It may be due to the Internet and e-commerce, or the globalization of the economy, but nevertheless: the jobs went away for good. Some went overseas, but Nickelsburg told the audience that the slash in manufacturing jobs was gradual and had more to do with automation. “Companies are producing more with less,” he explained. “The manufacturing output of California, for example, is 140 percent of what it was in 1990 but with 30 percent fewer workers.”
Nickelsburg said that since 2008 the country has lost more than 2 million construction jobs, 2.5 million manufacturing jobs, 800,000 retail jobs, and scores of financial and legal services jobs – and none of these jobs is recoverable: “5.5 million of the 8 million total jobs lost in this recession aren’t coming back. It’s the new Grapes of Wrath,” he said.
Steinbeck fans will recall the famous novel (and the film starring Henry Fonda) that tracks the saga of the Joad family as they are forced out of their farm – the only living they’ve ever known – during the Depression and the Dust Bowl. Because farming is their only skillset, they end up working as cheap migrant laborers, never again to own land or make a decent living.
“People can’t recover from the transition. They are the new Tom Joads,” he said.
Nickelsburg added that the American workforce will have to satisfy the new need for cognitive skills rather than mechanical skills. The coming years, he said, will be fraught with growing pains as the American worker starts acquiring the needed education and skillset for the jobs that will be available.
In the meantime, don’t expect much from the November election – policies currently in place will govern the economy for the next 12 months, regardless of who wins the White House, Nickelsburg said.
The one big concern is whether Congress will be able to prevent the economy from going over the notorious Fiscal Cliff on Dec. 31, when proposed spending cuts will automatically begin and current tax cuts will automatically end as dictated by the terms of the Budget Control Act of 2011. If Congress cannot reach an agreement, expect the nation to spiral back into a second recession during the first half of 2013. This will delay total economic recovery by another three years, he said.
If all this sounds too dire, however, there is cause for optimism – at least if you think in longer terms. Anderson School economists, he said, predict that the new growth sectors will be in education, information, professional services, scientific and technical services, and in advanced manufacturing. And this eventually will make the U.S. a wealthier country overall.
“Ten years out, we will be a wealthier society with more leisure time,” Nickelsburg said. Consumers will have more money and more leisure time – becoming prime customers for recreational industries like powersports. “We just have to get past the transformation first.”