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Scary facts – why high unemployment won’t go away

albmadmin
December 3, 2020

We know already that alabama unemployment is high.  It has been at or above nine percent for
three years now.  Unfortunately, I believe that it will stay high for a long time, possibly forever, for several different reasons.  Some of these factors are due to federal government actions and could lessen after the next election depending on who fills the White House and Congress.  Others won’t go away no matter what the government does.

Why is unemployment so high?

The first problem is taxes.  The United States has the second-highest corporate income tax in the developed world, only slightly behind Japan.  If you are familiar with Japan’s economic malaise over the last two decades, you know that they are not the example we should follow in this regard.  According to this report, even Japan has learned its lesson – well, sort of.  They reduce their corporate income tax rate by 5%, but it will still be far higher than most countries of the world and still too high to promote any real growth.  At least they are making a start.  Our federal government apparently isn’t even thinking about doing anything to promote growth.

The second government-induced barrier to the business, and therefore the creation of new jobs, is excessive regulation.  For most of us, government regulation is simply an irritation.  We have to take our cars to a shop for a state-mandated inspection; we have to sort trash and
recyclables, we have to get a building permit before adding a deck to the house, and so forth.  We have to meet inconvenient requirements and make take some time, but really don’t cost us a great deal of money.  But for big business, government regulations can cost millions of dollars.  In fact, environmental regulations in many business sectors require so much upfront investment that it is impossible for a small business even to open.  Ever try to start your own bank?  Don’t bother – you have to be a multi-millionaire before you can meet the regulatory overhead.  These expenses hamper business and prevent businesses from creating the jobs we need.

It doesn’t even take existing regulations to kill job creation.  Just the uncertainty that such
regulations are coming causes businesses to stop expanding their payrolls.  Since it is much easier to add employees than to reduce, when companies believe that government is about to add expenses for every person the company employs, the company’s prudent move is to freeze hiring to avoid these costs.

Due to these government barriers to business and the US’s high labor costs, many businesses have moved part or all of their operations overseas, where costs are lower.  Who can blame them?  They can still sell their products here, but they make much more profit by manufacturing them elsewhere.  Even when businesses don’t relocate overseas,
many still outsource many aspects of the business to other countries where highly skilled intellectual labor is available for a fraction of the US’s cost.

Finally, technological advances have been a double-edged sword for this nation.  Advances have greatly increased our quality of life and even our life expectancy.  Simultaneously, however, technology has also enabled companies to automate many processes that allow them to produce more with fewer people.  This also leads to higher unemployment.

Can it change?

With the right set of elected officials in place, the taxes and regulation could somewhat be rolled back.  This would stimulate growth and allow for some job creation.  This would do little to help with the outsourcing problem, though.  There is no real source of cheap labor in the US, except for possible teenagers looking for their first part-time job.  Minimum wage laws keep even that labor pool more expensive than outsourcing to other countries such as India.  Obviously, technology is not going to start going backward.  Even if it could, would
you really want that?  Who is willing to trade living longer and better lives for a few more jobs?

All these facts tell us that high unemployment is here to stay.  This is the new normal, just a part of living in America in the twenty-first century.  It may improve slightly, but it certainly isn’t going away.

Is there any hope?

Yes.  That is the whole purpose of this blog.  You didn’t come here just to read depressing news – you need solutions, and that is what I aim to provide.  After many years of pondering, some significant truths from the Great Depression became obvious to me and allowed me to formulate a plan for becoming immune to unemployment.  Continue reading, and I will share that plan with you.

Please add your comments.  Do you believe unemployment will improve?  Are there other barriers to job creation that I haven’t mentioned?  What can we do to make things better?

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