Friedman writes: "A Washington lawyer friend recently told me about layoffs at his firm. I asked him who was getting axed. He said it was interesting: lawyers who were used to just showing up and having work handed to them were the first to go because with the bursting of the credit bubble, that flow of work just isn't there. But those who have the ability to imagine new services, new opportunities and new ways to recruit work were being retained. They are the new untouchables."
Having had the great good fortune of
(a) being at a firm which did several rounds of layoffs
(b) taking a (very) small part in discussions leading to the designation of some of those who got laid off, and
(c) surviving said rounds of layoffs myself and winding up in a good situation so far
I can vouch for the fact that what Friedman's friend said (and I don't doubt that he said it; as I have heard others say the same) is almost certainly a mixture of truth and SHEER [censored] UNMITIGATED [expletive deleted]. Specifically, the type of SHEER [censored] UNMITIGATED [expletive deleted] that certain senior people who must decide to lay people off - which is a horrible, horrible task - say to make themselves feel better (and not coincidentally, blame the laid-off)
It is SHEER [censored] UNMITIGATED [expletive deleted] on two levels, which you can see from the main categories of those who have been laid off:
1) Most big firms who have had to lay off scads of lawyers have concentrated those layoffs amongst two categories: first, the most junior attorneys - i.e., those who cost a lot of $$ and haven't yet gotten enough experience to make themselves useful (plus, because of the pyramid structure on which big law firms are organized, they are the most numerous group of non-partner attorneys at any one time)
While most firms would of course try to not lay off the better performers at the most junior levels, it is very difficult to distinguish the more junior you get - especially when most have them have had very little work to demonstrate their abilities, and learn enough for the future. So saying that those attorneys just sat at their desks and waited for work to be handed to them is pretty unfair as a general matter.
(For what it's worth, at the internal deliberations I took part in at [firm name removed], the partners were pretty honest that they were probably going to end up firing plenty of people who would have been just fine if there had been any work for them) Friedman's friend's maxim becomes more true about attorneys who were more senior - plenty of whom have lost their jobs as well -- but this leads to the second level of SFUB . . .
2) Hello, structural changes in the economy? Ever heard of 'em? If you devoted your life to, say, mortgage-backed securitizations (or tech IPOs back in the Internet bubble), you may be the most flexible, creative guy in the world, but your chances just went way down due to circumstances beyond your control (unless you're going to blame the lawyers for crashing the economy - I haven't heard that yet).
Not coincidentally, the second category of lawyers who have been laid off en masse by big firms have been concentrated in those sectors hardest hit by the credit crisis. Sure, plenty of securitization lawyers have been able to retool, but they're swimming against a very strong tide.
Sorry for the rant, but I have heard too much SFUB from BigLaw ever since the credit crisis hit. Though some minority of the people who were laid off undoubtedly deserved it, I don't want to fall into the trap of blaming all the people who had to lose their jobs to justify my own privileged position (not to mention "talking your book" to clients - much of the SFUB comes from firms' reluctance to admit that layoffs are being driven by the parlous state of their own finances ).
Of course, I don't want to deny that there is truth to what Friedman's friend said; that flexibility is more important than ever before in this economy--though you think our schools can impart that? Our schools which have sucked wind for 40+ years? Good luck on that one!
But to posit that as the dividing line between those who have lost their jobs and those who have not? That's serious arrogance. [exhale] As you were
This is worth exploring as a reason for the resistance to making unemployment benefits more generous in time of recession. When the economy is at full employment, the people who get laid off tend to be either people who have been turfed out of their firm either because they are in a dying firm/industry, or because they were bad fits for their jobs. (I'm not denying the existence of unjust firings, but they're not a huge proportion of the overall unemployment rate, especially when tight labor markets make it difficult to find replacements.) So generous unemployment benefits do significantly raise the unemployment rate, because they encourage people in dying sectors to look around for something close to what they used to do, rather than moving on.
But I've heard any number of conservative economic types claiming that this is a problem with Obama's current unemployment benefit boosts, and that strikes me as profoundly unlikely. When the unemployment rate is up around the 10% line, the problem is not people waiting around for perfection; it's that there aren't any jobs for them to take. Increasing peoples' incentive to take a job offer will not do anything to increase the number of job offers; at best, you're just shuffling the unemployment around some. Indeed, at a time when aggregate demand has collapsed, more generous unemployment benefits could plausibly make the unemployment rate lower.
There's something in us that needs to believe that awful things must happen for a reason. And in some cosmic sense, they do--there are no uncaused causes running around the universe. But that doesn't mean that the reason they happened is that the person they happened to did something to deserve it.
I can vouch for the fact that what Friedman's friend said (and I don't doubt that he said it; as I have heard others say the same) is almost certainly a mixture of truth and SHEER [censored] UNMITIGATED [expletive deleted].
That fits most Friedman columns, imo.
I think #2 is an extremely good and important point. In order to have progress you must have structural unemployment. The best you can hope for is an orderly transition.
Indeed, at a time when aggregate demand has collapsed, more generous unemployment benefits could plausibly make the unemployment rate lower.
Very true. One long-term trend that works in favor of socialism (and in a good way) is that with ever-increasing productivity we need fewer and fewer employees to produce the same output. I like the John Barnes vision of the future where AI does 99% of the work and people only work 2 hours a day for 10 years (and, naturally, complain bitterly about every minute of it).
I like the John Barnes vision of the future where AI does 99% of the work and people only work 2 hours a day for 10 years (and, naturally, complain bitterly about every minute of it).
