How the Labor Market Gets Scarred
Some economic impediments are circular in nature. For example, low wage growth begets lower consumer spending growth, which results in weaker hiring, while an oversupply of labor keeps wages low. But there is another factor as to why wages are depressed economy wide and that is the displacement among individual workers. As industries and occupations undergo seismic shifts, former workers who had once worked in those jobs now need to find other employment opportunities using different skills, for which new employers might be willing to pay fewer dollars.
Once in those new jobs, having little tenure those more recent hires are at greater risk of losing those jobs during subsequent downturns. A greater sense of job insecurity can mean, for some workers, that their desired precautionary saving levels might be higher and spending lower. This quasi-permanent scarring of a segment of the labor force can last for years, unlike previous recessions in the U.S. whose effects were more transient....494 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.
Already a Subscriber? Please login.