Apr 04

German Dual-System Model Solution for U.S. Unemployment?

Currently Spain and Greece are suffering from a greater than 50% unemployment rate for youth ages 18-25, while Germany’s youth are unemployed at a tiny fraction of that rate, 7.8%. Germany employs a dual-system in which those with the grades and the desire to pursue formal higher education are able to do so, while those with lesser grades or a desire to enter the trades or seek specialized technical training are encouraged and subsidized to enroll in technical schools and apprenticeship programs.

Read a report on the program here.

The United States as well as the rest of the world is suffering from a massive shortage of skilled tradespeople. The United States should be building the groundwork for a system similar to that of Germany, and it should do so soon.

Apr 02

Unemployment Down?

As you may have heard, the unemployment rate is down to 8.3% from 10% in October 2009, but there is more to the story. What the big number reported on by most news outlets doesn’t tell you is that real unemployment has barely dropped, and wages and benefits continue to fall. Daniel Gross over at Yahoo Finance recently spoke to Robert Reich, former Secretary of Labor under Bill Clinton, and he painted a less rosy picture than most of you will hear on the nightly news.

We do know that more jobs are being created, said Reich, professor of public policy of the University of California at Berkeley. The problem is that the actual labor participation rate, the ratio of people who are in the labor force relative to the people who are eligible to work, it’s down to almost the lowest point it was during the great recession. We haven’t seen much pickup in that. In February, it stood at 63.9 percent, which was down from 64.2 percent in February 2011, and significantly below the 66 percent levels of 2006 and 2007.

Because high unemployment increases the employer’s bargaining power relative to the prospective or current employee, median wages have also been falling for the lowest 90% of wage earners. Moreover, the percentage of people who receive their health benefits from their employers has fallen to 53% from 63% in 2007. In other words, employers know that there are more job seekers than available jobs, and they are kicking us square in the teeth. So, while the economy is growing, without some action in Washington to force employers to increase wages and offer benefits, the new economy will continue to show a downward trend in these areas.