Point 1: Have you ever been unemployed for a few months with generous unemployment and severance? It's not nearly as much fun as you'd think.
Point 2: Human wants are unlimited. If the median house was the Palace of Versailles people who lived in the White House would think they were experiencing grinding poverty.
I really don't want to sound like a scold but -
"Point 1: Have you ever been unemployed for a few months with generous unemployment and severance? It's not nearly as much fun as you'd think."
IMHO, the correct question is: "Are you in control of your destiny?" I have been unemployed for 15 years (I'm retired) since I was 49 years old and it has been wonderful!
"Point 2: Human wants are unlimited..."
Unlimited wants lead inevitably to unlimited disappointments. Live within your means if you value happiness.
You're really lazy - got it. Different strokes and all that. Choosing to consume vast amounts of leisure isn't any better or worse than choosing to consume vast quantities of any number of things. Food, booze, drugs, sex, etc.
Angst,
And not to be a scold isn't sloth one of the seven deadly sins?
You're going with "retirement = lazy"? Good luck with that argument; I'm afraid you're not going to find many people sympathetic to it, though.
You have got to be kidding. You make it sound like the unemployed's worst drama is not being able to afford the latest virtual surround system.
I don't share jmo3's views about laziness. If you're happy, good for you. But the preaching about living within one's means and controlling your destiny hardly applies to the current employment situation. Take a fucking good look around you.
Pride and greed are also deadly sins if you want to go that direction. I'm with KR, I doubt you are going to find very many people who agree that retirement, even early retirement, and living within one's means is equal to sloth.
No, the correct question is have you ever been unemployed? You haven't been unemployed for 15 years, you've retired. Sometimes bad things happen to good people and unemployment can be one of those things. What would have happened if you were laid off when you were 45, or if the value of your investments dropped dramatically when you were 48? What would happen if you got an expensive but curable disease that wasn't totally covered by your insurance and it wiped out your savings? You can and should plan for the future, but no one is really in control of their future.
Point 2 is evasive. Human wants are unlimited, but just because we want something doesn't mean we blow all of our savings to get it.
To respond to the original article, creative destruction is the driver of capitalism. Unfortunately, we don't live in a capitalist economy. We live in a regulated economy with capitalist tendencies. IMO the primary cause of the recession is the government through suboptimal regulations. Why did we force banks to lend to people who obviously couldn't afford the loans? Why do we have labor laws that have forced all of the manufacturing jobs to move offshore?
I'd like to see Meghan write an article that addresses the fundamental problems with our economy, such as the fact that we really don't manufacture anything in America that people from other countries want to buy. I was in central Mexico a couple of weeks ago and found it disturbing that while there was plenty of material goods on display for sale, and in possession of the citizens of that country, virtually none of it was made in the USA. Not the clothes, not the cars, not the electronic equipment, not the appliances, not the jewelry, not even the pirated Britney Spears CDs. How are we going to have a recovery when we aren't selling anything that others want?
Yes, we make software... but how much piracy goes on around the world? And how much of this is moving overseas? (Most of it in a decade or two.) Yes, we make airplanes... but so does Europe, Brazil, Russia, and Asia. Our computers are assembled here (or in Asia) from parts made in Asia. Our electronics are made in Asia. Maybe we have some high-end machine tools and construction equipment, but most of the world buys the cheaper stuff made overseas.
In the history of the world, has there EVER been a prosperous economy that wasn't based on manufacturing? Manufacturing made America and England, it certainly helped Japan recover from the destruction of WWII, and it has been the driver of China's economic rise. Russia has manufacturing, but no one wants to buy what they make except for weapons. America's economic decline corresponds with its decline as a manufacturing power, and the manufacturing jobs that built the industrial heartland of this country now build shining cities in China.
Until we make more things in America and create more skilled labor jobs I don't think we'll exit the economic tailspin we're in.
jmo,
Well, sure, it's not that much fun at 2009 levels. But consider that by 2109 at 3% real growth the economy will be 20x more productive -- that means comparable generous unemployment and severance would be something like $250K to $500K and that's in real terms.
I do think you're right about the continuing pursuit of status though. After all, today's poverty level is about the average of the 1950s and people still don't seem to like it much. OTOH, a lot more households survive without working than in the 1950s.
I think at some point the amount of socialism we can afford to give to everyone will meet essentially all of most people's needs, and then there's nothing but status.
Well, sure, it's not that much fun at 2009 levels.
It depends on your stage of life. When I was laid off after 9/11, I was only a few years out of college, my share of the apartment was $500 and I had just paid off my car. With $512 a week in unemployment that was plenty of money.
If you're 38yo and you have 3 kids and a 4 bedroom house and two cars it's a totally different story. That's why I find UI to practice a form of age discrimination. If you get laid off at 24 you get an 18month paid vacation, if you get laid off when your 34 or 44 or 54 you're f**ked.
Yep. That's the tragedy of our current levels of productivity. Someday those things will be considered subsistence-level goods.
Of course, people will still suffer painful status losses. Status competition is where all the fun is.
It's small comfort to people todat who have to give up a car and half their square footage that they're still living better than people did in the 1950s, and I imagine the same will be true in the future as well. OTOH, I'm guessing that by that time only about 5% of people will have to pay income taxes.
Just think how strange it is that even in a terrible recession, we have so much money to waste on trivialities that people who play kids' games really well can make tens of millions.
