This is a piece I have been wanting to write for a while, but it took the alternative of taking my Income Tax test for my CFP course on the subject to motivate me down this path. I may fail this tax test, not because I don't understand the concepts, but because my 60 year old brain cannot retain all the details.
Anyway, a combination of a Fox Business blathering on about how the Obama Administration polices are responsible for the slow recovery in jobs with a story in the NY Times about a the long term unemployed in Boston helped my find my train of thought.
The NY Times article highlighted a 57 year old Ivy League undergrad with an MBA from the University of Chicago (my alam mater) who lost his job 13 months ago. And he cannot find a full time job, so he has stitched together 3 part-time jobs that together fail to add up to his unemployment insurance. I don't know if the guy has kids in college, but somehow he blew through his savings over the last year, so clearly he didn't downsize his spending fast enough. I am quite sure that with a 30 year track record and his clear motivation to work, the issue holding this guy back is (i) his age and (ii) a perception that he will insist on a higher salary than a younger person. I suspect the latter is not reality, but the former is reality.
I don't know how many people over 50 are in the long term unemployed but I suspect it is a majority. Some of these people definitely have the ability to continue to contribute like my fellow alum, but many probably are not as skilled (and now we include all the long term unemployed) and were wasted by a final job stop in a position that technology, globalization or a lack of demand has eliminated. Their skills are all over the map. What will get them back into the workforce is a shortage of workers that creates demand all over the map.
So, the criticism of the Obama Administration policies is inappropriate. When a real estate bust occurs, there is not one country that hasn't taken 5 to 10 years to work through the problem. The U.S. is no different. In fact we have done better than most other countries because of TARP and the 2009 stimulus. But that stimulus ran out 2 years ago and was not completely focused on infrastructure spending where there is the biggest bang for the buck. The GOP has made sure that no additional dollars be spent on infrastructure and now the Road Building Fund is nearly bankrupt. The only thing the government can do now is increase infrastructure spending. That will give jobs to young and middle aged construction workers and their spending will help create some jobs for older people. Lord knows that between decaying bridges, decaying roads and decaying underground pipes, there is lot to be repaired.
However, what it will not completely do is create the groundswell of demand that will create a shortage of workers. That takes young people forming families and spending money on houses. And this generation of young people has too much student debt and many suffer from a lack of opportunity to get career jobs. Until they pay down there debt and finally land in their career job, they will not provide that necessary source of demand for solid economic growth. So tax cuts like the GOP propose will only send money to the wealthy who have no need to spend more. The only thing that can help all this is a national effort to fix our infrastructure.
It used to be politicians of both parties supported this. But not today and not in the last 14 years.
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