Job recovery since the 2008 economic meltdown has been sluggish and lagging other economic indicators.  Yet industries are making record profits and the stock market has significantly exceeded its highs prior to the economic collapse.  Executives are making record salaries and bonuses and housing starts, prices and sales have just about recovered to their pre-meltdown levels.

So what’s the cause of lagging unemployment?  We must first understand where the unemployment number comes from.  It comes primarily from the number of people claiming unemployment benefits from the government.  Those claiming unemployment checks were previously employed.  However there are a steadily increasing number of young high school and college graduates that are entering the employment market who remain unemployed and are not counted.  So unemployment may be significantly higher than indicated.  I have grown children who struggled with unemployment a few years after graduating from college before very recently finding full time jobs.

So why do people continue to have difficulty finding jobs in spite of the return of our economy to near pre-meltdown levels?  Outsourcing and automation are two of the primary reasons for the sluggish job recovery.

Many jobs have gone abroad where labor rates are significantly lower than they are here. Not all these jobs are blue collar jobs.  Many are white collar such as software jobs going to India and engineers jobs going to China, India and elsewhere.  Now Africa is looking more and more attractive as an emerging market where cheaper goods and services can be produced with much lower labor rates.  Many if not most of our manufacturing companies are now multinational so outsourcing is becoming progressively more natural.

Robotics and automation are becoming more affordable and adaptable than ever so they are being more extensively employed even in smaller factories.  Robots work tirelessly and need no breaks and demand no salaries or benefits. They can be reprogrammed and adapted to do other jobs when new products are introduced.  They can lift very heavy loads repeatedly or perform very delicate jobs reproducibly and with great precision. Many robots can be maintained and serviced by only a few humans and soon other robots will do that job.  As time goes on robots will become smarter and far more affordable replacing more and more blue collar jobs.

Computers are becoming so powerful and software so smart that they can do the work of hundreds and thousands of white collar clerks, technicians, and engineers.  As they get progressively smarter and more powerful more jobs will be displaced as we have already seen.  They can now drive cars in crowded streets.  It’s only a matter of time before they do just about everything.  They do not tire and are millions of times faster at doing computations and algorithms than we.

Artificial intelligence is enabling computers to make very smart and intelligent decision just like us but much faster and without our biases. They are progressively getting better at doing medical diagnostics and recommending treatments that could make doctors obsolete in the future. Computer technology is so good at analyzing blood and imaging tests such as CT scans and MRIs that doctors are already dependent upon these results for their diagnostics. So it is only a matter of time before they can do it all. Medical databases are being established now in all doctors offices and hospital as part of the Affordability Care Act that will allow centralized computers to crunch through billions of test results and diagnosis to improve the ability of other computers to diagnose diseases and prescribe treatments.  If doctors can be replaced by automation so can many if not most other jobs.

So the lack of jobs is not due to a slow recovery as much as it is due to outsourcing and automation.  These jobs are gone forever.  People looking for jobs must retrain for other jobs which are not yet obsolete.  But as time goes by more current jobs will become things of the past as was sword making.  Jobs are slowly disappearing permanently.  Low paying service jobs will likely be the last to go since they are not economically feasible to replace at the present time.  But the more money you earn the more likely your employer is trying to find a way to cut your cost to them.

So what is the ultimate outcome of all this?  The U.S. will eventually become like many once affluent countries.  Its standard of living will go down for the vast majority of people and there will be the few very rich and a far less affluent everyone else like England is today. Much lower paying jobs will again become available but everyone will have less to spend so there will be less demand for goods and services and consequently a permanent decline in economic prosperity.  This may happen gradually over the next 20-30 years but our standard of living is unsustainable.  Salaries have already remained virtually flat for the last 5-10 years for most.  The standard of living is outpacing our raises so we are starting to have less spending power.  This is just the beginning of a long term decline.

I highly doubt that we will reach the point of the dark ages but we will become much like European countries are today.  We are at the peak of the American empire and as has always happened to empires in the past, this empires will most likely fall.

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