That fits most Friedman columns, imo.
Amen. Find an anecdote that collapses under even the slightest review, and build a "theory" around it that, boiled down, would be most at home on a Hallmark card. "Lexis and the Olive Tree"?? Please!
If my calculations are correct, if we gave every adult American $100 per week whether or not they were employed (to ensure employment is always more profitable), it would cost about the same as we spend on defense. Now all we need is a benevolent superpower to protect us and we'll be set.
This must be a corollary to the fact that in Workers Compensation cases one finds that file cabinets fall or other mishaps occur mostly to personality disorders and drug abusers.
Parsing Unemployment
Making a mid-course correction,
in a world turned up-side down,
with their organizational matrix
redrawn in spherical-polar coords.
There are probably enough competent
people in the current crop of culls
to staff a support organization for
the rest, in a government-provided
home for the permanently unemployed.
So generous unemployment benefits do significantly raise the unemployment rate, because they encourage people in dying sectors to look around for something close to what they used to do, rather than moving on.
Say again!?
See Atlantic Canada.
Derek
What's that?
It's the world's smallest fucking violin.
I'm playing it now knowing that the world is out a few more lawyers.
A good start.
LOL
I also find it hard to sympathize with securitization lawyers which were "concentrated in those sectors hardest hit by the credit crisis".
Here's to their future jobs. May they be finally get paid by doing something useful for the rest of humanity.
I never agree with MoverTyperGuy and I now find myself in complete agreement with him. I second his opinion.
Lawyering is a skill that can be used in many fields and even big-time lawyers can take on small cases while waiting for something better. So, the violin is barely visible. But, at least Megan McArdle is doing what she knows rather than, for instance, caring about low-skilled Americans living under bridges. Who could have ever guessed -even after a million years - that Megan and CAP would have similar disinterests?
P.S. If you're an unemployed lawyer and you want to get some internet and maybe even cable TV fame, do this. Note that that plan is ideology neutral.
On to the unmitigated disaster that is unemployment policy in the United States.
Millions of people are exhausting their unemployment insurance claims; and the Senate, under the leadership of Democrat Party leader Harry Reid, seems incapable of fucking organizing itself to vote on a bill approved overwhelmingly in the House of Representatives to extend benefits by taxing the very employers who are benefiting from massive indiscriminate layoffs.
The failure of the Obama Administration to pass Comprehensive Unemployment Insurance Reform will go down in history as the Achilles Heel that brought down the demi-god.
Unemployment leads directly to people being unable to make their house payments, often exascerbating the already horrid foreclosure situation in the United States. Not to mention the bankruptcies and destruction of family life brought on by having ones livelihood snuffed out in an instant.
Barack Obama needs to get up off his ass and walk down Pennsylvania Avenue and tell the Congress to put a Comprehensive Unemployment Insurance Reform bill on his desk to help the working man in this country.
Or the working man is going to rise up and smite him.
Barack Obama needs to get up off his ass and walk down Pennsylvania Avenue and tell the Congress to put a Comprehensive Unemployment Insurance Reform bill on his desk to help the working man in this country.
I bet they would do that if the Republicans would stop trying to load it up with a bunch of BS amendments so they can slow the bill down.
Reid filed a motion tonight to extend unemployment benefits, this way he can get the ball rolling and will be able to limit debate.
"I bet they would do that if the Republicans would stop trying to load it up with a bunch of BS amendments ..."
The Republicans don't run shit dude. Harry Reid can't organize a vote in a 60-vote Democrat Senate? WTF?
Bashing Republicans doesn't cut it. Democrats run the House and Senate and White House. They have veto-proof and filibuster-proof majorities.
If Democrats can't stand up for the working man with the majorities they've been handed then they're just a bunch of incompetent morons who should be fired.
It's a NO. BRAINER. to tax business for laying off all these people and exacerbating the financial meltdown. If Barack Obama can't get that done, then answer me a question:
What the fuck is he good for?
Expletives, used early and often: less effective of a communications style than you might think.
Maybe the President and enough Democratic senators understand that "no brainer" (or ones not given more than basic thought) solutions to economic issues have long-term consequences that outlive soundbites and immediate emotion. Perhaps they see France as an example of what happens when you make it difficult and/or expensive for companies to adjust employment in a downturn.
@ kkjamess, who said: "Perhaps they see France as an example of what happens when you make it difficult and/or expensive for companies to adjust employment in a downturn."
That's funny, because I don't remember Barack Obama campainging on making things easy for corporate America to lay people off. I just checked the Democrat Party Platform and Sticking It To The Working Man wasn't one of their planks.
Tell me, if Democrats are against helping the working man when unemployment/underemployment is approaching 20% of the workforce, then what, prey tell, are they useful for?
If Barack Obama wants to protect business' ability to lay off workers at the drop of a hat, why shouldn't I just vote Republican?
Well, they are going to try to pass the Employee Free Choice Act. Presumably, it will make firings harder.
But keep in mind that labor flexibility is a double-edged sword. When you make laying people off harder, you also make job availability lower. European countries have higher unemployment in part because of their labor laws.
There's a balance here, but I'm not sure making it harder for companies to fire people is a solution to unemployment. Instead, it would almost certainly make the current situation worse.
Taxing companies for laying off people during an economic downturn GUARANTEES that companies won't rehire quickly once the economy improves. Instead, they'll look for ways to eliminate work, either by automating it or moving it offshore. Companies are rational, and you will force them to refrain from hiring people unless its absolutely necessary when you make the cost of hiring and retaining an employee higher than the benefit he generates.
