Will US Workforce Entrants Need To Emigrate To Find Jobs?

Will US displaced workers need to emigrate out of the US to find gainful employment after the recession?

The problem facing displaced workers in this recession is not future low paying jobs. The problem is whether any jobs will be available for them.

The US lost over 7 million jobs in this recession so far (more job losses are expected) and needs to create about 1.4 million jobs per year just for new entrants to the workforce, such as school graduates, mothers and divorcees returning to work, retirees returning to work, etc.

So far, in this recession, there is negative net job creation, which is why unemployment and discourage workers numbers are so high and going higher. Historically, in the best of times (not the average job creation rate), the US creates about 2 to 2.4 million jobs per year. At that rate, it will take a decade to return employment to pre-recession levels. If new job creation, is lower, it will obviously take much longer.

The excessive job losses of this economic downturn are like a dam created by government policies breaking and the total effects felt in a short time as oppose to a normal river's run-off occurring gradually, season by season. The US is experiencing a massive restructuring of protected and subsidized industries.

The job losses in construction and auto industry are mostly union jobs. The job losses are a result of the removal of union "economic rent seeking" and replacement, not with low paying jobs, but with jobs fairly priced for the worker's skill level, training, experience and industry need. The job losses are also the effects of automation on industrial productivity replacing union pay scales and workforce retention rules. Additionally, it is the effect of the job market catching up to previous auto bailouts, e.g. Chrysler late 1970's, etc., and government housing subsidies, e.g. GNMA guarantees, mortgage interest deduction, etc. and undoing the distorting subsidy effect on wages and employment in the affected sectors. Higher than average wages in the auto sector accelerated increased automation and productivity gains.

Many of the jobs connected with skilled construction of the depressed housing sector or with the skilled manufacturing of the depressed auto industry sector will not come back. Will these workers need to find jobs in the lower-wage, lower-skill service-industry jobs? Will these workers be able to find any well paying jobs?

If there are comparative advantage skills in the available US work force, jobs from other parts of the world will be outsourced to the US. In addition, when there is an excess mobile labor force in a country, the workers emigrate to other countries where their skills are needed. For example, immigrants came here to build the railroads in the 1800s, and then about half the immigrants who came here to build the railroads returned to their homelands after its completion. In current times, utilities and other companies will often bring in skilled and specialized labor from foreign countries to meet temporary unfilled job skills in the US. After the end of the recession, US workers may have to go outside the US for jobs. Worker mobility among different countries is a norm in many parts of the world, except the US.

There is no way to know if new US jobs will be high paying or low paying. It depends on US industry need (demand), the skill set of available employees (supply) and the relative value added of the employees. Once we are past the worst of the job losses of the recession, the problem will not be creating high paying jobs. The problem will be whether the skill set, training and experience of the available workforce match the new high paying jobs' requirements.

If skills do not match job requirements, the US might have going forward a much higher natural unemployment rate than it has had since WWII due to the frictions in the labor market caused by a mismatched skill set between workers, job openings and worker mobility. The concern then will not be the creation of low paying jobs; it will be high unemployment without any substantial job creation.

One thing that will occur will be efforts by the unemployed to remove artificial job barriers to their hire such as licensing, unnecessary education requirements and union membership for better paying jobs, such as teaching, the medical field and similar job categories where future job openings are expected and the necessary skills are available in the workforce without the needed license or affiliated memberships.