Mitigating the “Mancession” in the United States – the need for great endeavors

"the historian has difficulty in suggesting the degree to which the canal obsessed and enchanted Americans in the fall of 1825. It was taken to be a symbol of the boundless potentialities of the country, its resilience and its hopes” – contemporary newspaper article following the opening of the Erie Canal in October 1825.

Much has been said of the effects that the Great Recession and its aftermath have had on the employment picture in the United States as the unemployment rate has stubbornly refused to go below 9%. A level hitherto thought to be highly unlikely by some really smart and powerful people (including the White House’s economic team which predicted a maximum level of 8% in Q1, 2009 as they tried to sell the stimulus package). While a 9.1% unemployment rate is bad enough, it is important to realize that this is an average number. And like all averages it masks some really telling differences in the characteristics of the various sub-populations in the country. Through the recession, men lost jobs at a faster clip than women did. College educated men have a lower unemployment rate than men with high school diplomas, a group whose prospects are in turn better than those who never finished high school. All this information can by no stretch of the imagination be deemed to be new or insightful as everyone agrees that the recession and its aftermath have been particularly harsh on blue-collar men who tend to work in construction and other cyclical industries.

However, what is particularly scary about the situation is that this is not your typical cyclical unemployment driven by the boom & bust of economic cycles. The sustained household construction boom of the 2000s is gone and is likely not coming back; the Obama administration may have saved Detroit but these jobs don’t pay nearly as much as they used to and many of the manufacturing jobs that have flowed to low-cost countries are unlikely to flow back. This trend of burly men used to working with their hands being out of jobs has profound socio-economic consequences ranging from declining consumer demand to failed marriages and even heightened racial tension and xenophobia. It’s not unreasonable to expect social tension, domestic abuse and other ills to result from men being out of work and having to depend on their spouses or partners for sustenance.

A lot has been said about the need for innovation, reinvention and retraining for the new skills in demand in the new knowledge economy. I am in full support of these moves as it is clear that a lot of the well-paying blue-collar manufacturing jobs are not coming back to the US, neither should we expect nor even hope for the building boom of the 2000s to resurface. However, I think retraining is just one part of the answer as the more we look at what it entails, the less certain a solution this option appears to be. Firstly, the unemployment rate for college graduates is considerably less than that of high school graduates. So an obvious solution will be for unemployed folks to head back to college, right? Not so fast actually. Imagine telling a 50 year old guy who’s been either working in factories or construction sites to head back to college for 2 or 4-years and have to study calculus, macroeconomics or whatever it is college students learn these days. And while he is at it he will have little or no income to support his family. So while it is a sound and noble idea, many working people will balk at getting on the college track due to the difficulties involved in executing such a move.

It’s however not all gloomy as not every job that is projected to boom in numbers over the coming years requires a college education. However, only 8 out of the 30 fastest growing jobs being forecast by the US government requires nothing more than a high school diploma. These are: Personal and Home Care Aides; Home Health Aides; Medical Assistants; Social & Human Services Assistants; Gaming Surveillance Officers/Gaming Investigators ; Pharmacy Technicians; Dental Assistants and Gaming & Sports Book writers/runners. Looking through these eight job categories very few jump at me as being particularly well suited for a middle-aged man who has been pouring cement or hammering steel for decades. I am not sure it is very reasonable to expect a 50-year old worker laid-off from a closed refrigerator factory in rural Pennsylvania or Illinois to be particularly excited to work as a home health aide or as a dental assistant. Also not sure many people will also be rushing to hire a guy who has been shaping steel (and who looks the part) for a job tending to Grandma and Grandpa!

However, it will only be gloom and pestilence for the blue collar man if the country chooses to have it that way. I believe there is a way out and this lies in something counterintuitive: launching a massive and sustained construction boom. Not the housing construction boom that created a mess big enough to sink the global economy. I speak of a nationwide infrastructure boom that will fix the country’s crumbling infrastructure and equally as important: put millions of blue collar men back to work using the skills they have gained over a lifetime. The American Society of Civil Engineers estimates that the US will require about $2.2 Trillion over the next 5 years to fix its crumbling infrastructure. People could be put to work fixing these infrastructure gaps that are an impediment to economic growth and a threat to human lives. Beyond fixing problems, there is a place for “great endeavors”: the building of the Erie Canals and Transcontinental Railroads of the modern era. This is the century of renewable energy so people can be put to work building the platforms of a green economy: building windmills and solar panels; revamping transmission lines and retrofitting homes and public buildings to make them more energy efficient. These things can be done and people could be gainfully employed doing thereby enabling the nation to buy time to retrain the workforce for higher knowledge while insuring itself against infrastructural decay and obsolescence.

This need not be entirely financed by the government. If there has ever been a time for public private partnership in infrastructure, it is now! The transcontinental railroad, the Suez Canal, Eurotunnel and many other landmark projects were not wholly financed by governments. There is no reason why the United States cannot enact legislation to build a National Infrastructure Bank that will be mainly privately funded. The money is there, the projects are there and the ingenuity and skills are abundant. If the rest of the world keeps piling money into Treasuries after a downgrade and were willing to finance NINJA mortgages for overextended people then they surely will invest in the debt and equity of an infrastructure bank investing in the future of the United States. It is a win-win for everyone and the millions of unemployed men will thank policymakers and financiers for it.