If the Obama Administration and the Dems really wanted to stimulate the economy, they would have done what every economically successful administration HAS done... cut taxes! But it ain't about stimulating the economy, it's about completely trashing the system and making the population so desperate they'll come to heel... or they'll starve. Worked for Stalin, worked for Mao, and I'm sure the radicals running things believe it will work for them, too.
I'm playing it now knowing that the world is out a few more lawyers.
They didn't get disbarred. They lost their jobs. So the world is not out any lawyers, it just has more hungry lawyers.
When it comes to securitization lawyers, it's more the "securitization" part than the "lawyer" part. Gone are the days when lawyers in general held the podium as the nation's biggest (private) bloodsuckers.
Yes, but you missed the point: hungry lawyers do things like bring frivolous suits on contingency. That is, hunger is what drives the sort of lawyerly behavior that makes lawyers hated.
One of the wonderful things about being a lawyer is that if you are willing, you can become un-lay-off-able after a while. When your billings exceed your salary and benefits, nobody will ever let you go. And if they do, you just take your clients with you and either land in a new firm as a partner with a nice book of business or go solo.
That sounds very reasonable, and you certainly know a lot more about how lawyers in a fix are prone to act than I do.
But when the current situation improves, I hope the lawyers who have been laid off find an area outside of "securitization" to make a living. I'm more or less allergic to the word right now.
Blaming securitization for the current crisis is like blaming whiskey for alcoholism. It's not to blame, it's just a lovely little invention that's been misused.
Yes, and I took this to be the point of the original Friedman column: it's not about "flexibility of character", it's about actually bringing in business.
If you're just working the clients that were already brought into the firm, then it makes sense to lay you off when the firm runs low on clients. But if you were actually bringing in more business than your cost, firing you would be a net loss to the firm.
That just seems like common sense to me, and applies in other service businesses - I worked in IT Consulting, same story. If you're the most technically proficient in your team, you'll get some attaboys and recommendations, but if you can tie your name to money (I upsold this existing client, or found this new client, etc) then you're on your way to promotions. This is hardly "SFUB", and Friedman doesn't say "flexibility".
OK, but could we agree that it's a bit harsh and simplistic (abusrdly so, actually) to assume that every lawyer in that field is worthy of such disdain? I happen to be counted among the "bloodsucking" lawyers, albeit in a different field, which has not suffered to the same extent as some others in the current economy, and I can vouch for three facts: (1) many large firms decided to shed some employees in a logical and appropriate manner, at least in the intial rounds of lay-off's -- under-performing, lesser-skilled, low-hanging fruit, if you will; (2) salaries, particularly junior associate salaries, were out-of-whack; and (3) there are many good, smart people, who worked hard and were highly skilled in their chosen craft, who are now seeking work through no fault of their own.
Recognizing that some lawyers are engaged in work that is far less than benevolent for society at large, there are many others for whom the same cannot be said. This includes a great many allegedly evil securitization lawyers. Like, for example, the folks in my shop who securitize debt on a full-time basis, merely to finance solar arrays or affordable housing. Those guys are in terrible fear for their livelihood, but they sleep quite peacefully at night in terms of their overall contribution to society. Like most things, this is more nuanced than it might first appear, and it is certainly more complex than a sophomoric "securitization = bad guy" analysis would allow.
I'm not typically so sensitive, and I like a good lawyer joke as much as the next bloke. But I'm simultaneously watching some very fine human beings fear for their families' well being - lawyers who became experts in securitization precisely because they wanted to advance, for example, the vehicles to finance renewable energey on state and federal properties. I'm not saying that we should award them a medal, but we could do, at minimum, without the misplaced hostility.
I don't disagree with any of that. Unless you're talking about torturers or something, there's virtually no professional area that doesn't have kind, warm-hearted, "very fine human beings [who] fear for their families' well being". I bet there are pimps out there that fit that description. Every stereotype is a simplification.
You tend to form your impressions of a professional area based on the overall contribution it makes to society. So if, say, a particular profession is at least partly responsible for inflicting suffering on people that weren't even directly involved in dealings with professionals from that area, then that profession tends to get a bad reputation. That's more of less regardless of diligence, cleverness and other personal qualities the professionals in question might have. Hyperbolizing for clarity, we don't admire smart, industrious, well-intentioned thieves.
That professionals in that particular field were often better compensated than others who undoubtedly contribute to the public well-being doesn't make things better.
99% of lawyers give the rest a bad name.
Nimed, point taken. And Fraggle Rock, that was funny (though to be fair, I'd use a lower number, like say, 85%...).
Unemployment insurance is the best of all fiscal stimulus. It should be increased.
It's not quite right to say that extending unemployment insurance has no labor market effects. Even in a recession, some unemployment will be frictional, which is to say that it results from employers not being able to find the right employees. To the extent that unemployment benefits encourage people to look for work less hard, it increases the frictional unemployment.
However, that is a very minor effect and swamped in magnitude by all the good things that can come from extending benefits.
Also, from an empirical perspective it does not appear likely that job seeking has been dampened much if at all. Everything I read says that employers are being inundated with resumes every time they post a job. I've heard of firms advertising paralegal job openings and find that dozens of lawyers are applying.
When employment is near full employment, it can increase unemployment by lengthening search times; right now, I agree, it isn't.
Yeah, that argument had a lot more relevance at 5% unemployment.
