Sectors like manufacturing, agriculture and energy have been getting more productive, but they have not been generating more jobs. Instead, companies are using machines or foreign workers."

Brooks's solution:

"It will probably require a broad menu of policies attacking the problem all at once: expanding community colleges and online learning; changing the corporate tax code and labor market rules to stimulate investment; adopting German-style labor market practices like apprenticeship programs, wage subsidies and programs that extend benefits to the unemployed for six months as they start small businesses."

Brooks suggests diverting money from health care, which "provides comfort to those beyond working years", to "programs that spark reinvigoration."

But will the learning of remedial English or basic computer skills at community colleges actually spark "reinvigoration"? Do apprenticeship programs only provide temporary relief from joblessness at reduced wages? Will the opening of small businesses remedy the problem?

According to the U.S. Small Business Administration (http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24):

"Seven out of 10 new employer firms survive at least 2 years, half at least 5 years, a third at least 10 years, and a quarter stay in business 15 years or more. Census data report that 69 percent of new employer establishments born to new firms in 2000 survived at least 2 years, and 51 percent survived 5 or more years. Survival rates were similar across states and major industries."

If we are looking to reduce unemployment by creating new small businesses, these are not encouraging figures.

Absent from Brooks's op-ed is the role of innovation on the shrinking job market. Mr. Brooks might consider, for example, how, in past decades, advances in typesetting involving computers and lasers eliminated thousands of jobs in the newspaper industry. Today, the Internet, the dissemination of tablet PCs and Kindles, and the free availability of instant news sources could easily deliver a death blow to much of this sector.

We live in a different world, demanding specialized skills and expertise from an ever declining number of persons, and regrettably this new higher level of unemployment is not susceptible to a quick fix.

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