Jobs are out there, but it's very competitive. My wife and I were both lucky enough to get hired again after being laid off most of 2009, but there was a lot of interviewing. Somewhat shockingly, we both ended up with substantial raises (~50%) over our old jobs. I'd like to think that argues productivity is improving as well, but in truth I'm pretty sure we were just very very fortunate.
Dave,
Funny you should mention that I have a friend starting a new job on Monday and he's getting a 25% raise. I'd have to say if you get laid off into the worst recession since the great depression and get a 25%+ raise you were being wildly underpaid in your previous job.
Also, going forward you should try and move jobs before you get laid off. I've worked with people who will stay at a job for 7 or even 10 years and only move when they get laid off. In such cases they end up making far less than those who made moves in a strong job market and were negotiating from a position of already having a job.
It's extremely competitive. I have 15+ years in international non-profit IT infrastructure and I can't even get an interview for a job running Windows Updates because, for example, the last job I applied for had over 2,000 applicants.
People are not sitting on their asses salivating to collect $200 a week. Employers are just not interested in hiring and many of them cite the continuing uncertainty caused by inaction in the Congress.
Meanwhile, the states are going bankrupt as foreclosures eat 25-40% holes in their annual property tax budgets and consumer spending declines take out the remaining 10-15% on declining demand from those left with uncertain job futures.
The Congress could immediately inject TONS of stimulus, prevent foreclosures, halt bankruptcies, create sales demand ... there is almost no drawback to extending unemployment insurance payments. It's even deficit neutral, since employers pay for it.
There's absolutely no reason that Democrats shouldn't have already done this except abject fucking incompetence.
movertyperguy, I believe that, for a change, we're more or less all in agreement here: unemployment benefits should be more generous when there's a high rate of unemployment, which is the situation the country is in right now.
You're correct that the Obama administration and Congress have all the power and should be doing more.
What, unfortunately, is also true is that the tendency of the last recessions is for employment to have a slow recover.
I'm not sure why this is so. One common hypothesis is that today's jobs require in average more specialization than jobs in the 50s, hence structural adjustments are harder.
It's an extremely shitty situation. I sincerely hope it will change for you soon.
I don't understand. Why would the state of the business cycle change this marginal decision? Given there's few job openings, an increase in UI benefits increases unemployment. Are you making an argument about effect size?
All the studies I've read have found huge effects of UI extensions, they all control for levels of unemployment and many have samples that contain the early 80's recessions.
People are not sitting on their asses salivating to collect $200 a week
Ugh, where do you live, it's $628 a week here in MA?
In VA it maxes out around $350/week.
Megan - I can endorse your friend's comments 1000%. Firing junior attorneys because they aren't rainmakers? Seriously? Big Firm life is not a John Grisham novel - junior lawyers are supposed to work hard, what they are told and learn the skills to become grow-up lawyers.
Among the junior ranks a lot of the people who were let go were the lower performers - not bad in most cases, just not quite as good as their peers. Many of those folks were perfectly acceptable in the summer of 2006 - or as we said then, 2/3 of a body is better than no body. A few of were generally good attorney who had one bad screw up in front of an influential partner. Some others were unlucky souls who had just rotated into a new group where the leader didn't really know them. And there were some who were let go for no apparent reason whatsoever.
Friedman's thesis has a lot more application to senior associates and partners, though de-equitization of under-performing partners has been going on for a while.
Of course, all of the above applies to the firms and practice groups that are still in fairly good shape, whereas at some firms they pretty much just canned the entire structured finance group, or in the case of one L.A. firm with an office in the Lipstick building, they appear to have gone through the firm directory and canned every 2 out of 3 names.
Not sure I buy it. While anecdotes are not data - I know 3 people that have been unemployed for nearly a year. They all have turned down jobs because they "weren't quite what I was looking for"
You should probably call the U.S. Bureau of Labor Statistics and convey your fascinating insights on the labor market.
10,000 apply for 90 factory jobs
Can you believe these lazy, fussy bastards?
I guess you don't read very well, do you?
I said up front that this wasn't proof of anything. What I was disputing was the assumption that increased unemployment insurance benefits don't lead to high unemployment. I have personal experience that this is simply not true.
How much does it matter? I have no idea - it could be very small or something more meaningful. But saying that it doesn't matter doesn't seem to be consistent with my experience.
Yes it was proof of something.
It was an counter-example to the blanket rule.
Whether it's any more than noise determines whether it matters, but it's there.
But it is perfectly consistent with your experience. You know that your friends turned down the jobs, but you don't know if the positions were filled or not.
Because the number of applicants for the vast majority of jobs is very high right now, even if a large percentage decides it isn't interested in a particular job, there is more than enough unemployed people left to fill the position. And then some more who wanted the job and didn't get it.
It may be the case that your friends have highly specialized and valued skills, such that even with the current unemployment rate, almost all supply is absorbed. But these are usually very small markets that have almost no weight in the unemployment statistics.
Nimed, it is also true that there are a lot of positions that have been open for some time.
I personally have a position open that we have extended two offers for that were declined.
Again, I'm not trying to claim that the affects are huge or even significant - but they do exist.
It's not surprising, really. The economy is so much more specicialized than it used to be, so it's increasingly more difficult to match skills to people.
That underscores the point about structural employment: learning a new, more marketable skill is painful, so if there isn't pressure to do so it's hard for an economy to keep generating productivity gains.
Steve Sailer had the best take on this Friedman column -- Tom Friedman: America's schools failing to educate enough rainmakers. Read the whole thing, but Sailer makes a good point here...
Okay, so our schools have to not only teach the times tables, they have to teach salesmanship and entrepreneurship. Hmmhmm, my impression from watching The Wire was that our public schools were already turning out more than enough crack salesmen but not enough kids who were good at arithmetic.
You know, this is almost enough to make you wonder if globalization isn't all that Tom Friedman has cracked it up to be.
I kind of have the impression that quite a few Americans, like, maybe, two or three hundred million of them, don't possess either the IQs or the personalities to be rainmakers. Are they permanently obsolete in the world that Friedman has been such an energetic cheerleader for?
If you can spend 10 hours a week on fantasy football, you can spend a few minutes reading the business section so you aren't blindsided when your company declares bankruptcy.
Was that just random stream of consciousness by you or do you think it has any relevance to the comment I posted?
I kind of have the impression that quite a few Americans, like, maybe, two or three hundred million of them, don't possess either the IQs or the personalities to be rainmakers.
People have the time and the ability they just choose to do other things. While there are some that are unable the number is perhapse 30-50 million not 200-300 million.
Are you seriously arguing that the ability to play fantasy football implies an ability to be a rainmaker?
Are you seriously arguing that the ability to play fantasy football implies an ability to be a rainmaker?
I'm saying if you put as much effort into rainmaking as you put into fantasy football, yes, you would make some rain.
I've been making that point for years...
First of all, if UI reduces the motivation to find a new job quickly -- and how can it not? -- it must do so regardless of the unemployment numbers. You can argue on humanitarian grounds that people should not be that scared, but you can't argue for extending UI on utilitarian grounds.
If we regard unemployment as a signal that labor is misallocated, which is reasonable, then the worse the unemployment the bigger the evident misallocation, and the faster and further people must move for the problem to be solved. Reducing their motivation will a priori extend the crisis for all, however humane it may be for individuals.
Secondly, one of the evident reasons employment lags economic recovery is the natural conservatism of hiring managers. Being human, they are far more reluctant to fire people than shed other costs, and consequently more reluctant to take on salary costs than other costs when times have been recently hard.
Since confidence in your ability to predict the future -- your ability to know you can still pay this salary for this new hire a year from now -- is the sine qua non of new hiring, any government action that adds uncertainty to the labor market depresses hiring.
Suppose Congress starts randomly extending or contracting UI benefits, depending on politically-charged evaluations of "how bad it is out there." This will of course produce variations in how good a market it is for hiring (if it doesn't, it's failed in its purpose, of course). So now when I consider hiring someone, I have to factor that in. Sure, this candidate seems pretty good, but he's not perfect, and last time Congress cut UI benefits -- as the news says it's poised to do, since unemployment is down, a Republican majority has taken office, or an election is right around the corner, whatever -- I got a much higher quality of applicants for my job. Maybe I should wait a few weeks, see what Congress does!
Multiply that by a million small businesses, and there's your lagging employment numbers. One of the primary goals of governmental action when unemployment is bad (unless you want to go full Soviet style and have government hire everyone) should be stability and predictability in the tax code, the capital market, and the labor market.
Another thing is that you don't, in fact, have to find a job to get one. Some people can make a job -- becoming self-employed.
High unemployment benefits discourage that, too. Especially if you have to apply for x jobs a week to keep your benefits (cutting into your time) or the state considers you employed on any day on which you do anything for which you might get paid, one day.
It's not the best time to start a business either. Tight credit, low demand.
Yes, which is why we shouldn't add to the stuff to discourage it.
Especially if you have to apply for x jobs a week to keep your benefits (cutting into your time)
Clicking on 3 or 4 Monster links a week takes what - 5 min?
The arguments for stability and predictability of government action are pretty sensible.
But this one, while possibly true, is irrelevant
So let's see
There are 10 job openings and 15 qualified unemployed people receiving unemployment compensation. 10 of the 15 people say "Fuck it, I can afford to wait for something better". As a result, 5 jobs vacancies remain unfilled. UI is keeping the unemployment rate higher than it would otherwise have been.
There are 10 job openings and 150 qualified unemployed people receiving unemployment compensation. 10 of the 150 people (or 100, if you think a fixed proportion is more realistic*) say "Fuck it, I can afford to wait for something better". All job vacancies are filled, and there are still 130 (or 40) people who would like to get a job, but just can't find one. In this case, UI is not keeping the unemployment rate higher than it would otherwise be. Meanwhile, most of the unemployed are able to feed their families, keep a roof over their heads, maybe medical insurance (if you didn't lose it with your job), etc.
As others have pointed out, even with high unemployment there's probably a small percentage of individuals who would be able to get a job but don't. Of course, chances are that job will not remain vacant for long.
But another thing entirely, and this is the relevant point, is to argue that the effect of UI on unemployment is independent on the current unemployment rate.
More to the point, the unemployment rate was 5% in April 2008, and it has been climbing steadily since then. Perhaps there's some kind of undiagnosed Great Sloth Pandemic out there. Alternatively, it's also possible that previously employed people can't find a job.
*I don't think it is. It seems reasonable to assume that, the greater the unemployment rate, the less picky people are with job opportunities, because the chances of being accepted in the right job are smaller.
One thing about unemployment insurance is that it involves a tax. As a consumer I would buy more if I were compensated in part of the amount of the tax paid on my behalf. As a business owner I would be able to hire more people for constructive work if I could avoid the tax or the associated paperwork.
I find it disappointing that people would rely on insurance instead of savings to deal with forseeable circumstances such as losing ones job. Those without adequate savings are bound to get into trobule in circumstances from natural disaster to medical problems and impart their problems onto others. To me being an adult means taking responsiblity for one's own problems.
I was impacted by a reduction in force earlier this year, but I got a new job starting on the termination date of my previous one, perhaps in part because I don't believe in unemployment. Some of my former coworkers explicitly said they were going to enjoy their severnce benifits for a while, althrough they eventually got jobs.
My new business unit has had 4 open requistions since June. Admitedly our HR department isn't very good at recruiting. We've had to shuffle people around internally to get things done. See my post on crodwourcing for more general discussion of available oppertunities.
Anyway, I think we would all be better off without unemployment insurance of any kind.
I find it disappointing that people would rely on insurance instead of savings to deal with forseeable circumstances such as losing ones job. Those without adequate savings are bound to get into trobule in circumstances from natural disaster to medical problems and impart their problems onto others. To me being an adult means taking responsiblity for one's own problems.
This is a great idea if you're around 40 years old and have been in the workforce for 20 years with the chance to build up savings. It's not so effective if you're 25, just out of law school, with $120K of student loan debt.
"My new business unit has had 4 open requisitions since June."
Please provide a link where I can find our more about your open jobs. I and 20 million other Americans are desperate for work.
How much do these jobs pay?
Securitization lawyers losing their jobs.
At the same time, people losing their homes to foreclosure have a lack of legal representation.
Sounds like there's work for those lawyers in the nation's legal aid offices; but the pay scale's lower by an order of magnitude.
The problem is one of competence. The people doing securitization don't know jack about real estate.
Or litigating. That's why the world need not worry about hungry securitization lawyers turning into plaintiff's side bloodsuckers. If you've been papering securitization agreements for years, you're not going to wake up one unemployed morning and sue somebody. That takes an entirely different set of skills.
Let them get desperate enough, and they'll do it.
Having a run at a the lottery with a car accident case is a lot more enticing than doing foreclosures at charity wages. Same malpractice risk, very different rewards.
That would put anyone who's lost a job and now facing foreclosure at risk of being abused by the same group of incompetents two times. In the domestic abuse industry, the call it re-abuse. Happens to rape victims, too. First they're raped, then they're raped again if the case goes to trail.
In my experience, litigating and real estate are not difficult skill sets to develop. Any lawyer talented enough to survive years of experience doing securities work can retool fairly easily to proficiently litigate or do commercial real estate.
It does not work the other way though--most lawyers who litigate for years cannot develop a transactional mindset. And real estate attorneys do not seem to have the bandwidth necessary to perform the securities work, which tends to attract more talented lawyers seeking the money that comes from it.
No, people are losing their homes because they have no money to pay the mortgage. When you cannot pay the mortgage, the lender can foreclose on the home.
Given that is how it is supposed to work, why, exactly, are we supposed to add futile legal proceedings to the creditor's losses?
I am a person currently unemployed, about 10 months going.
My profession is a bit lower on the pay scale as lawyers - I was a librarian, had been for 15 years straight out of college with a Masters degree (my Bachelors was in Journalism: I got a D in Reporting and an A in Ethics, explains why I didn't end up in that job track ya?).
The biggest problem for me is that the whole librarian profession is undergoing its own problems of job availability due to the public sector (where most librarians get employed) getting hit as bad as the private sector. Something to do with states making massive budget cuts, where libraries tend to get hit first because of more pressing needs with law enforcement, fire rescue, water management, all of which are getting their own cuts and hiring freezes. Last time I went to the county Personnel office to check up on my COBRA payments, the Employment bulletin board which two years ago was covered with job notices was completely barren... well, there was one notice left, for a job requiring such specific technical and management skills in waste water treatment that it seemed unlikely they'll ever find anyone for it.
Library job websites two, three years ago had tens of jobs that would cover my qualifications (reference services, mostly). The Florida Library Jobs site had a page and a half of Reference-level jobs. Today? If anything opens up it's for Admin level. And I'm looking at other states where I can move, other counties, risking even the cost of relocation and possibly underselling my condo just to be able to move to a job... and still not finding much...
The good news is, I've taken up on the WIA retraining program to study up on my computer skills, get an A+ certification (knock on formica), and hopefully find an entry level with an IT job somewhere. But in the meantime I NEED the unemployment benefits to keep me afloat, because there's really not much there in my original job market.
For what I know about the high unemployment is that it makes the job market too competitive: too many people looking for the too few jobs that ARE available. And people ARE looking (ever been to a career center's job fair recently?). It's not laziness, it's despair that a lot of us jobless are feeling right now. The stress of NOT being employed is proving far harsher than the stress of having a real job.
Didn't they have jobs programs in the 1930s? Why can't we have a jobs program today?
I think it might be a good idea to include some sort of relocation bonus for people on UI. Say $5,000 if you move more than 50 miles and $10,000 if you move more 200 miles. That would be a big help to those who need to move to greener pastures.
Maybe as an interest free loan? You don't want people gaming the system, but I think that helping folks move to where the jobs are is a great idea.
Which do you want?
1. They cut the libraries' budgets still further to pay for them.
2. They borrow money, which dries up credit, which makes small businesses' credit crunch that much worse and they don't hire people.
So generous unemployment benefits do significantly raise the unemployment rate, because they encourage people in dying sectors to look around for something close to what they used to do, rather than moving on.
But I've heard any number of conservative economic types claiming that this is a problem with Obama's current unemployment benefit boosts, and that strikes me as profoundly unlikely. When the unemployment rate is up around the 10% line, the problem is not people waiting around for perfection; it's that there aren't any jobs for them to take.
You contradicted yourself in record time there. What you meant to say was there aren't any jobs for them to take in their sector or in their area. Unemployment benefits are going to induce people to search for jobs they're better suited for, and how rare those are is going to make a difference in proportion to how generous the benefits are.
Said another way, If I get laid off today, and I can get unemployment benefits that are say, 80% of my salary, I'm going to take my sweet time looking for a position I'd actually like to take. If the benefits are say, 50%, I'm going to start applying for anything in my general field that I can plausibly claim to be able to do. If there are no benefits at all, I'm gonna see if I deliver pizza or work in a call center or SOMETHING and I'm gonna do it NOW. The rarity of good positions in my field is going to increase the pressure on me in all cases, but the effect of UI is still there.
Certainly, some automotive line workers and investment bankers and residential construction workers have moved away from Detroit, or NYC, and started looking for work in an industry that's living instead of dying, like IT, or Health Care, or et cetera. But plenty of them haven't, and it's undeniable that UI is slowing that shift, and the more generous it is the greater that effect will be.
I agree. There is a practically infinite amount of crowdsourced work out there for an educated person who wants it. If you work enough hours, it can pay better than unemployment but most people choose to just collect a check.
I think Friedman's closer to right than your friend, except that I think that Friedman's point is so obvious that it's not worth writing down.
Even in the fat times, the lawyers most valuable to the firm have been:
1) At the upper levels, lawyers who can bring in more work than they can do (i.e., can market themselves and the firm to clients); and
2) At the lower levels, lawyers who the senior lawyers look to do to their work (i.e., can market themselves to the senior lawyers).
Doing good work is obviously a factor in staying in both of those groups, as is pure marketing. At any rate, everybody knew who the stars were when times were fat, and they know who the stars are when times are lean.
On top of that, your friend is right that dumb luck is a factor, as it always is. One big failure in front of the wrong partner or client, or specialization in a field that collapses, and a star can flame out faster than you would think.
(There is also a third overlapping group, which is junior lawyers who the senior lawyers believe will *eventually* fall into category 1, but let's omit them for simplicity).
Another huge problem with unemployment in this country is the Associated Press.
Take this story for an example. Today, it was discovered that analysts were surprised at the new jobless claims. "The Labor Department said Thursday that new jobless claims rose to a seasonally adjusted 531,000 last week, from an upwardly revised 520,000 the previous week. Wall Street economists had expected only a slight increase ..."
So, analysts continue to underestimate the weakness in the labor market, and jobless claims are rising faster than anyone predicts.
So who does the Associated Press go to for comment at the Obama White House?
Nobody.
They did not even seek comment from the Obama Administration. They did not seek comment from anyone in the House of Representatives. They did nto even seek comment from anyone in Harry Reid's Senate.
They did find one analyst willing to spout the Administration line, so they quoted this no-name think-tanker instead: Ian Shepherdson, chief U.S. economist at High Frequency Economics.
He said the fact that half a million people are newly unemployed was "slightly disappointing."
As long as the Associated Press and the other in-the-tank media are covering for this incompetent administration then the unemployment situation is only going to get worse and worse.
The press is supposed to be irritating those in power ... not protecting them. The press is supposed to be on the side of the people, not the government.
What happened to you journalists? When did you join the Dark Side?
Here's another example of media complicity: CNN reports 7,000 people a day are exhausting their unemployment insurance claims (these are payments funded by taxes on employers ... not the government).
Who does CNN talk to in the Obama Administration about this problem?
Nobody. They did not even seek comment from anyone in the Barack Obama Administration. They did not even seek comment from anyone in the House or the Senate.
How can you write a story about national unemployment without seeking White House or Congressional comment? Why is the media covering up this story for the Administration? Isn't the media supposed to be irritating those in power on behalf of the people?
Why is the media not questioning our government? When did the media become part of the government?
I think word has gotten around that the Democrats consider the unemployment rate a sore subject--perhaps THE sore subject--and a lot of journalists don't want to get on anyone's 'do not return call' list.
Other people to whom the unemployment rate is a sore subject: THE UNEMPLOYED. I could give a flying eff whether the Democrats don't want to talk about it. It's their job. And it's the Republicans' job. I know you're not defending them, I just get cheesed when politicians sucking off the public teat get all delicate and chafed when they have they have to deal with the problems of the little people who are worried that employers just aren't hiring because of mixed signals from Congress on a whole host of regulatory/legislative issues that affect business. I'd love for them to get on the stick and figure out some policies that will stimulate hiring rather than stimulate their contributors.
Maybe we'll have to start looking internationally:
"Yet for a country planning to spend $100bn over the next three years on infrastructure, India, with its 1.2bn people, is in the unlikely position of needing not more money but more manpower." (Financial Times, Oct. 15)
Civil engineering capability is very much needed there. I don't know what the barriers to entry are.
Several commenters seem to think that it is practically cost-free to extend unemployment benefits, because the money comes from employers rather than taxpayers. I don't see it that way. If you take more money from employers, doesn't that leave them able to afford fewer employees?
Just because you think something (like unemployment benefit extensions) is a nice thing for the recipients doesn't mean it's a good idea to take somebody else's money and put it there.